Ann: Transforming New Standard Energy , page-85

I would just like to predicate everything I'm saying in this post is all in my own opinion and may be completely wrong. So do your own research and come to your own conclusions, these are my personal feelings and beliefs from a jaded investor who lost money today.

I have to say from my point of view, I am very unhappy with this deal. This is not what I signed up for not even close. NSE are now a totally different company with a very different outlook. I invested in a company that has a great asset in the canning and as a sweetener I invested on the upcoming drill program at merlinleigh, which has now been trashed. My plan was to sell a couple of weeks after the drilling commenced at merlinleigh. Regardless of the results at merlinleigh I would have bought back in a few months before the drilling in the canning. My plan was to mitigate risk at merlinleigh, but hopefully make a nice little profit and then buy back for the canning.


I feel cheated and believe in my opinion a lot of investors have been led up the garden path. I invested 60 grand in this stock because it was low risk. NSE had a spud date, they have the canning and a heap of cash in the bank that was to see them sitting pretty for at least another year. I believed there was not a chance in hell they were about to dilute the share price through what is essentially a capital raising, how wrong was I.

I sold today, which may not have been the smartest move, but I need plenty of cash in January for my house deposit. So I cut my losses and bailed. I wasn't prepared to go through the upcoming massive share dilution.

In my opinion this is a very bad move for NSE, Prior to today this company had a focussed safe plan that centred around a fantastic asset in the Canning, with plenty of cash.

Now this company has lost it's focus entirely and opened itself up to spending lots of cash and in my opinion upcoming massive share dilution. This company was safe and now it is a very risky investment in my opinion. They have committed themselves to spending a heap of money at the cooper, eagle ford and a fair whack at Merlinleigh. This can only open the company up to a lot of risk and spending a lot of money, not too mention the massive share dilution as well. I forgot too mention a lot of potential debt as well, assuming they can get the finance. In my opinion I believe NSE management have been sweet talked into a bad deal, by a much larger predator in my opinion who will probably gobble them up.

I believe this is a deliberate tactic by Magnum Hunter who have set NSE up to take all the risk and will eventually take over NSE at a time when the share price is low and in need of finance. In this process Magnum Hunter will gain what they really want which is the Canning and Cooper basin assets. They can watch NSE spend heaps of money on de-risking both the Canning and Cooper assets and then take the company over when and if they feel there is something worth owning outright. NSE in my opinion will become very vunerable when they have to spend lots of money and are having to raise more capital. Even with good news people don't want to invest in a company that is needing to raise heaps of cash. It's a risky prospect. A case in point is Citation Resources who have released good results this year and have had there share price go down as no one wants to invest in a company who needs to raise heaps of cash to service there wells and drill further exploration wells. Range resources has there claws deep into Citation resources and will take over CTR when and if they want too. In the mean time Citation Resources market cap keeps going down because no one wants to invest in a basket case. Further more there is no one else able to take over the company because Range Resources has there claws in so deep.

Im not trying to compare CTR to NSE, because at the moment NSE are in a solid position. But I can see a similar situation playing out.

In my opinion Magnum Hunter have nothing to lose in this scenario and everything to gain. In fact they have been paid for the eagle ford assets which is in my opinion part of there plan to get NSE to spend a heap of cash all over the place which will make them very vulnerable and when Magnum Hunter take them over for a song they get it all back. In my opinion its a master stroke by Magnum Hunter. Get paid for assets they don't want and then hook there claws in deep so no other company can or will be interested in NSE.

They have lined up NSE with a magnum and will hunt them down.

Please keep in mind I'm a jaded investor who has lost a good whack of coin today and take this all with a grain of salt because I'm probably completely wrong.