re: slingshot effect - watch this space... Slingshot effect...

re: slingshot effect - watch this space... Slingshot effect coming up...

The share prices of the JV partners involved in the upcoming Gilbert-1 (56mmbls recoverable – P50) and Maclean-1 (96mmbls recoverable – P50) are moving up in preparation for drilling...MOG on the other hand, is lagging somewhat.

Why?

It seems there might be a little uncertainty regarding the current rights issue and what impact it might have short term...which is probably a fair assessment?

So lets have a look at what might be going on…

1. Recent buyers:
A quick reference to the buying leading up to the rights trading shows that about 4.9m shares were snapped up on-market leading up to the record date. This would have resulted in about 2m rights going to those more likely to have a short-term outlook…it follows therefore, that these people may be expected to sell down approximately 800k shares at 18c+/- to get the funds to convert their rights (I m assuming half of these recent buyers can't afford to convert without selling)

2. Existing Holders:
We also have existing holders...those who were holding prior to the lead-up to the record date. We can expect to see some of these people also cashing out in order to get the funds to convert their rights, but perhaps not as many as some might think.

Approximately 18m rights have been issued with a 12c conversion price…therefore, in a worst case scenario, we would need to see some 12m shares sold at 18c to pay for their conversion...LOL…of course, this isn't going to happen.

Firstly, the top 20 holds about 54+...so you can rule out most of them...and of the remaining shares, I think we can safely assume, given the 2:5 ratio, low conversion price and imminent drilling campaign, that only a small number might actually sell in order to convert…so lets assume 25%

18m rights x .54% (top 20) = 9.7m rights (balance = 8.28m)

8.28m rights x .25% (existing holders who may sell) = 2.07m rights.

2.07m rights x .12c each (conversion price) = $248,400

$248,400 divided by .18c = 1.38m shares

Therefore, we can reasonably expect to see about 1.38m shares hitting the market at 18c from existing holders near term.

3. Rights are renounceable
Don’t forget the rights are renounceable and therefore able to be sold on market if the holder can’t afford to convert…any rights sold, effectively reduce the selling pressure on the shares even further.

So far we have seen just over 1m rights hit the market…this will have a positive impact in the order of 680K shares (assuming 18c per share)

Summary…

800k shares…expected to hit the market from recent buyers.
1.38m shares…expected to hit the market from long-term holders.
(680k) shares…to be subtracted due to rights selling.

Total= 1.5m shares

Given the above observations, it appears we might see something like an additional 1.5m shares hitting the market due to the current rights issue.

To date, some 880K shares have already hit the market in the 18-20c range since the rights have been trading…perhaps leaving as few as 620K shares to go?

It is clear that MOG is currently suffering from a short-term overhang of shares…an overhang that in my opinion, should be all but over in the next session or two, if not already?

Regardless of the timing, when it does become clear the overhead has been cleared, I’d be expecting MOG to stage a rapid catch-up to the other JV partners...or in other words, a "slingshot effect".

Doesn't really matter to me however...I am already set...up to my neck in fact...and patiently waiting now for the drilling of these two company making monsters.

Cheers!