Member Info for londoner7

Spary1, you say, "why would the bod say in interview that the Welch wells were producing 40-50bopd if they were not,". I've no reason to doubt that at times they have achieved that level. I didn't find the comment convincing because in the Feb update they refered to peak flows of 40 bopd with a sales average equating to 30 bopd, so I suspected the reference to 40-50 bopd in April was also a peak flow rate.

When a suspended or broken well is brought back to production it will normally flow at a higher level initally before stabilising.

I was looking for a comment on current production - we didn't get one. All we know for sure is that during the first half Welch production averaged 24 bopd gross.

We were told, "Since June, three additional wells have now been repaired and restored to production"

Additional to what?

CBS,

The $321,348 sales revenue attributed to Mosman is the same number used in the income statement with the header, "All amounts are in Australian Dollars"

Spary1, I don't disagree with anything in your 15:35 post. In fact it was your comments that pointed me to the media interview. At the time I didn't think the comment on 40-50 bopd was very convincing but didn't feel any need to say so - it was only my opinion and I think you know by now I try to deal in facts. I was happy to await the expected July update. Welch, 24 bopd gross (18 bopd net) averaged over the 6 months to end of June.

I think you're right about the next Welch update. I think it will be above 24 bopd, but I don't think it will be much above 30 bopd (my opinion based on my assessment of the facts). What is your expectation and its basis?

Mosman accounts are stated in Aussie dollars.

2550 was barrels sold in Q1. As far as I know a Q1 production numbers has not been provided.

Would you clarify your comment on c4400 barrels (source?) - I don't recognise this number.

I was looking for, and expecting, good numbers for Welch. In an interview in April 40-50 bopd was mentioned. We only know that over the H1 Welch averaged 24 bopd. This is not a good number. The update included a comment on 3 additional wells - I think the benefits of this rework have been over played by posters on this board.

"Q1 sales revenue was $215k, so that means approx $319k sales revenue Q2? "

Nothing wrong with your math, but don't confuse that with Q on Q production growth.

One should also be careful looking at a comparison of half year on half year sales revenue numbers for clues on production growth. Converting to USdollars the A$534K sales revenue for the last 6 months was US$400K. Stated 2018 H1 production accounts for $296K (4417 x $67), with the remaining $104K sales from selling down inventory – that’s LAST YEAR'S production – which was valued at $146K in the half year report.

We don't know for sure when this sell down of inventory occurred but based on my assessment of the Welch numbers it occured in the recent quarter.

It's a shame these comentators don't offer any idea of what would constitute good numbers. As with most company updates, when numbers are pesented, those on the buy side claim they are good while those on the sell side say otherwise. The herd instinct.

Putting my head above the parapet I'll offer the following:

D&P - Would need 3.6% LFL in the recent 16 week period to achieve flat LFL for the 42 wk period. I think this is too tough to achieve, but let's see how close MARS get. I'm looking for >2% LFL for the 16 wks.

Taverns - I'm looking for >3% for both 16 wk and 42 wk periods.

However, it isn't all about LFL numbers. At the half way stage Ralph talked about balancing revenue growth against margin so I'll be interested in the comment on margins. Last year they said, "operating margins are slightly below last year in line with our expectations." However, commentary this year on overall margins is confused by the CW acquisition, so the statement might need clarification.

Indeed, just a thought, but it just occured to me that with the school holidays about to start and children at home perhaps this is the time of the year when sunny skies tempts families out to the like of a MARS beer garden, Maybe 'summer matters' most during the school holidays. I caught a long range weather forecast this evening and prospects look good. OK Bamps I get your point, computer screens are an alternative draw, but kids still like to to seen and meet other kids. Even this old kid can relate to that human experience. ;-)

CBS, I wouldn't mention the funding requirement for the Welch wells without reference to a source. IMO there is already too much speculation around Mosman's activites.

Comments on this board have led to a belief that a horizontal drill at Welch has already been funded. It's my assessment of AC's interview that those comments are false.

Much of the comment on this board revolves around an interpretation of vague statements made by Mosman via RNS and media. If Mosman has funding for a horizontal drill, subject to board approval for the project, then why not clearly state it.

In the interview AC stated, that Welch production has doubled since acquisition, AND these three new wells will add production to that. Why no current bopd numbers? Or comment, "we have exited the period with xx bopd production". It's a common statement from an oil company with good news to tell.

We know that following the Welch acquisition the first activity was to repair/workover the producing wells, so perhaps at the time of acquisition they had run down and were then producing 10 bopd, in which case the 24 bopd for the last 6 months is indeed a doubling. However!

I posted this comment a couple of days ago (nobody has queried the numbers so I guess there is agreement with my conclusion)
[The applicable gross numbers for Welch are 3,108 to Dec 2017(average 17 bopd) and 4,309 to June 2018(average 24 bopd)an increase of 39%. Mosman acquired the Welch assets 11th Sept 2017, when Mosman stated , "The average sales volume from the Project over the last 13 months has been 34 bopd (gross)." In the Feb 2018 update Mosman said, "The first phase of workovers has established production of up to 40 bopd". The same update quoted sales over the 4 month period between Oct and Jan 2018 which averaged 29 bopd.
To now attribute a 17 bopd average to the last 6 months of 2017 is odd in the context of the numbers Mosman quoted at the time.]

New posters? If Mosman doesn't directly provide the numbers I guess most of the LTHs here can't calculate cash flows for the 6 months to June. I've calculated net backs on last years numbers and oil price and think I have a very good idea of what Mosman's operting cash flow was for the last 6 months. But calculating the Q on Q production change is impossible from the data supplied. I guess there's a reason Mosman offered less meaningful half year comparisons.

Thanks oilycounty, There was a discussion on the funding of a prospective well at Welch. I hadn't realised that the discussion had shifted to the Stanley well.

As Da_Gee says, the next key news is on Arkoma. It will be hard for Mosman to avoid an update before the end of July, but listening to AC's interview on Tuesday's a decision on the option is still a few weeks away. I understand that Inland is controlling this field and have been struggling since the acquisition to stabilise the flow rate to Mosman's satisfaction, hence the delays and variation of the original options. The current attempt centres on the introduction of the ESPs to target the Wilcox zone. AC visited the site last week so should have a clear view on progress. Target is 80-100 bopd gross.

Spary1, what is the issue date of that RNS?

Mc78, the link I posted below is the interview following Tuesday's update. There was a 2nd interview yesterday which only refers to the new Stanlry drilling development.

Spary1, I listened again and I agree with you he did reference the last placing when he was talking of the loan option. I had in mind that the drilling itself was funded largly based on your comments on this board relating to 'long lead' items but listening carefully, my undetstanding now is that the previous equity funding went into getting the horizontal well PREPARED (1:08 in) and there is a distintion between that and the drilling itself.

My interpretation is that the previous equity raise does NOT fund any drilling at Welch.

It can be tough to decipher Mosman's media as well as the updates, so I suggest interested parties listen for themselves and make up their own mind.

http://www.proactiveinvestors.co.uk/companies/stocktube/9871/welch-proving-to-be-a-star-performer-as-mosman-oil-and-gas-increases-production-9871.html

CJ66, you say, "The key I believe is more about providing the different options to capture a wide public, and how well you run the company vs debt and longer term economic/market factors."

Who could disagree with that statement? Not me.

Which is why we look at the LFL figures. Management believe they are managing debt but it's clear the market doesn't agree. Additional cash flows from continued fair weather might change that view. To maintain the dividend MARS need to maintain earnings. It is Berenbergs view that GNK will not achieve that, let's hope MARS can.

Paul Mumford's recommendation inccludes the comment, "I have met the management and they are confident". I look forward to next week's figures, but if we get at best and average August as opposed to the dreadful one we had last summer then I'll be looking forwards to the year end figures more.

Spary1, you address a point to me.

"Londoner you say that Horizontal wells are just talk, please can I remind you that we have paid money to secure a lead time for the horizontal drills at Welch, why do that if they didn’t plan to drill, bank debt facility has been mentioned time and again"

The reason that I describe it as just talk is that IMO Mosman should have been over recent months and must over the coming months (July - Sept) be producing significant cash flows from the US assets to be in a position to go forward with a horizontal drill at Welch. No time line for the drill was mentioned in the RNS update but a couple of hours later AC is on the media talking about a drilling date in October, while reminding us that a board decision on going ahead with the drill has not yet been made - so even from AC it's just talk. He also referred to the bank debt facility saying that borrowing would NOT be used for the drilling. He talked of a small amount needed against the charges banks were asking for, etc. I thought he made it quite clear that the drilling would be funded from equity placing (I assumed from the last placing). We now know that an additional $95K of the placing funds has been spent on drilling the Stanley well. All the more reason for strong cash flows from the existing assets. I'm not aware of any guidance on the cost of drill of a horizontal well at Welch but there will also be completion costs. (I don't think it's wild speculation to suggest that these would now come from an additional funding based on well results. It's a two stage process, and at the moment AC seems to be against debt funding)

Hence my focus on the performance on US assets. I had outlined my expectations for the July update, which were based on Mosman guidance over recent mpnths, so I was disappointed with the update. I'll follow up with Wolfiewolf once I've resolved a couple of items.

leas, thanks for the link.

I suspect this link is the same source for the comment Bamps21 refers too.

The man from Cavendish might be right - he makes a good point.

I have been surprised by recent commentary (and market data) that says the hot weather is a deterrent to eating out. Is it the impact from BBQs? Perhaps there is a difference between the impact on casual resturants, say on the high street or in the shopping arcade, and the format that MARS offers with outside dining.

The recent downgrade of GNK by Berenberg was because Berenberg were disappointed by GNK's recent like for like trading results."Pub Company LFL sales +2.2% over the last eight weeks, aided by good weather and sporting fixtures". Berenberg felt the LFL should have been better and I can see their point, particularly as in my area the GNK pubs did very well out of the World Cup. Are their pub gardens failing to perform as expected in the good weather? Like snow in winter, can summer weather be too good for these groups? Young's put out very good LFL numbers but then we all like to head down to the river on even the hottest days.

I look forward to next weeks update from MARS.

Young's pointed out that numbers were against a strong comparaive for last year. I'd forgotten that last summer started out much like this one, and worsened from July onwards. Looking at the Coffer Peach tracker updates from last year confirms this pattern.

When asked about the impact of the World Cup and consumer spending on business, the MARS board said, "Summer matters!"

I guess what matters is the weather over the next 8 weeks. I hope the children go back to classes in September with a good tan.

Wofiewolf, you say. "It's good to have different opinions.......the board are starting to turn things around.,,...........Then they throw in this $100,000 curveball which makes me think there's no strategy at all............. I expect one of two things to happen. Either we decide not to buy the additional stake in Arkoma or more likely, we decide to go for it by way of yet another placing............ encouraging production results"

I quote you (by the way not in any particular order), because it shows someone who is looking at the medium to longer term picture for Mosman, rather the current focus on whether a particular trade is a buy or a sell, and the usual unsubstantiated ramper hype. Similarly there is much unsubstantiated negative comment, essentially on the minute by minute share price movement which on days like this seem to be shouting into the wind. Someone (Sweatysock?) made a good point about how when a share price has fallen in the way that no sellers are left, news, any news, can provide sufficient buyers to unleash an upward wave in the price. As we have seen over the last couple of days.

In recent posts, I have focused on the US assets as I see these as the key to Mosman's short to medium term success. If they don't get these right I think talk of horizontal drills and OZ is just that, talk.

You say, "encouraging production results". Where do you see them? Can you quantify them?

Best, Londoner7

buzz53118, you say, "That's all I'm saying".

In that case I'll add some clarity for new uniformed investors looking at this company.

In the 6 months to Dec 2016 Mosman had zero revenue.

During 2017 Mosman stated to acquire production assets.

In the 6 months to Dec 2017 Mosman had $321K of revenue. The asset accounting for most of the last 6 months revenue was only acquired 11th Sept 2017. Therefore, it should come as no surprise that revenues increased significantly over the 6 months to June 2018.

nice1, this IS a number that is positive and I generally agree with your computation (although I made it higher at 29.7%).

The applicable gross numbers for Welch are 3,108 to Dec 2017(average 17 bopd) and 4,309 to June 2018(average 24 bopd)an increase of 39%. Mosman acquired the Welch assets 11th Sept 2017, when Mosman stated , "The average sales volume from the Project over the last 13 months has been 34 bopd (gross)." In the Feb 2018 update Mosman said, "The first phase of workovers has established production of up to 40 bopd". The same update quoted sales over the 4 month period between Oct and Jan 2018 which averaged 29 bopd.

To now attribute a 17 bopd average to the last 6 months of 2017 is odd in the context of the numbers Mosman quoted at the time.

While the overall fields number indicates an improvement in production, the detail of the Welch numbers indicates a decline. The most relevant numbers for investors is the last quarter production versus the previous quarter but Mosman has chosen not to supply this. Why?

Latino, if you buy an additional holding then the net barrels attributed go up, simple, but you've highlighted a discrepancy in the quoted Arkoma numbers.

Mosman acquired a 10% holding in Arkoma on 23rd May, prior to the last 6 months in 2017, and this holding was fixed for the entire 6 months.

The net production for Arkoma attributed to Mosman is 206 from a gross 4,781 equal to 4.3%. The net number is after royalties. Mosman stated that royalties accounted for between 18-28% depending on the asset. Let's assume 28%, then on a 10% holding that should equate to (10% x 4,781) x (1 -28%) = 344 net, more than the 206 quoted. Why the discrepancy?

On 16th Mar Mosman acquired an additional 17%. For the 6 months this gives Mosman an average holding of ((74/181)*0.1)+((107/181)*0.27)= 20%. 20% of the gross number for Arkoma is (6,434 * 20%) = 1,287 barrels. Let's use the 28% royalty number again and we have a net of ((1,287)*(1-28%) = 926. Again well short of the 507 net quoted. 507 of 6,434 is only 7.9%.

There is a similar discrepancy in the gross and net numbers in both half years.

We know the field has a mix of oil and gas but I don't see how this should make a difference and it's a big difference.

WTF2012, I'm not and I don't believe I have any responsibility for the share price.

I have followed this company for two years and find it an interesting story to follow. In my posts I attempt to add clarity where there is confusion or misleading comment. As I have today. I deliberately delayed my last post until after market close because unlike many posters I don't like to influence the many inexperienced traders/investors that flock to these situations, for the good reason that I have no insight to offer on the short term direction of any share price.

However, in the quiet of the market close I'd love to debate the numbers with anyone that believes this was a good update. I'm going offline but will catch up tomorrow if not later tonight.

Best, Londoner7