Philip / A Few Clarifications
Regarding the loan reference, these loans were secured
Please stop repeating this on the thread, because it is simply not correct. Call the company for specific clarification if you do not believe me.
My understanding is that Arakis is continually evaluating expenses and efficiencies, particularly since Mr.Khan has taken over. So I would think this will continue to be a priority of the new board. I am not sure just what Sands has in mind, but perhaps they will clarify this.
Now that Arakis is a non-operator, and essentially just a monitor, they can probably get by with a smaller group in Calgary, but some of the G&A costs will remain.
However, I am not sure what they are doing bringing this up in a release. They will have a boardroom seat, where any good ideas would get a thorough airing.
They may have a boardroom seat, but they will still be in the minority of outsiders. Maybe they thought their ideas would get a "more thorough" airing if they were supported by a large number of individual shareholders?
Perhaps the most curious part of the release concerns the suggestion that Arakis concentrate its efforts in the drilling project. Is it just me, or is that not precisely what they have been doing?
Given that Arakis' only has about $50 MM in net working capital, and their share of the upcoming capex budget has risen proportionally to the increased pipeline construction costs, I think Lundin has raised a very fair issue here. Arakis is inevitably going to have to raise more financing just to fund their own share of the total capex forecast for the Sudan project, and yet they continue to spend money in other areas (i.e., $1.25 MM for Wadi Saylah No. 1 in Oman). Does that make good financial sense to you?
I personally think that Lundin has raised some interesting points that should be considered very seriously by Arakis management.
Razor |
