So is this thread dead or what? Everyone seemed to have an opinion just a little while ago about the company, but now everyone is sitting on their hands!
I'll start us off again. Spoke with the company. Discussions are underway with a couple of major houses regarding a financing.
They are looking at raising 5-10 million dollars if possible. I personally hate to see any financing done at these low levels, however, without cash, there will not be any forward progress for the company.
Cash is required to test the well and funds from the underwriting will be used to test this well. Testing should cost around $1.5 MM ...expensive I know...not sure why costs are so high but this is what they tell me.
This will bring the total cost of the well to $4.0 MM completed. Testing should begin sometime in August and if there are delays, it should be in the order of weeks, not months...again, this is what the company is telling me...(where have we heard this before).
Recoverable reserves from the first well should be in the range of 20-30 million barrels of recoverable oil. Numbers as high as 60 million barrels have been discussed, but until the well is tested we can only assume zero barrels for now. If 25 million barrels is a reasonable number, and putting a value of $5.00/bbl less 30 million development costs, the added value to the company should be in the order of $100 million.
So why is the stock here at 20 cents? I don't know...although I would guess that management credibility, lack of funds, and still no test data would contribute significantly to the price.
The company would like to exit the year with production, and while as I shareholder I would be thrilled if it happened, I'm not going to hold my breath...again that credibility problem!
Should see a second well spud sometime prior to year end (a function on how much cash they can raise).
That's all I know at the moment!
Does anybody have any thoughts on why the majors or seniors are not seeking a deal? Is the location a bigger hinderence then we first anticipated? You'd think that if the well logs are as good as management is leading us to believe, there would be some interest from other parties.
Regards,
Tate |
