Member Info for londoner7

H2 revenues (Australian dollars) $534,500, (Q3) 3m revenue to end Mar was $215,000, so (Q4) 3m revenue to end Jun was $319,500. Accounting for a $4 WTI price increase I estimate Q4 sales at 3,560 barrels against Q3 2,550 barrels. This appears a nice increase but this is sales. We know that there was >1,400 barrels inventory (stock) at the end of November. We don’t know the inventory number end of June so these sales numbers don’t provide any guidance on production quarter on quarter.

Getting back to the production targets I outlined on Welch and Arkoma yesterday.

Welch - From the update, "Oil Production for the six months ending June 2018 was 4,309 barrels (Net Attributable to Mosman: 3,303 barrels). This represents an increase of 39% over the previous six months." The update does not point to any recent (recent quarter) progress at Welch, 4,309 gross over the 6 months to June averages just 24 bopd. If earlier average production was around 30 bopd (Feb update) then recent average production is a long way short of the 40-50 mentioned in the 25th April interview. I’d estimate current production is well below the 30bopd guided earlier in the year.

Read the text carefully and it seems clear that the production upgrades have not resulted in the production results Mosman hoped for. Every phrase on future improvements includes the horizontal wells. Interesting that talk is now of a horizontal drill in Oct (AC interview). The upgrade of existing facilities has failed so Mosman need to fallback to the prospect of the horizontal wells. AC said it will be funded from equity not debt, yet the board still hasn't approved the well.

Arkoma - From the update, "From Mosman's perspective the results are also important to enable the investment decision which is due by the end of July 2018." Note the word 'due'. In his interview AC referred to a decision in a few weeks, which takes us into August.

"It may take some time to establish steady flow rates." Really!

A 10am RNS released into a frenzy, was clearly a calculation which paid off. Hats off to you JB, I can hardly believe you got away with that!

Clearly, I'm wrong - this will not be the make or break month for Mosman I expected, although my interpretation of these numbers suggested a break. Don’t you just love this market?

Does anybody want to discuss the numbers in this RNS?

Completing the football metaphor , before Mosman can bring it home they need to put a couple of balls in the back of the net. You seem to be planning the ticker tape parade before the result!

CBS, if Mosman meet the 'good news' numbers I outlined then I can see the SP going to 1p in a hurry. Whether it stays there is another matter. Equally, if Mosman fail to meet the numbers I can see a further drift down in the SP, or worse.

I doubt it was in JB's plan but it seems to me that this month has become a make or break month for Mosman. The SP has previously spiked on positive talk but I think the market has tired of talk. Time for action.

For that reason I consider talk of HZ wells at Welch and a farm in OZ to now be secondary. Again, only acion here matters.

These treaties form the basis of international trade. While it isn't surprising to hear an anonymous Indian official claim that the India state can't be held to account the fact is that the authorities have made submissions and the case will be heard.

India requires inward investment. International business will take account of how India reacts to the judgements. Retrospective tax changes are a no no in civilised trading economies.

The likely updates are on US assets Arkoma and Welch.

IMO

We should expect a decision on the Arkoma option by the 31st July, based on achieving 'steady state production'. News that the flow rate has stabilised at 80-120 bopd gross and the 2nd option has been taken up will be regarded as good news. Anything less will be regarded as bad news.

On Welch, Mosman has previously stated 30 bopd average for Welch over a period preceding the latest expenditure on production upgrades. On 25th April JB guided at 40-50 bopd. Three months on I guess average production over 50 bopd is an expectation.

Any other views on these numbers.

One morning in the next couple of weeks a 7am RNS will land and the speculation on these assets will end, but not today.

WT, when PEPs (predecessor of ISAs) were introduced there were a number of odd and vague rules surrounding trading and the holding of cash within a PEP. It was confusing at times as to what could and could not be done but thankfully that's all history.

Bamps, how is your local Marston's performing?

thoryuk, I don't argue with the merits of holding GFRD but the 10% yield quoted by some brokers and data sheets is misleading because of the recent rights issue.

Prior to the rights, broker concensus for adjusted post tax earnings was £141,4m, which equates to a 2x covered dividend of £70.7m. At the current Mkt Cap of £965m, that is a dividend yield of 7.3% and PE of 6.8.

At the May 2017 acquisitions, "The total cost of the 55% acquisition of Inland's interest (if all options are exercised by Mosman) will be USD$1,925,000."

At the conclusion of all options Blackstone would hold the remaining 45%.

This values the entire Arkoma business at US$3.5m. (May 2017)

The exercise of the 1st and 2nd options were then delayed and varied, and the commentary highlighted a need for stabilised flow rates. Clearly, Arkoma production was not matching what was expected at the time of the acquisition, and that production was erratic.

The response from the operator (Inland) was that two new and larger ESP pumps, and other facility upgrades, would stabilise flow rates at 80-120 bopd (gross). The upgrade costs (US$425K) were carried by Mosman and Blackstone in exchange for a reduction on the price of the 1st option, which was exercised in March.

The 2nd option was adjusted to the purchase by Mosman of an additional 6.3% stake for US$231K, to be exercised on or before 31st July 2018 - leaving the 3 parties with equal stakes. Clearly, Mosman and Blackstone want Inland to maintain 'skin' in the game. Does Inland continue as operator if Mosman increase its stake?

If the desired medium term goal at Arkoma is for a stabilised flow rate at a production level (80-120 bopd - gross) satisfying Mosman's criteria for closing the 2nd option then today's news is not good. It seems to me that JB is preparing investors for the possibility that Mosman will not complete on the 2nd option on or before 31st July.

While there may be an interim update - AC has arrived safely on site - I'd expect the next substantive RNS on Arkoma to be news of one of the following events:

1) Arkoma production has stabilised at (number > 80 bopd) and Mosman has exercised the 2nd option - based on today's update I think this event is unlikely.

2) Arkoma production has stabilised at (number <80 bopd, but the production level and prospects are sufficiently attractive for Mosman to exercise the 2nd option.

3) Mosman has postponed a decision until (date), with mitigating factors.

4) Arkoma production has not been stabilised, or has stabilised at a rate below an acceptable level and Mosman has withdrawn from the 2nd option.

As I now view Mosman's desired outcome at Arkoma as unlikely, I think the most likely outcome is postponement, without any firm declaration of current production rates - similar to today's 0-80 number. A pattern of soft data releases has been established - note the recent comment on July 4th holidays affecting the release of hard data. Heaven forbid that an investor would have sufficient data to accurately value the US assets.

Londoner7

THE VOICES IN YOUR HEAD MUST BE VERY TROUBLING. I'D IGNORE THE ONE THAT WAS TEMPTING YOU AT 890P THIS MORNING AND GO WITH THE ONE TELLING YOU TO BUY AT 625P. THAT'S A 30% DISCOUNT. CLEARLY THE ONE WITH 50 YEARS TRADING EXPERIENCE KNOWS HIS/HER STUFF!

"Last night, the cabinet approved an additional £7.65 million to ensure the work continues currently and the council meets its “contractual commitments”, while the current design plans and contract are examined."

As you say, it appears to be no fault of GFRD. Unexpected costs are the nature of the business. A good example of why GFRD should not comit to those legacy fixed cost projects like AWPR.

I thought the new construction guy came across well in his part of the strategy presentation in Feb last year. Still on their investor site if you want to listen.

Meta, I guess you know that construction companies do not provide financial details on individual contracts - it assists the competion in their bid levels. We'll only get figures for the divison and commentary.

In last months trading statement the commentary was, "Construction's underlying performance continues to improve, while continuing to work through diminishing outstanding legacy contracts."

AWPR being the major outstanding legacy contract.

I just realised that I should have included Berkeley Group's recent comments affecting the housing sector having an impact on the Linden Homes division of GFRD.

My investment focus here is on the market sentiment towards the AWPR project and resulting rights issue, rather than the housing division. That's not to say it should be ignored.

olda, I'd hope you are assessing why you invested in the first place and what has changed.

Reasons for the pullback - Perhaps it's market sentiment around global trade issues or perhaps it's company specific concerns, such as the AWPR safety issues raised a couple of weeks back.

We had a trading update just 5 weeks ago. Even if you've read it perhaps it's worth reading again. There were weather related issues around the AWPR adding to cost pressures, which they hope to recover during the summer. As someone living in Scotland I can tell you that the weather here over the last month has been exceptionally good - I'd guess that's a positive. A 4 mile section of the AWPR is being opened today.

A post end of year trading statement is due in 3 weeks.

Investing isn't easy and timing is particulary difficult.

Good luck with your decision.

This could be the long awaited build up to the tribunal decison but current trade volumes don't support it yet. Perhaps there's another trade before the final decison and perhaps the decison will be put off yet again - time is money to lawyers.

I've no doubt there will be news in July. Their option on Arkoma expires the end of July so they will announce a decison on whether to up their stake from the current 27% to 33.3%. Key to the market reception will be how they present their June/July production data against the target of 80-120 bopd. As to reserves the recent Moyes report indicated 2.4M prospective against 8.4M mentioned at the time of the acquisition.

Let's say they hit the mid point of 100 bopd gross, then that is 27 bopd net to Mosman, with an additional 6 bopd for a $231K option payment. Worth it?

Welch at it's peak hit 40 bopd, but to March was averaging below 30 bopd. It's clear from the comments with the last placing they need to spend to get more out of the existing holes in the ground. These remaining wells will be the dregs of the acreage. A decision on a horizontal drill due end of year means on past performance a decison by end of year at best. Unless existing production covers existing expenditure bank debt looks unlikely, whatever JB likes to indicate as his options, when the only option taken so far has been another placing.

They have suspended production progress at Strawn. Settling for the 5 bopd net achieved up to Jan. "No further workovers are planned in the short term and staff and other costs have been streamlined to maximise cash generation."

It seems none of the sites have measured up to their promise at the time of their acquisition. The only saving grace has been an increase in the oil price.

Adding up production for the 3 sites, assuming Arkoma comes in on target, gives total production of about 27+30+5=62 bopd. At the very best I see $25 net back per barrel for an operating cash flow of $46,500 per month.

Based on accounts to Dec 2017 JB and his mates are spending $65,000 per month, and thats before OZ exporation spending and the ongoing due dilligence and feasibility extras on horizontal drills and the like.

If my net back number is off then maintaining the other numbers requires a $35 net back to break even. At $68 WTI, minus 18-28% royalties, Texas state tax 4.6%, transport $10 (Permian), and a man and his van and a can of WD40 to maintain the wells, who knows? JB isn't telling us other than the operations are cash flow positive and doesn't want to provide monthly numbers.

In this business it's cash flows that count. You can point to NPV10 valuations but these only have value to buyers at a substantial discount.

The dream ticket here for shareholders is OZ but it may prove to be a ticket too expensive to hold. To my mind the investment case based on US production is poor considering the limitations on the upside without further substantial investment. And are the likely returns worth it?

Last night's legal chatter made me laugh.

Is it a delayed reaction to the news on National CineMedia M&A or the w/e US 'Incredibles 2' numbers? Perhaps yesterday's market sentiment was a factor in any delay. YTD comparisons on US box office revenues still look strong following on from last month's trading update - should be a strong first half with this weekend's US Jurassic release to come.

spogbat, closure has been a long time coming. As I recall you first mentioned a potential asset swap 18 months ago. I guess the cash component of the deal will increase to reflect the four RMC locations excluded. Your reference to tillicoultry certainly trumps mine (skene). Five hard rock quarrys in the middle of what is esentially a void in Breedon's coverage. There shouldn't be any CMA issues. No doubt Breedon management are looking and talking, just a question of whether the family owners are prepared to sell and the price. Unlike Lagan which brought in a new boundary region (the island of Ireland) there might not be the same opportunity to absorb the active members of the family into Breedon management - if they did I would start to be concerned that the top layer was getting heavy. So far that hasn't been Breedon's style. An RNS in 18 months with the headline "Tillicoultry - all cash offer" would be nice. It's now a long time until the interims in Sept (delayed by Lagan). Until then, outside of further news on M&A, we have the MPA Q2 numbers due early Aug, which should reflect a decent recovery from the weather affected Q1 data. I don't think the monthly ONS construction data is particularly meaningful. Londoner7

"drilling would be subject to FOIl, and if FOIl was late drilling would be late as well." That's what he said. Refer to the AGM presentation with speaker notes.

While I still maintain that sunny Sunday afternoons are one of the most important external factors for Marston's business this summer, the World Cup helps. Following Harry's late winner last night I dared to look at the knockout stage fixtures. The group G 1&2 fixtures are played at 7pm on a Monday and Tuesday night - either is perfect on an otherwise quiet pub night. Although I am worried that Bamps may have to pay full price for his steak and chips in Worcester if it's a Monday night game! ;-)