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Very thorough post,just a shame you didn’t mention a good chance of a farm in,strange that
LAALLEE
Think he already did one - he bgt a PUT!
X
Ohh. Do one buudy.
The terms of the funding here are not great. When all is said is done, this is death spiral financing, known for its destruction to the share price. This was hidden in the RNS but the clue is there:
“Conversion Price: The lower of (i) a 25% premium to the price of the Company’s ordinary shares on the date of draw-down, or (ii) the lowest closing bid price of the Company’s shares on the five days prior to the date of conversion”
It is not drawn down yet, but alongside the costs of the well the company’s recent equity issue will not be enough to fund this.
Therefore, the company has these options:
Go ahead and drill using the destructive convertible loan notes when required
Conduct another equity raise to shore up the balance sheet
Now, management work for shareholders. But they also work for themselves, as a company with no cash cannot pay any wages. It will be interesting to see what happens but I am expecting volatility to increase as the story develops.
How does the chart look?
We can see that volume and volatility has increased in recent months and certainly in the last few days.
Chart taken from SharePad
This stock has been a wild ride, and I previously called this a short around 2.6p, given that the AGM resolution to issue more equity was passed. I then shorted more when Tom Winnifrith posted about a placing.
However, the company pulled this placing, resulting the big gap up in October where I covered and went long for a trade, closing the same day. The board then managed to get a fundraise away much higher. So far, management have played an absolute blinder with the stock price sitting where it is, and I have to take my hat off to them.
Shareholders will be hoping that they can continue this run of form into the drill.
Author Michael Taylor’s website www.shiftingshares.com contains a number of tutorials on how to trade and invest as well as his free book – ‘How to Make Six Figures in Stocks’.
Bahamas Petroleum
BPC