Here are the questions one needs to ask
-If producing, how much revenue is made and what percentage of costs does that cover. If you are losing money, being in production is just a motherhood statement. You can go bankrupt producing a lot more than 60 boe a day and many have.
- if acquiring new acreage/ assets, one must ask why are they diluting existing assets by say 30% and more with options. Are the existing assets not likely to be successful. Does the new asset take resources away from existing assets and if so, have I been misled as to the quality of the existing assets and their potential
- with acquisition ask, what am I acquiring , more of the same, and if I am why am I diluting the company to acquire more of the same.
- with the size of the raising, ask , are we raising more money than what we need for this acquisition, and if so are we using the excuse of the acquisition to top up bank accounts to pay management salaries for the next 6 months
- with the acquisition, ask will this asset add cash flow form production, does this cash flow cover even one additional well, or will it actually increase the capex requirements of the company. Remember we have one will dribbling oil, two flaring gas and not enough cash to drill one well, so why buy more assets and not drill out their own acreage
- with the acquisition, if it has a production profile, I would be asking is this a profitable operation we are buying or someone else cutting their losses
- with the acquisition, you may want to ask what have the "SI investors" being told about the break even price of production. Are we profitable at 30 USD. What is the break even price stated in the "SI documentation" if its different and for example they are "break even at USD38 then why have we been lied to by being told we are profitable at 30 and highly profitable at 40USD
- with the acquisition, one needs to ask does having more acreage simple result in more drilling which makes the CFO side business more profitable
Now if the above doesn't make you question anything, and I an simply a "downramper" in your eyes, then you are very deserving of being an owner of this business.
In my view this business wont be a viable business, not now not in a years time and probably never. This acquisition for those that have eyes AND are willing to see proves the spin on virgin territory , world class asset, highly profitable at 40USD, 390 additional wells, sweet spot drilling with seismic, low cost operations are nothing more than spin spin and more spin.
Now one last thing, I will pre-empt on of the come back , in doesn't matter they are diluting, because they are buying assets at the bottom of the cycle .. but if you are diluting the SP at .6c what does it matter. Better paying 50%b more when SP is at 1.2c for example. AKK SP reflects the bottom of the cycle so to dilute the share base to buggery to acquire assets does not give you a benefit if you are issuing shares at .6c and free options does it
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