RE: SO429 Nov 2020 17:08
Calm down guys! SO4 recent surprise fund raise is neither bad, nor good. It all depends on your entry price, how long you are willing to hold, micro and macro economic factors and mostly whether you trust the management or not, going forward. Tony were confident claiming they were fully funded post debt funding yet here you are waiting for another raise, who knows at what price, the participants and there is absolutely NO guarantee that further raise won't be needed.
My recent experience with ANGS/CERP taught me not to trust any CEO specially if they become super rampy on twitter/podcasts/interviews. Just like lots of other investors, I strongly believed and trusted Paul Vonk of Angs and the legend(!) Leo Koot of Columbus Energy. Vonk simply lied about future production claiming stable flow rate of 300-400 barrels/day from Brockham and further from Lidsey and Balcombe fields while Leo Koot was ramping about his string of pearls in South West Peninsula in T&T and how the company can easily become 500M company but all of a sudden sold it to BPC for 25M while you all probably know what happened with Angus Energy! Those who watched their interviews can confirm how genuine and convincing they looked and sound in their interviews and how the shareholders supported them for years, myself included.
SO4 is surely marching ahead with their production according to their twitter pictures (just like ANGS and CERP posted) but always avoid talking about the massive debt financing they now have and associated payments and further payments and associated clauses if they are successful with their second financing package. Debt financing can be a massive headache if you fail to produce enough or even with massive production if you fail sell enough. Debt financers are ruthless. ARCM from Premier Oil for instance, made a killing by shorting the company to oblivion, forced it to change course and now selling it to PMO’s competitor and will become a shareholder holding 16%. SO4 is hoping to generate 60 million per year which is good but I admit, I don't know much about their OPEX/CAPEX going forward, associated taxes and clauses associated with their debt payments etc.
Please don't get me wrong. You might be a winner if you are OK riding the storm. I admit, I mostly relied on JW's research (my bad) but due to my previous experience with O&G companies with similar level and targets, I just didn't feel comfortable with SO4 going forward like others who sold out last week.
I won't regret it if the SP rockets tomorrow or feel good if it tanks further but just took the decision to preserve my capital and invest it elsewhere. So whether you are holding or have sold out, you've made your decision so stick to it and ride the storm.
GLA
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