'Share profits' continued...13 Dec 2014 12:30
........... Were it not for February’s sale of Antrim Resources (N.I.) to First Oil for $53million, Antrim’s shareholders would be paying a severe price for their board’s passivity. It is true that the First Oil transaction left Antrim in a strong financial position (debt free and with a sizeable war chest), but so far the directors appear to have squandered making good use of this opportunity.Since the 24th of April (when the First Oil deal completed), Antrim has issued a paltry six RNSs. The market for small cap oil companies has been extremely difficult for several years. And this was before the oil price’s recent cliff dive. The last thing shareholders in a small exploration company can afford to pay for is a reticent board of directors, content just to sit back, earn their fees and wait several years for a single extremely high risk exploration play.Contrast this approach with Sound’s aggressive and successful commercial strategy over the last few years and it should quickly become clear why Antrim’s shareholders should open their eyes and welcome today’s approach. If they are still unconvinced then the following line from Antrim’s latest quarterly report should cause them to consider how deceptively perilous the company’s position is;“In the nine month period ended September 30, 2014, Antrim had a net loss from continuing operations of $5.7million compared to a net loss from continuing operations of $7.1 million for the corresponding period in 2013.Net loss decreased due to lower E&E expenditures and finance costs partially offset by higher general and administrative costs.”Antrim is burning cash.And the market knows this.This is why Antrim has consistently traded at such a discount to its cash balance for the last seven months.On September 30th, Antrim’s net cash balance was $16.5million. However, the company also had decommissioning obligations of $5.1million. Although these costs aren’t due for payment until 2016, it is unimaginable that the board doesn’t intend to pay these bills using existing funds. This leaves roughly $10.4million available to Antrim.On its own this sum appears to offer Antrim a great deal of support. That is, until you take a closer look at the company’s expenditure. At a time when the company should be doing all it can to preserve its precious resources, this board managed to oversee an increase in general and administrative costs!Quite why Antrim needs a dual listing in Canada and London, when the company’s focus is on Britain and Ireland, is anyone’s guess. For that matter how much advantage is to be gained by Antrim’s board being based in Canada?In the nine months to September 30th, Antrim spent $3.97million on general and administrative costs, up from $3.56million in the equivalent period the year before.................TBC
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