Member Info for Vyrnwy

Chrisatbirdies
Regarding your comment about the shafts - could I politely suggest that you keep up with the progress of work committed before you put your fingers on the keyboard.

All still good. The fundamentals are unchanged and still very compelling. Additional capex specified in the funding requirement - inevitable with almost all procurement now committed. Banks' due diligence in process. A mix of funding for that additional component being considered by SXX if required. Many options available not just fundraising, so likely to be a mix.

Opex reduced so there is scope for some leveraging, e.g. leasing, if available, would enable movement from some capex to opex so some deferment for cashflow.

There is a contingency component in there so they would want some flexibility. No use fundraising if it turns out to be not fully required. Consideration of a partner with a big balance sheet sounds interesting. I wonder if a certain lady in OZ is in communication and that Royalty funding can be tweaked.

The next news is likely to be about the next take-off agreement(s).

The FT piece from Yesterday was a weak affair. It commenced with the premise a reminder was needed of the need to carefully scrutinise optimistic claims for an 'untested product.' Untested product indeed! Where does it refer to the 300 trials, in over 50 locations, with more than 30 of the world’s major crops?

Where does it mention the characteristics of this product that differentiate it from the main suppliers of the existing product? Where does it mention the size of the potash market - some 60 mt with Sirius holding the largest known deposit?

The piece casts doubt on the ability of the company to obtain the guarantee. No mention of the Northern Powerhouse and the jobs already created. No mention of the numerous hurdles that the management has already successfully jumped when many said they wouldn't succeed. No mention of the support from Australia's wealthiest woman (and 5th in the world) Gina Rhinehardt, Chairman of Hancock Prospecting.

If was left to the author of that FT piece, no major infrastructure projects of this scale would ever get started.

dogger

I know of another company OPE (Optare Bus Manufactures) that delisted a few years back and that board, whilst not used, is still available on LSE.

No, it wasn't a fraud. If anyone had proof of that, then the moral thing to have done would have been to lay such evidence before the FCA rather than crow and gloat about a prediction. They were also subject to a statutory annual audit. BTW: Look up the definition of to 'own'. Its literal use in the post below implies slavery but I dare say, its a slang pejorative.

In my view, It was a flawed business model, ill-equipped to go through the protracted oil price downturn. They had tried to expand too fast using different forms of funding to do so - Placements, Equity Funding Facility, and Bank Debt. In the end, they were virtually wiped out in the storm. They had no control over any wells that might have had to be shut in by operators in the oil price down-turn. They tried to be a well operator on one or two occasions, even though it went against their mantra relating to risk which ran: "it was better to have a 1% stake in 100 wells than a 100% stake in one well". They were the operator of Roger Swartz, which spud at the end of 2012 for an estimated cost they said of $729k, just sold for $37k. In five and a half years, years, how much revenue did that generate? They exec directors weren't drillers; they were landmen .... mineral rights acquisitions and look at what they did with those: $6m purchases; $4.7m w/o (almost 80%) in impairments arguably because many were uneconomic to develop.

They may get by with more work on behalf of WED; it will take a long time in my view, and I hope they succeed with that if only for the sake of LT investors. At some time in the future, WED will want to see a return on its commercial tie-up with the company.

I'll be following its progress from filings at Companies House - good luck.

smidsy - continued...

Investing in small companies is especially risky
The shares of smaller companies are sometimes known as ‘penny shares’.

They don’t meet the requirements for a full listing on the London Stock Exchange (they’re ‘unlisted companies’), so they’re bought and sold on other markets, like the Alternative Investment Market (AIM) and the Plus Quoted Market.
Think carefully before you invest in a small company. Is the investment right for your needs? What are the risks, and what might they mean for you?

smidsy.

It doesn't work like that as I'm sure you know and if you didn't know, then you should have either taken advice beforehand or you should not have been investing in shares in the first place.I am sorry to couch a response such blunt terms but there is no other way as I hope you will see.

The company has not stolen your money. You bought shares in a company from the market and you still own those shares if you haven't sold them on AIM. If you have been a long-term holder, then will have had plenty of opportunity to read the annual and interim accounts and evaluate the company's performance over time, determining whether the risk of holding the investment was increasing or not. If you held the shares throughout, then you accepted the increasing risk. Even as late as last July, that is a year ago, the auditors expressed concern which you either accepted as ever-increasing risk, or you failed to read the audit report in the annual accounts which, I have to say, is your own negligence. The extract below couldn't have been more clear and stark:
"The company's ability to continue as a going concern is dependent on continuing support from its lenders and its ability to raise funds on the open market. These conditions, along with the other matters explained in note 2.3 to the Financial Statements, indicate the existence of a material uncertainty which may cast significant doubt on the Group and Company's ability to continue as a going concern."

It is now a matter for you to determine how you will deal with those shares in the future. The company has until 30th September to file accounts at Companies House. Although I haven't held any shares here for many years, I will be following its progress from it returns there. I learned many years ago from the school of hard knocks about properly evaluating risk and to not ‘fall in love’ with a share – it will all come right in the end. That is hope at best but more like wishful thinking.

For information, the following is typical advice from the internet about investing in shares:
“Buying shares can be risky. The price of a share will go up or down if people change their minds about how well the company is performing, or about the economic condition, it operates in.
If a share price reduces then the value of your investment reduces as well.
However, shares have historically provided better returns over the long run than the other main asset classes: property, cash or bonds.
Holding shares in just one company is very high risk. If that company gets into difficulties then you could lose some or all of your money.
You can spread your risk by diversifying – buying shares in a variety of companies, and investing in other assets or countries – or by putting your money into pooled investments like unit trusts or OEICs.
If you’re well diversified and invest long term (for more than five years) you can keep risk down, and have a chance of good returns.
Investing in small companies is especi

.... To De-Listing

But why did this puny US company, managed by US-domiciled citizens who weren't drillers but who invested in wells in the US mainland limiting their control, register the company in the UK and list on the UK market in the first place? Despite boasting that in certain circumstances. they could take one dollar and turn it into four, despite tapping the market for several million pounds of working capital, and other forms of funding, six years later all they can show is fewer wells than they started with, massive accumulated losses, shareholders wiped out, no dividend ever paid and still a need for working capital.

Despite all this, they still have their mission flashing up on their website: 'Building A Significant US Onshore Focused Oil and Gas Production Company'. Note they determined 'significant' by well-count (a percent here, a percent or two there) not by production volume.

Does anyone remember this interview given by RW 6 years ago?

https://www.youtube.com/watch?v=r7hY3OSchrA

First step, a General Meeting to obtain consent to significant disposals to repay the bank loan in the timescale given. I The reason for the mention of a delay to publishing the FY2017 accounts will be due to such a divestment considered to be a significant post-balance sheet event and account taken of any provisions that may arise.

Smidsey, That should all be at arm's length with Magnolia managing the WED well investments (2 x $500k worth). If it comes to bankruptcy, WED would make arrangements with another party and assign the management of those investments to that other party. It's unthinkable that MAGP wouldn't have notified the market via an RNS if the contract had already been formally cancelled. So I guess it's still operating at the present time but, as you know, there has been no further deployment from WED for 6 months and I think we can take a pretty good guess at the reasons. So, I would say that the agreement is probably in limbo pro-tem - from WED's perspective, future deployments of capital deferred. until clarification of MAGP's position to continue in business.

smidsy Do you mean the agreement?

gorgeous george No - the model was the problem. They had no control. Over-expansion due to leveraging was the problem That's what I call mismanagement.

Shareholders are last in the queue.

So there we have it. They will need to dispose of c50% of their wells as I advised previously. They have restrictions on their account (interesting) and they have around a month for the repayment.

Correction to my last post which contained the wrong date for the last fundraising from shareholders. It should have read December 2017 not December 2016.

Mr English. Regarding the annual accounts of December 2016, the auditors advised the existence of a material uncertainty which may cast significant doubt on the Group and Company�s ability to continue as a going concern. When that was written, the company could and indeed did later raise funds from shareholders (December 2016). The company had a borrowing facility that it hoped it could renegotiate. Moving on from then .... The H1 2017 accounts last September, showed a slight worsening of the dire current ratio. The company's ability to raise further funds from shareholders is unavailable. We know that the company is intending to reduce or eliminate bank debt by well divestment. Forget what makes up current assets - it's the current ratio (current assets / current liabilities) that is important and that has been dire. That ratio, the total of Share Capital and Reserves ($0.8m H1 from $3.1m FY2016 and could go negative) and the auditors' report will tell all. Yes, they can raise funds by well divestment to eliminate bank debt. That will improve the current ratio but they will probably need to sell off 50% of those reserves to do so. As a consequence, It will also reduce their revenue generating capacity and with it gross profit to cover fixed admin and generate free cash flow.

Robsky When you write: .... "the last opportunity to have your say is looming 3.30pm on the 7th", that suggests that that date and time is the cut off for voting. It's not. That is the date of the General Meeting when the result of the vote will be announced. Quote from RNS... " Latest time and date for receipt of Form of Proxy ... 15:30 p.m. on 5 June". That is .3.30pm today.

No

Expectant father. Seriously though, WED is a 20% + shareholder. IMO they must have criteria about the financial soundness of contractors with whom they deal. There has been no update from MAGP about WED one way or the other which is intriguing. What is known is that there has been one only deployment of their funds to manage and that was almost 6 mths ago. Suffice it to say that the expected value of the consideration receivable for the deal is blown. Who knows if there is a plan B for them vis a vis MAGP Who knows if they are in the background with $100k cash for shares to take control but there would still be the working capital and liquidity issue to resolve. Who knows where their votes will go and what their exit strategy might be. Your guess is as good as anyone.

The writing was on the wall for investors for quite some time. I've followed this company as I was in and out of this share early on and probably broke even as I am very cautious about small companies that want to expand too rapidly by increasing their gearing. I learned a big lesson from the 2008 financial crash when I lost a lot of money in an over-leveraged tech company. The oil price shock crash was this company's 2008 equivalent and their model didn't help. They were stuck with debt and the money making machine had stopped and was going into reverse. Their model was flawed at this point because they had no say about what drilled wells operators would shut in and some may have been economic from the company's viewpoint. They needed to raise funds for working capital. Placings and well divestment were their only options. Placings caused massive dilution as did the 'white knight' consideration shares which didn't represent immediate cash. The SP has continued its fall to the point where placings were now no longer an option. So that has left the only immediate fund-raising option of more divestment of wells to reduce or eliminate debt as they have announced. Creditors other than the bank remained high at H1 and the bank, it would appear, would like its loan either substantially or fully repaid. A divestment of wells will reduce it's operating and cash flow generating capacity much further, hence the need to slash fixed overheads and a major overhead is the regulatory expenditure associated with its listing ($30k for audit and tax work alone). Your guess is as good as mine how long this will last as it will still be 'under-water' from a liquidity standpoint and the only realisable asset will have been significantly reduced in scale and value. It's no coincidence that the 2017 accounts are normally released in June. For me the question is, what will the directors recommend if they don't win the vote? Not long to wait.