Moving Forward Via the C.E.O : "Significant steps have been taken towards building an additional export pipeline to enable us to exploit the potential of the Umusadege field." I'm sure this 18% pipeline issue will give Mart the urgent need to move forward with pipeline construction. However, even using ENI's pipeline, Mart still throws off significant cash flow.
"Total crude oil deliveries into the export storage tanks from the Umusadege field for the month of July, adjusted for estimated pipeline losses, were approximately 358,500 bbls." Now I'm not sure how many barrels of oil sitting in the storage tank will actually be sold in Q3 but I do know barrels of oil produced and sold in Q2 was 408,638. So, if the bbls in storage now are any indication of bbls sold in Q3, were off to a monster start.
Drilling the UM-10 commenced July 4th so I'm sure the 52% percentage of share total this quarter wil be significantly higher in Q3.
"Subsequent to June 30, 2012, Mart has collected $41.6 million of its accounts receivable and other receivables related to oil sales from the Umusadege field." To fully cover the quarterly dividend via free cash flows, Mart must generate about $68 million per year in free cash flow. The collection of $41.6 million in receivables will cover the dividend for a bit less than three quarters. I'm not to worried about the quarterly dividend being removed based solely on this quarters "anomalous" earnings.
All in all: bad quarter. Everything that could go wrong did. Q3 is looking promising. UM-10 news could get shares back to $1.70 range. I still believe we are much closer to a signing of a crude handling agreement with Shell then people think. Mart generates free cash flow and has no debt. It's not like were going bankrupt because of a bad quarter. Mart is sitting on a pool of light sweet crude oil. Having the issue of pipeline capactiy is a problem I can surely live with.
Holding all my shares and accumulating on dips