My view is, give Matad the benefit of the doubt in terms of WH, until they disclose further news.
If they fail to deliver WH this year, then they deserve to be criticized, and take one on the chin.
I also think it’s time for all to stop the finger pointing, and to once again add value to this board in terms of their knowledge and contributions. Equally if the rampers reappear, they need telling perhaps their time is better spent elsewhere.
I was at the AGM today and my view is this. Mike is a decent guy, and I think will readily admit he and his team have learnt a lot this year. In terms of WH I am confident Matad will deliver this year.
However the Captain is bang on. This is high risk frontier drilling with no promises. The serial rampers here add no value, and to be honest several I would class as oxygen thief’s.
I am sure the AGM minutes will be distributed shortly. I was pleased with Matads response to several questions, and pleased going forward the management are committed to their execution planning for the remainder of this year and 2019.
However I know the likes of Mr P and others will reappear shortly. WH has a lesser COS than SL, so please stop the nonsense ramping and garbage, and accept if you are invested, this is high risk, with a high probability of failure. As long as Matad deliver against their revised drilling schedule, that’s a risk I am happy to take.
Couple of points / observations for consideration.
My view is SL will be a technical success, but not a commercial success. If we all honestly believe on Matads first major drill we are going to get lucky, most of us that understand this industry know we are kidding ourselves. Gas also exists in this region, so there is alternative potential, should oil fail to appear.
During 2018 Matad will have learnt a significant amount, will understand several process's in far better definition, especially relating to immigration, the labour office and MRPAM. All critical to a business that has to move forward.
The learning's and the failures go hand in hand, but if Matad learn from these, manage cash, hopefully they will be better prepared for 2019.
The kicker !!!
The retention of Mike Buck is critical. Matad lose Mike Buck, then the business is in a dark place. Mike has been on a steep learning curve and will now recognise some of the issue's with delivery in Mongolia. He will recognise some of the people he has to deal with will have a knife in his back prior to breaking a smile, and he will know now who he can and cannot trust in Mongolia. Mike therefore must stay.
What Mike does need and its critical in frontier / emerging markets, is a hard nose COO, who growls, spits and in short is an animal. That guy has to deliver against every target / objective, and must know how to do so. If that person is a cost to the business of around 1mill USD per year, to me that's money well spent. I would encourage Matad to find that person, spend that money, and then let Mike get on with what you employ a CEO to do, which is keep his shareholders, the business stakeholders, and senior relationships moving in the right direction.
Its very easy for me to understand the failures having worked in frontier markets for approaching two decades. Its bloody difficult, and each country is very different to the next. Mongolia can test the resolve of the best of people. What Matad don't need is a soft cock, out of somewhere like London, Singapore, Houston etc. These guys although experienced add little value when needing to get stuff done in the middle of the South Gobi.
Also bear in mind, yes British Gas come in, and loved Mongolia. I was also in Libya when British Gas spent millions on a block their in 2006, and came away without success.
Any success from SL and WH will be very lucky. This is frontier, wildcat drilling, in a remote climatically challenging country, that at times finds it difficult to operate and govern itself.
If 2018 is successful, or a failure, Matad will have learn a lot. However in terms of risk, this opportunity is very high risk, with potentially little or no return. If nothing else this year, Matad announces Mikes retention for a further two years, and the introduction to the operational team of a top quality COO, Project Controls Manager, and a local fixer, the business will be better placed for 2019.