Ok, that makes sense. You have suggested in the past that expectations for this work, e.g. the well reopening, might be unrealistic.
Are you expecting a bombshell RNS at the end of the month, high costs relative to revenues, little progress on work to expand production? Do you or anyone else think there's any chance we will get something more positive?
One reason to be optimistic is that Argentina seems to be at the end of its current covid wave and is relaxing restrictions. It seems as if Echo has a chance to pull something out of its hat. Treading water is not so bad if nothing is actually going wrong for production, and if they can accelerate their activities going forward. I don't think the summer gas pricing is a problem long term; i think gas is going to be in demand in Argentina for the foreseeable future and it doesn't look bad for the company if their wells keep performing.
This is the kind of conversation i hoped we could have on this board. Ranger brings up a key point. What is going on with the workovers and also gas production, wells reopening? Is production declining long term or was the compressor issue resolved? I am not sure I buy Ranger's idea that the twitter photo was part of a compressor masquerading as an element of a workover. If there was a problem they wanted to hide with a compressor, why use a photo of that at all? This kind of thinking does seem a bit paranoid and I don't think the world works like that.
I keep trying to focus the chat back on the main issues instead of meta-commentary... What is everyone's view on the prospect of getting back to 2500 plus barrels a day and so on. What is the risk of production actually declining.
Digittt bottom line, do you think they are still losing money, and do you think the serious progress on production that MH has been so confident about will come about?
I am confident in this stock if the company achieves what it repeatedly promised was straighforward to achieve. It doesn't have to work miracles to look cheap at its current market cap. But it does have to make progress.
The things I worry about are a. is Ranger right about production increases essentially being unlikely.
b. is gas production stable or not?
c. are we going to give out 2 million euros of shares at a sub-8 million market cap? Honestly I'm not sure how this would even work as it would tank the share and the bank would get less than the current value of the shares.
Am I right in thinking that you think it's a cashflow problem that is stalling CL and other projects? I heard you say payments in were lumpy, I think that was from your post. But what worries me is the overall revenue/profit situation. Because if they're not making money now, with higher gas and oil prices, reduced costs (as per RNS), then how can they make money in the future and how can they pay the debt?
To me it seemed as if, with the commodity prices, Argentina opening up, they couldn't really fail long term unless everything went against them. But it also doesn't seem as if their efforts are bearing much fruit. Surely they would let us know if things were in fact going better than it seems, but would they let us know if they were much worse? What's the downside from these levels, that's what I'm interested in - I'm patient enough to wait for an upside if it's coming.
I hear a lot of dark murmurings about James Parsons and Sound Energy, and then the comment about scabs getting shares etc.
Can someone explain what this is about? Are people suggesting that the share price is deliberately being kept down in order for dilution to occur, after which a rise will be attempted/contrived?
Surely it would be company suicide to do a placing or issue 2 million worth at this market cap, and the current sentiment?
'Following the Company's announcement of 24 March 2021, relating to new gas sales contracts for 2021-2022, the Company has now agreed summer and winter pricing for its annual industrial clients, with the contracted winter premium providing substantially increased cashflow in the near term for future operations and production enhancement work programmes. For the committed production over the key southern winter period (May to September), the Company will sell natural gas at an average price of $3.52 per mmbtu, which compares to $1.35 per mmbtu for industrial clients the previous year. '
So is that $3.52 in winter, $2.64 average of summer and winter?
And this is for 4.6MMscf/d which is about half our gas output. Anyone know about the rest?
'The Contracts have a term of 12 months, with gas sales beginning in May 2021, and provide for a 126% increase over annual industrial contract pricing previously achieved by the Company in May 2020 and a 39% premium above current local spot price.
The Contracts provide gross 6.5 MMscf/d of committed production, 4.6 MMscf/d net to Echo, at an average price of $2.64 per mmbtu, with the Company able to elect to sell additional volumes of up to 1.9 MMscf/d net to Echo under the Contracts. This optionality, at the election of the Santa Cruz Sur partners, provides flexibility to respond to market conditions including rising spot prices.
As a result of the Contracts, a minimum of approximately 70% of gross daily gas production from Santa Cruz Sur allocated to industrial customers will now be committed under secured contracts until April 2022. '
From the March Commercial Update RNS. So I think yes we're partially locked into those prices.
Hi, aside from short term trading, what kind of news do people think is likely to take this to 1p+.
The new discovery that's being tested, how likely do you think it is to be commercial - is this a long shot or does it look good based on people's experience?
Martin Hull is a money man, right? So he renegotiated the bonds, now he's trying to run a tight ship (his salary apart), going for conservative incremental gains that possibly sound less risky and more sensible in theory than practise.
It seems like what we really needed, given we are still against the clock, was for him to do the bonds, then step aside and let some wild Yosemite Sam oilman gamble the farm on Monte Aymond/CLix-1001 with whatever motley crew he could scramble together from the local bars.
Still hoping MH knows what he's doing and all the pieces will suddenly fall in place and we will be on our way. And that I haven't bought into something that's being run to my disadvantage... Good luck all.
For once, I think maidit308 seems the most realistic here, if we take the company at face value anyway.
But ranger104uk could well be right.
I hope Martin Hull sees himself as playing a long game and keeping expectations low until he has credible fundamentals to base publicity on. I hope they didn't knowingly base their strategy on production goals that are impossible to meet. I would assume that the people who made these plans estimated a good likelihood of success before committing to the costs; it would seem that a lot of infrastructure has already been bought/installed to support production and I would be surprised if that all came to nothing.
I get that it may not recover, but why not explain why you think it will not recover? What's the problem now that the commodities Echo is selling are much more valuable, and Echo has updated its infrastructure to allow it to increase production, albeit more slowly than we had hoped. MH IS updating the infrastructure, work IS ongoing, that isn't a con and it amost certainly will improve the situation even if it takes time. So what's going to derail us, if you think we will be derailed - be specific.
Same for the optimists here. How are we going to pay the debt in the timescale allowed, how are we going to reduce costs AND make new discoveries. How long are our existing reserves/wells going to last, can we get better production than pre-covid in the near term, can we get good revenues/profits? Can we grow and not have our growth siphoned away by dilution for bondholders?
I'm not sure how international gas prices relate to Argentina's prices, but looking at this article from a month ago, I'd suggest that we are well placed to get good prices next year too. It doesn't look as if sufficient new production is coming, and I'm curious about this too 'Argentina will be looking to further incentivise developments of natural gas,', as we do have wells to develop.
https://www.hellenicshippingnews.com/argentina-introduces-gas-plan-too-late-and-forces-purchase-of-lng-at-record-high-prices-says-globaldata/
(actually I should add that of course I got the info about Lombard Odier from this twitter post https://twitter.com/AIMRANGER1/status/1380880844542377988/photo/1 )
Ah, no, the short came about because Lombard Odier had 74.2m warrants at 0.30p which they used to cover their short, so that situation is unlikely to reoccur. Ok good.
So that very unique historical situation is what is terrifying people about this stock...
ARahim posted 'ibroxonia, that is what I am thinking off. could they setting the price low for a loan conversion to shares.
I had a similar experience last year with kod borrowed cash from the RF and at each two months or so the price drops to 0.08p, they convert part of the loan to shares then pump it to double the price and sell. they done it many times till they doubled all their money.'
So that is still a worry. But then KOD is an explorer, we are something more solid.
I've been following this stock for almost a year and not getting involved because of all the shennanigans, but at this level it has began to look like an amazing opportunity. I just really want to get my head around all the potential downsides.
Sorry for asking so many probably obtuse questions but Digitt, you said:
'Before they asked to issue 50%...now they split it into 20% and 20%. The first 20% is possibly unlikely as it requires for the one note 51% support, but they're a disparate bunch of noteholders to make the election (which we saw play out with the restructuring). On the other notes, maybe...not sure. We will find out end of this month. '
What's to stop them shorting us again? What arguments are there against this being a death spiral financing scenario?
At our current s.p. it would be, but if production/revenue increased and the s.p. did well then even 2 million worth a year in shares wouldn't matter too much.
Would the size of our debt make this kind of death spiral unlikely, because the noteholders would be damaging a company that requires share equity to grow and survive to pay them back in 2025? Or will we be short sold again and again.
I know you said the share conversion was possibly unlikely, but they did choose to short us previously, why wouldn't they want to do it again? Does their behavior depend largely on our prospects i.e. last time the covid situation was more uncertain, the price of commodities lower, the upgrades not yet progressed; will the calculation be different this time, is this merely a risk or is this essentially the locked in fate of the company?
I suppose the larger shareholders, who I assume are more knowledgeable than I and understood the situation, would never have voted for this if that was the probability.