Share Placement for nothing or for profit?, page-11

MM,

Everyone (by now) surely knows the difference between AKK and WPL, STO. One would also hope by now they also difference the difference between shale production and conventional production, the VERY BIG differences in the underlying asset from this basis to the other basins in the USA and how to figure out all the different "costs" to understand how (eventually) companies can get to NET INCOME.

Having a "punt" to double, triple or even 10 bag your investment based on nothing more than the smell of an oily rag found in some cow pasture or the bubbling up of crude from a stray bullet is great fun.

However, AKK is being put up as a 10 yr investment (per their own slides) and along with that all the same kinds of metrics used to value an E&P company ... but without the transparency that most companies provide. And the more you dig the less appealing it becomes.

No issue with what you say but it works in reverse too ... when it fails all the pumpers will be gone (replaced by a new set as it attempts its next endeavour) and all will say how mgmt failed them blah blah (everything but doing the research to figure it out).

Such is life on Hotcopper. Left versus Right. No centre position (as in not held) and everyone has some secret agenda instead of simply discussing and evaluating (called speculating by a certain poster) the information provided.

Guarantee you, some will applaud the acquisition (but again why) and aggrandise it. Some might even do a few calculations and say how "cheap" it was (other will do different ones and come to opposite conclusion). Just keep in mind the assets sold by the company, the amounts received and impairments recorded against those assets.

Wrt to your earlier question about "please point out a stock with poduction cost below 50dollars" that would be just about every E&P company in the world. A great many have full cycle costs below $50 (and full cycle costs are not a number you ever here from AKK). The second part was "and market cap below 10mill so i can buy it" - based on answer to first half that would be most all of them.

So whats wrong with the answer .... it lies in the question. Production costs (also called lifting costs) are only a small part of the equation that goes into the creation of shareholder value.

Good luck.