$2.5m in the bank is actually worth less than that due to the continued cashburn.
Italian assets? Worthless, unless the Italian government ensures that the offshore drilling ban doesn't happen and somehow lets KEY drill the Borsano Block.
UK assets? Clearly well south of the $4m we paid for them.
TZ assets? Until commercialisation actually occurs they are worth a lot less than they could be, hence my disgust at the board for offloading 75% of our interest in Nyuni/Kiliwani. Why a firesale of potentially our best assets?
WA assets? Practically worthless.
Suriname? Depends on when/if they'll ever be brought into production. I queried Ken on this a while ago and he scoffed at my suggestion that they are a long long way from being commercialised. Clearly he hadn't read the document from Staatsolie (60% owner of the Coronie & Uitkijk licences) about their forward plans. It's available for all to see on their website.
In summary, under this board/management, probably less than is reflected in the share price.
My thoughts on what should happen to retain what shareholder value is left:
Cut head office costs back to the bone, no point spending good dollars looking for something to buy when we don't have the money to develop what we already have.
Put Suriname in a bottom drawer, it's not costing us anything to manage and down the track it might actually be worth a bit.
Scale back Italy efforts, offload Borsano block to someone that has experience in getting drilling onshore in Italy happening, ie someone like PVE. For the offshore blocks, retain those in case the bans on drilling are cleared and then farm down so we are free carried for any seismic/drilling.
Australian assets may as well be sold off, waste of money even acquiring them and they never looked likely to pay off.
UK assets? I'm not sure, my gut says it's no good sending good money after bad so I'm thinking don't drill Lidsey #2z, but then given the high production costs it might be better spending cash to accellerate production so there's better economy of scale thus increasing the profit margin.
Tanzania? Retain Nyuni/Kiliwani, our best chance for some short term gain with production increasingly likely within the next 18 months, fingers crossed we'd still have some cash left by then. Negotiate with the govt for delay in the work requirements for WSS due to the unavailability of a suitable drilling rig.
The above is a minimalist approach to conserve cash and limit further dilution until we can actually get some better cashflow happening from our existing assets. Good for existing shareholders.
Only other alternative would be to embark on a similar approach to what the board is taking and bring new assets in with the associated massive dilution. Bad for existing shareholders. Especially if they buy what appear to be poor assets like what is currently on the table.
KEY Price at posting:
2.8¢ Sentiment: None Disclosure: Held
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