Member Info for spike501

So no announcement today. I find it a bit disappointing - my normal point of view on these boards is that companies should get on with running things and calls for constant updates and RNS's from PIs are unnecessary. Usually it's the companies that are constantly announcing non-material information that are the ones to avoid. However I would like to see a little bit more proactive communication from Vislink. GoPro has a market cap of $5bn and have made a big deal about this product - the very fact that VLK have linked up with this significant industry player to launch a fairly significant product would seem to be worthy of a market update.

GoPro have announced today the launch of Herocast - this is the result of the collaboration between GoPro and Vislink http://investor.gopro.com/releases.cfm Could be pretty significant as it is being sold directly to the retail market by GoPro and presumably Vislink carry a share of the profits. It's relatively expensive so not mass market but it still a retail product for end consumers, which is a first for Vislink and GoPro are the prime company for action cameras and equipment so it still likely this will sell in good quantities. I think an extra £1million bottom line per year must be acheivable. There should also be revenue streams through tie ups with major sporting organizations plus potential commercial uses. Announcement tomorrow I would guess.

Broker forecasts are for 6.8million euros this year. 2milion is already confirmed and doesn't include the Chinese off take agreement which should be for a minimum of $2.5million so overall would be already in excess of 4 million euros. It would be good to get confirmation that the Chinese off take agreement has started as expected as Chinese deals don't always pay off. They factory is probably another 3 months from being fully operational but then should surely further boost sales this year. So 6.8million seems achievable if not beatable.

We know the results themselves tomorrow will be wholly unspectacular, however I'm hopeful they have some other positive update for the market. It seems to early for the factory as that was updated only last week, but we could get an update on the China off take agreement - $2.5millipn to $5million not included in the confirmed orders, a new sales agreement of possibly an update that the second Sivec quarry - where the revenue terms are much better for Fox - is operational.

Unfortunately they have been selling, not buying - they previously held 16million shares.

Pablo - the Beaufort note is very strange. Referring to diversified assets which Caza do not really have - it currently a bone springs only play, the only other is Louisiana seismic data - and also its substantial funding facility which it also doesn't have. I'm hoping its not as bad a picture as I think as well. I hope Tradernor is correct and it gets taken out for $150million - I like the company and I like the management. I just don't see it.

Oogleflugal - I really haven't any criticism of management at all. They've just been unlucky - no one forsaw $40 oil. However just to the note the hedging is a condition of the Apollo notes and not management's decision.

Tradenor, you're putting way too much weight to the production metric alone. Any acquisition cost is going to be determined by a number of factors and high up the list is acreage. Your $150million estimate puts an almost $30k per acre valuation on Caza, against the $6k per acre for Heyco - I think its totally overvalued Not all of Caza's acreage is developed either, only a certain number of spots. The 640 acre Marathon road site is probably producing 1000boe/d - do you think someone will pay $150million for 640 acres? Also if I can see that Caza are in financially weak then so can any potential acquirer.

Pablo, I've been following Caza for sometime, made some losses back in the Arran days but then bought in at 11p on the way back up last year. I sold out for around 19p when the oil price began dropping as Caza have exactly one of the profiles of companies that are heavily exposed to falling oil prices. I like management - E&P is risky and despite some setbacks such as Arran they managed resources well and their entry into the Bone Springs looked like a winning strategy, especially after securing the debt funding from Apollo - they have been caught out by oil price and there is very little they can do about that. However the entire strategy required constant drilling to get ahead of the decline curve and have operational cash fully fund continued drilling - at $100 oil my calculations were that this would be around 2200boe/d and to get there would require approx $80million in debt - given oil was $100 and Apollo had made $50million immediately available with a further $50million available it all seemed acheivable. Its gone now - Caza do not have enough free cashflow to keep up with drilling at the required rate. I suspect in Q1 production may just exceed 1000boe/d again, however I don't see this being maintained. There is no more Apollo debt available and I find it highly unlikely any other expansion of debt will be available - Caza should have been (and probably were) trying to get cheaper funding at $100 oil but didn't so the chances now for cheaper and additional are totally remote - hence Yorkville. Even if oil starts to recover the debt market will take far longer to return to previous levels as lenders have got long memories. Similarly with acquisition - the ten and hundreds of thousands of dollars per flowing barrel or tens of thousands per acre market is also going. There are plenty of distressed holders so many cheap opportunities. The Heyco deal that Tradernor flagged was a very strategic purchase, that acquired acreage that fit in with Matador's current assets and also brought substantial expertise into their board - Heyco are a pioneer in Permian drilling. Even so that acquisition was done at around $6000 an acre and although the price per flowing barrel was high, there are immediate opportunities for vertical workovers to significantly increase production. The acreage is always going to be the main driver of the price and applying the acquistion metrics to Caza results in a price that doesn't even cover debt. The acquistion market will also take longer to recover than the oil price. Why do I do it? Quite frankly I find it totally irresponsible to be ramping this now and any claims that this undervalued are utter nonsense. Short/medium term there is no significant news coming (only 1 well with 15% interest being drilled) and we all know what Yorkville will do to the price. Longer term, currently I don't see anything for shareholders-I think you will either lose all your money or be very heavily diluted for the co

Tradernor Fine Heyco was bought for $111million not $100milliin as I approximated. So take $113million and divide by 18300 net acres that Heyco sold to get to the acreage rate - then apply that to Caza's 5100 net acres - it comes to $33million. Apply some premium for higher production - it's still unlikely to exceed the $60million in liabilities Caza have, leaving nothing for shareholders.

Esmerelda - quite frankly Caza are in a very weak position and the auditors have not signed off the accounts as a going concern - basically as things stands they aren't confident that Caza has the funds to keep it going for another 12 months. The position isn't quite as bad as Note 1 reads - the Apollo notes aren't officially due until 2017, however because Caza are in breach of covenants (which has been delayed until September) the auditors have required Caza to show in their accounts that the Apollo loan is required to be repaid this year, hence the very large deficits. However even without the Apollo note, Caza have payables of $21million - this is money owed to suppliers for invoices for work carried out so will be mostly to the drilling contractors - however at year end they only had $5million in cash and were owed about $7.5million from oil sales made but not yet paid for. This is a large working capital deficit to have and usually supplier bills are payable within 120 days.

Tradenor - I know this company inside out and I have read the annual report this morning, something you have apparently failed to do Production in Q4-2014 was 901boe/d - 75% of that was oil. Cash maybe $5million but working capital is far more important metric and that is negative $9million. They owe $21million in bills - how are they going to pay those when the have only $5million in cash and are owed only $7million. The hedging helps but revenue in Q4 was still only $4.8million because as stated by the annual report Q4 production fell below 1000 boe/d Heyco sold 18300 net acres, Caza has 5,100 net acres. Heyco is also stacked acreage so all the Caza management talk about 5,100 really representing 22,950 net acres equally applies to Heyco. The Heyco acquisition was a very good benchmark - $100million for 3.5 times the acreage. Caza will get a little credit for having higher production so they might get $70million - pay off the debt and other liabilities leaves about $10million for shareholders which is about 3p per share.

Pablo2 - look at the working capital position.. Cash $5.1m Receivable $7.5million Payables $21.3million That is an $8.7million hole in working capital - some of it has been filled by Yorkville, but given there was also drilling activity in Q1 there was likely further outflow - I would estimate it at a minimum of $5million at the moment. Even with hedging revenue was just $4.5million in Q4 - at least $2million goes each quarter on financing costs and admin costs so how are they going to pay their bills that will become due over the next few months? Production dropped in Q4 to less than 1000boe/d - the marathon road wells may have maintained production in Q1 but they are only 15% WI and with little in the way of drilling happening now it will be difficult to maintain production in Q2 - so the whole situation gets worse.

Fair enough - if you're correct I'll donate £200 to your favourite charity.

Caza doesn't really have months for the oil price to recover and in the interim the shareprice will be held down by Yorkville - I would guess that Caza never sees a share price in excess of 6p again.

Newstatetrader - I've very clearly posted my rationale with facts and figures. If you care to post a rebuttal feel free.

Tradernor - the Matador acquisition was for almost 4 times the acreage that Caza has and was from a private holders who were unlikely to be distressed sellers. While production is lower as stated in the details there are multiple vertical wells that offer opportunities to significantly increase production for a very modest workover investment Caza results today are awful, absolutely awful - unless there is a rapid change in oil prices soon there is nothing here for shareholders. Working capital is negative $9million and the $5million raised from Yorkville will likely all have been eated up in Q1 through drilling - at best case there is a $5million working capital deficit currently and I believe it will be nearer $10million. Production dipped below 1000boe/d and revenue was just $4.5million even with the hedging - Caza use at least $2million each quarter for admin and financing costs, so there is only $2million remaining that needs to go towards paying bills. There is virtually no money for drilling so production will struggle to maintain its current level so cashflow drops and the whole situation gets worse. Based on the transaction you reference and the current financial situation of Caza I find it doubtful any sale would leave anything for shareholders after repaying debt.

These were highly significant results for Vislink but it hasn't yet been recognized by the market. Until last year much of Vislink's business has been hardware, which is lower margin, capex and working capital intensive and typically lumpy in terms of revenue. It is still somewhat the case as the UK government contract is around £5-7million in non-recurring revenues. However these results were all about Pebble beach systems - this is high margin, cash generative and much less cash intensive and likely much more predictable. PBS generated only 15% of revenue but over half of unadjusted operating profit and this from only 9 months of trading and VLK was able to grow PBS considerably - this should continue to be a very reliable generator of profitability and cash and can reduce the reliance on the lumpy hardware revenue stream with these larger contracts effectively being a bonus. Revenue could well potentially remain stagnant or even drop in 2015 if the hardware division does not secure another large deal,however cash and net profit should still grow, while the GoPro deal could offer material upside. I also believed the believe the PBS and broadcasting segment could well make Vislink an attractive acquisition target for some of the larger players. I'm not necessarily expecting rapid share price growth - the market still looks for top line growth - however I think this is a very solid longer term hold that should be able to maintain a consistent dividend.

Red Hot Penny Stocks Exciting times here - I expect an announcement pre-XMAS announcing the launch of Tier 1 customer and confirming revenue expectations of in excess of $20million over the life of the contract, possibly up to $30million in total including the supplementary OTT deal.

Nothing further needed.