Richard, John , Scott / Lateral Vector Resources
Previous Posting:
Richard - All / Company Calls
Made a few calls today. Talked with Lateral Vector, Oxbow Exploration, Ramarro
Resources. Attempted to talk with Prize Energy, nobody home - left message to call
me.
Lateral Vector - Expects to average 1600 - 1700 bbl's/d for fiscal 96. Will have exit
production of approximately 2300 bbl's/d. Cash flow will be about $6.2 million, or
$0.21/share. The company has forecasted cash flow of $14 mil for 1997. All Canadian
capital requirements will be supported with cash flow and any glitches probably
covered with bank debt. Approximately 96% of production is oil. China project
somewhat in a change mode. Originally was to be joint partner in a project and looks
like they might go alone on deal. It involves capital requirement and were going to issue
shares to support the required activity. It's not automatic for major shareholders don't
want further dilution in share value. Company could be looking for third party to
support capital requirements.
------------------------------------------------------------------------------------
News announcement comes as no surprise. I believe the uncertainty of valuing shares in the marketplace based upon unsure objectives has been the contributing factor for depressed price of stock.
The China deal is being influenced by shareholders, you and me. The information about quality of personnel and services in China is really secondary to the main issue -- not to further issue 10,000,000 shares to fund a program which many question.
The forecast for the company in 1997, totally disgarding China, remains very good. Their Canadian operations are in order and progressing very well. Forecasts are in place to almost double their production rate.
The underlying fundamentals of the company are good. In fact, they alone are the reason why I liked the company. From an investor's point of view, it is crunch time. I consider any negative reaction to share price due to this announcement, to be an excellent buying opportunity.
There is one exception -- before any further investment in the company --- call the company and verify that the forecast in Canadian production and cash flow remain intact for 1997. When I talked with them 2 weeks ago, that was the case.
Bottom line, investment in Lateral Vector continues to be a value play at today's prices. Any progress in China without effecting shareholder value is a plus. This was my position earlier in year and continues to remain the same. |
