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Photo, Agreed. What has come back to bite the sp in the rear end is the history of announcements by PB and the company, promising a lot but not really delivering. That said, there is no logic to the market cap which does develop questions in one's mind that perhaps there is something else afoot, and not necessarily positive.
Photo, As always, a takeover can never be ruled out but the facts would suggest this is unlikely until the company has successfully proven up other Cascadura wells or other fields. That said, I actually think that, should anyone consider making an offer, the price would have to include a substantial premium for the following reasons:
- The company is producing significant gas plus oil
- The company is cash flow positive which will fund ongoing development drilling
- The NPV of Cascadura alone ranges from C$290m (1P) to C$ 520m (2P) and C$800m (3P) against a current market cap of C$210, suggesting that just the Cascadura field by itself will ultimately result in a sizeable increase in the sp (ca £2 by one analyst/commentator, presumably based on 3P recovery).
- The company is sitting on several other discovered fields which will significantly increase its market cap over time.
- Gas production will be sold to T&T under long term contracts, thus, while limiting huge upside from international gas prices, will nonetheless lock in a long term profit margin (with no downside) on all gas produced.
I have to take issue with the legions of rampers and eternal optimists on this board. Over the past 2 plus years, you have tried to talk up this company, without any hint of positive evidence and despite the never ending list of problems encountered along the way.
Currently, we have gas shows only (yet to be fully tested and analysed), a defective rig, dubious equipment and a management team and BoD who simply come across as totally out of depth. Not surprisingly, the sp is now heading south at a rate of knots and, frankly, there is little on the horizon (aside from drilling new wells with said defective rig and equipment) to suggest a turnaround in fortunes. Yet, we continue to have "investors" (goodness knows what level of market experience they have), who should be commenting on this situation but are nonetheless trying desperately to find positives in a sea of negatives.
I am now losing money on this company and, frankly, will put these shares in the bottom draw to see if something really constructive occurs in the medium/long term. Meanwhile, it would be so nice if there was reason and rationale for posts, rather than a never ending wish list.
I am simply mystified by the abject positivity of investors in this company who have, over the past 2 years or so, watched it stumble and bumble from one crisis to another benefitting not one iota from a BoD and executive team who are clearly out of their depth. LB's interview was a disaster of epic proportions and the problems with the rig itself and issues with the well structure merely add to the sheer incompetence of this hapless bunch.
Yes, I can appreciate investors trying to think positively about a bad situation but what is occurring here is a catastrophe. I can see a fund raise at 2-2.5p and the sp testing 1p in the not too distant future.
What a complete shambles this project has been from day 1. Clearly the company is going to have to raise more funding which will probably be done sub 3p and even then, based on past performance and achievements, we cannot assume that such funding will result in successful drilling elsewhere.
Time for Blaisse to move on.
Highland matt, Sadly, I feel that the disappointing performance of the sp is the legacy of PB"s countless optimistic statements about walls of cash and ginormous reservoirs of gas with additional pockets of oil, all of which would be developed or reflected in the balance sheet within 2-3 years. It simply has not happened and although I agree with you that 51p is nuts I am afraid that we are going have to live with this underperformance until other fields are brought on stream so 2-3 years is possibly the time frame to be considered before the market cap of the company reflects its real worth.
Legalwolf, No smoke without fire is specifically relevant to AIM, where I have experienced exactly the same trading activity with other companies. The reality is that it is almost impossible to contain information within, for example, a drill site and, far too often, loose lips provide excellent trading opportunities for those in possession of such inside knowledge. I am sure that, if you were to check the phones of the senior people on site you would find calls to London over the past few days. The trouble is that the LSE is totally useless in policing such situations, irregardless of whether they have been provided with clear evidence of wrongdoing or not. At the bottom line, the entire market and its oversight is corrupt.
This is, to my knowledge, the third technical problem encountered in a relatively short time frame. Of course, like most situations, it is capable of being remedied but it does pose the questions as to the level of pre-purchase technical evaluation and how intensive it was and/or the operating experience of those controlling this piece of equipment. The word hapless springs to mind.
Good news but would appreciate a downhole engineer's thoughts and views on the RNS. Specifically, the announcement initially states "Whilst drilling into Basement, a fracture zone was encountered...", as if this was not expected. However, it then states that "This fractured Basement was anticipated, and was one of the Company's primary reservoir targets" (which inevitably sows a seed of doubt as to whether it was anticipated or not). Is this, once again, just poor wording by the company or is such a geological flaw a potential problem, not least because they lost drilling fluid when entering the zone?
Lack of movement in sp over the past few months suggests that the market has already taken into account the value of the current well which would also suggest that next week's announcement of earnings, albeit significantly more than last year, will have little impact on the market cap and that it will only be the successful drilling of new production wells which will spur the sp upwards. That said, as has been commented before, these are strange markets these days and my logic could be completely wrong. I hope so!
RJ, I am a realist and have been around these markets for long enough to be able to develop justifiable pessimism from historical performance and the contents of wooly RNS's. You can interpret what you like from the events of the last couple of years and/or formal announcements, but the fact is that there has really been very little to cheer about (even the positive news of the rig acquisition, installation on-site and commencement of drilling have been overshadowed by updates about problems with the rig itself!) and the market is clearly reflecting this in the sp.
To the other eternal optimists on this board I sincerely wish you luck. However, I just don't see this being the case.
I think most, if not all, people on this board would acknowledge that we, as mere shareholders, are completely in the dark as to what is happening down in Tanzania. Yes, we can post all manner of thoughts and views but the reality is that we don't really have a clue as to progress or lack of, save for the woolly RNS issued a few days ago, from which I personally derived little comfort.
This share touched 28 p just over a couple of years ago and is now trading at around 18% of that figure. Yes, there was a necessary transfer of power within the BoD at the beginning of the year but, let's be honest with ourselves, events since then have done very little to calm most investors nerves and recent dill rig issues and blurry RNSs have done little to give hope.
To the RogerJolly's of this board I sincerely hope your blind optimism and faith is rewarded in due course as it will allow me to exit at cost, maybe even show a little profit. However, to those who are the realists and pessimists, I think we all have negative vibes as to what the future holds.
Just been able to read the RNS. Frankly, it does not read well, both in terms of physical progress and discovery or in terms of grammatical preciseness. Reading between the lines, I get the impression that gas shows and pressures are less than anticipated but the company is trying to put on a positive face. Not surprisingly, the sp is reflecting the ongoing technical problem and the relative lack of achievement.
This company has failed to impress over the past two years or so and I just get the further impression that the BoD, led by LB, is out of its depth (excuse the drilling pun). I am a shareholder but now in the red and not convinced that what lies beyond the foreseeable horizon is positive. Fortunately I don't have a huge amount at risk here so could ride the turbulence to see where things go. That said, this is now a binary scenario for the company - it either discovers commercial quantities of helium and survives or fails to do so and sinks.
It is evident that analysts and the market are not convinced by the recommencement of drilling RNS. This could be down to the history of this company over the last 12 months if not earlier, but undoubtedly also reflects the requirement to see target depth reached with positive news.
This is as binary as it gets now. Another drilling problem will seriously dent the company's prospects as will a declaration that there is either no gas or insufficient gas to be commercial.
This is not me trying to ramp or deramp but, rather, to inject some realistic thinking into the equation.
Let's be realistic here. This company has never reflected veracity over the past couple of years in terms of the content and timing of its RNS's. Clearly, if the rig problem is a component issue then someone did not do their job inspecting the asset and signing it off as fit for purpose. If it was operator error then we have more evidence of the haplessness of the people in charge.
I have said before that installing a relatively inexperienced geologist as CEO of a gas exploration company was fraught with challenges and I continue to feel this way. We now have a share price which has returned to the price it was 3 years ago, having reached 28p and averaged 10p in the interim.
Announcements that a director has sold shares in his company never fit well with the market, irrespective of quantum. This company is now considerably undervalued and, with £4m per month from Cascadura, will be able to fund further infill and development wells without having to raise equity. I would think that this is due a rerate shortly.
Why is that, almost every time PB makes a presentation or hosts a q&a session, the share price slides, irrespective of whether the information is positive is negative? Perhaps it is because the market is simply not impressed by PB's style (he looked like a mad professor in today's event) and is tired of his perpetual "good news in the future" stance. Yes, $4m net per month from production is a step change for an exploration company but it is not exactly the "wall of cash" PB has promulgated time and time again over the years.
Quite frankly, the company needs to seriously consider its public relations approach as its current model is simply not working. I don't know if it is getting advice from a professional PR firm but something needs to happen to bring about a rerate of the sp.