Back by popular demand :-)
A few reasons why I stayed quiet recently.
1. Previous personal problems are still around.
2. My son is getting married in London next week and guess what? That takes priority over Mart.
3. In every instances of perceived bad news about a small growing company the stock takes a big hit. A lot of shareholders bail to take profit and move on and some stockholders forget to look at the fundamentals and become irrational. So it's better to reflect for a bit and take advantage of the opportunity if you think it is an over reaction.
looking at the facts:
We had a bad quarter. S..t happens! The lost oil, lower share of the field, bad timing on lift and oil pricing were the main problems.
Are those 3 events temporary or is there more to come?
Lost oil will be with us for a long time to come. However the level of it is a temporary event. A "good" level would be around 8% to 10%. That's life. BTW if oil price had been down 10% last month nobody would have noticed. Historically Mart SP had not much correlation to oil price. Watch for August results to be out soon.
Timing.
When you get a bad timing on transactions one quarter you usually get it back the following quarter.
The share of the field was down because in order to convince the partners to drill UMU10 right away Mart had to delay the repayment in oil by 3 months. There is no free lunch in life. This was a very good decision by management. I was actually surprised they were able to pull it off. (see previous posts). Remember that as a result Q3 share of the field will be higher when Mart accrues the repayment and Q4 will also reflects some UMU10 repayment.
Lift timing and price forecasting for accrual is what it is, what can I say?
Have the fundamentals of the company changed?
Not at all.
We will still suffer from one export line issues until Q4 2013 and we knew that. If one did not that they must not have been awake.
The pipeline with Shell will happen. Anybody noticed how big Shell is compare to Mart? If believe Shell is at 800,000 bopd in Nigeria plus some of their partnerships with Total and ENI. Mart is not their first priority.
Will UMU10 be a good well.
The real question is "will UMU10 be very good or exceptional?"
We know the oil is there (UMU9) so it is just going to work and doing it safely( Ithink I drove that point many times. Safe is better) Timing is irrelevant since we have no place to put the oil.
Will Umusadege field be able to produce 30K bopd to 35K bopd in Q4 23013 when the new pipeline is up and running?
Big yes!!! nothing has changed. Just calculate the revenue and cash flow at that production level. dr.airtime will be happy to tell you if you cannot do that.
Will Mart reserves increase?
The question is by 2, 3 or 4X ?
And the big one: Are the dividend payments safe?
Well, just look at the balance sheet. The yes answer is obvious.
So in conclusion Relax and collect your dividend.
Now If you are a day trader may I suggest a different line of work.