KEY is a brilliantly run company.It has very little money and yet has operated 2 wells with a pipeline of future wells. Its current success whether it flows or not will imho lead to the farmout to future wells in ep 437.
One only has to look at some of the other companies operating in WA to understand the multi-faceted skills of KM.
BRU,NSE and EGO, have suffered catastrophic failures of management. Not all of the below are attributed to each of them but they have a lot in common: management disarray ,success either with large farmouts or well head success led to vast amounts of money being lost ..too much complacency, living of the fat, success breeding failure,
no clear vision or strategy (except now BURU) ceo changed leading to further instability, shareholders uncertain, rattled and disillusioned , bloated payrolls and overpaid executives and the list goes on.
Taking BRU as an example, it had a mc of over $ 750 million with a high of 3.75 and raised institutional money $50 million in June 2012 and then again $40 million in Sept 2012 and again Aug 2013 another $35 million and now now $28 million at 75 cents. So all that money being used up and no value being added a fall of $3 from the high.
So what do they do, they instigate measures that KEY has been doing all along; You just have to read their latest corporate update to realise that KEY has been going these measures all along.
Examples from BURU'S latest update
RESTRUCTURED MANAGEMENT TEAM WITH FOCUS ON DELIVERY •Streamlined management structure to reduce duplication and number of consultants •Flattened management structure and increased accountability •Staff had increased by +50%, current streamlining reduced by 30%, to pre 2013 levels •Strong internal cost discipline •Approval processes very rigorous - and appropriate staff to deliver
LOWER COST FIXED PRICE EXPLORATION DRILLING
•Need for step change recognised after review of previous 5 years of drilling
•JV have agreed to contract DDH1 Rig #31, a UDR5000 highly mobile mineral rig which has been converted for oil and gas operations
•The rig is currently drilling deep shale gas wells for an operator in the Northern territory
•Expected to be mobilised to the first drilling location for Buru Energy in October
•The rig is capable of drilling cored holes to at least 3,000 metres drill depth and has a small footprint and crew
•Expectation of substantially reducing exploration well costs
•Standard oilfield rig will still be required for development drilling CONTRACT STRUCTURE
•Fixed price contract which is expected to result in a decrease in drilling costs
•The fixed price includes key aspects of the drilling program from mobilisation to demobilsation and movement between wells
•Arrangements are in place to address a shutdown of operations due to weather
DDH1
KEY never had the money to lose and it has a management full of determination and resolve that has the company progressing to achieve its goals. I would say that KEY has been inspirational in the thinking of BURU"s new plan .
KEY Price at posting:
1.5¢ Sentiment: Buy Disclosure: Held
(20min delay)
