NTOG21 Apr 2018 09:22
Let's be honest, ML is beginning to deliver on all his promises and has not strayed from his plan.
If he can be accused of anything it is being too enthusiastic about his business, which led to some investors getting too emotional.
A few lessons have learned all round and ML can get on with the job of building a solid business with a firm foundation and we can invest our money and sit back.
I�ve spent some time thinking about what I would do if I were Matt, and the more I think about it, the more I can understand Matt�s excitement.
I would break down NTOG operations into two main Phases - Phase I and Phase II - and we are currently just beginning Phase I.
Phase I - build a solid foundation in politically safe Kansas, get a few producers to generate cashflow and then use that cashflow to fund or underwrite Phase II. During Phase I the sp has an upside limited by the size of the depleted reserves and the flow rates which are good enough to pay the bills, but certainly not in the same league as GKP. I wouldn�t want to guess at the sp, but I would be happy over 3p and very happy over 5p.
Phase II - is to use revenue from Phase I to fund and operate more adventurous acquisitions that could be the big one (or a duster). Phase I becomes the day-job paying for acquisitions and operations and underpinning the sp to wherever it goes. Phase II is our search for another GKP field.
So, if my assumptions are correct, Matt is beginning to see Phase I come into play and he is getting excited because he has Phase II in the back of his mind, just waiting for the money to come in from Phase I.
No wonder he�s excited, because his dreams are the potential Phase II sp if he finds his GKP field. Meanwhile, we have to limit our dreams to a single digit sp until Matt announces his first Phase II acquisition - at which point our dreams move up a gear.