RE: Can't blame13 Oct 2018 12:15
My figures are taken out of the last finals published in July where True had already taken over ED & therefore RP said in the report that “We have reduced our overheads by 30%”
So taking things directly issued by the company, they have reduced the overheads by 30% from £6,878,000 to my view of £4,814,600 which is just above £400k per month overheads. When you work out the cash position at the end of the year plus the monies from True & revenue earned, you can see the cash balance will run out this year 2018.
The report also said
“Total costs for the year charged to the Consolidated Statement of Comprehensive Income amounted to £6,878,000. These costs included patent fees and testing costs on the DTU and Helios Two projects charged directly to the Income Statement totalling approximately £790,000 in aggregate. The Group's share of the direct site costs for the East Denver operation charged directly to the Income Statement amounted to £734,000, although this includes the proportion of staff costs charged to the operation and partially recovered from our partners. There is also a charge of £208,000 in respect of direct taxes on the well output. Furthermore, the Income Statement includes a charge for amortisation and depletion charges on the East Denver project of over £900,000. With the expansion of the Group's activities, the costs in both administrative and exploration areas have also risen. The recruitment of key staff into our Denver operations through 2016 and 2017 led to an increase in payroll costs of approximately £1.0 million this year, some of which, as noted above, has been charged to the site operations and thus partially funded by our partners. The re-organisation of the financing of the East Denver project post year end should greatly reduce these costs in the coming year.”
Even if Highlands get a cash injection to develop Kansas & bring online wells and generate revenue, they still need working capital for their other projects & overhead cost when this money runs out.
We have discussed this on Twitter HD about the first months revenue from the 6 wells assuming they started at the same time. Your view is $600k (~£460k) where my view is £300k reducing monthly by around 15% per month. Hence I said the revenue from ED will not cover the overheads. Your view, they will for 2 months according to my overhead costs anyway.
Although Highlands are not paying for any costs which will be covered by their partners, they will only receive of the profit after the partners have recovered their costs and paid the royalties. You think it is 7.5% of revenue which it is not in my view but on profit after costs to all the partners have been deducted and state royalties paid.
My calculations are not by putting my finger in the air but by deducing it from the figures and statements issued by the company.
The AGM were given the authority to issue ~29,5m shares as they need money. Hopefully not all of it but may well need it with the c
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