RE: Ready for some Comedy Gold?27 Dec 2018 16:10
Outlook blurb from Annual Report Nov '15
"Prospects
Since the year end the Company has further reduced its liabilities and has undertaken a further and more extensive cost reduction programme. This programme is cutting costs across the board, sharing or eliminating office costs, and implementing a reduction in staff numbers (excluding Non-executive Directors) of over 80% from the average level of the 2014-2015 year.
We are sorry to lose capable and hard-working colleagues with whom we have worked for some time, as we adapt to the new marketplace. As we go forward now, having divested operational responsibilities and costs for our mineral exploration and production activities, we are looking at non-operator participations in onshore oil and gas projects. These matters apart we accomplished a significant amount during this period. As we rebuild, it is specialist oil geology skills for the particular basins where we may have interest that we may require, and initially it will be more economically effective to bring these in on a consultancy basis as needed.
The projects we look at are now either producing or capable of producing cash flow, and this means that as we look forward at the shape of the Company we want to see our analysis is driven by cost and revenue at the Company as well as the project scale. This is different from exploration, where the cost is simply "whatever is required" to progress to the next milestone or to establish or increase a resource, and is undertaken in the safe knowledge that whatever level of speed or cost is set, our operations and cost of discovery are likely to be far cheaper than those of a major. This cost differential, and the ability to sell on or farm in to a major if one did not self-develop, was the engine that in large part drove the exploration model for juniors. For a number of reasons, that model cannot now be relied upon. Our business has changed, and that means that even as we grow we intend to remain a lean operation that tightly controls costs.
Our announcement of the option over Shoats Creek offers us the opportunity to participate in a project that has low geological risk, low cost to us, and where we can look to early production.
Our new prospective partner there is Northcote Energy Limited (AIM:NCT), a company with which we have built over recent months a solid relationship and with which we hope we would continue to co-operate in this area.
The Company will be open to further opportunities to enhance and possibly scale up its onshore low cost oil production and development portfolio, but no project will now be considered that does not meet certain base criteria. These include early cash flow, low entry and operating cost, low geological risk, high anticipated IRR, and expected positive share price impact.
We will continue to seek favourable outcomes for our mineral and investment interests, including Star Striker, whether through sale or farm-out.
tbc
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