agm For disclosure, i have 76,000 shares @ average cost $6. ouch.
I was at the AGM, and it was extremely sedate. Not even one question, which surprised me. I guess this is oil town, and people are used to the ups and downs. The meeting was over in 35 minutes. However, it was worth attending, because the president did a 20 minute talk specifically focused on the production issues, as well as the production growth, reserves growth, potential upside from the F block and thermal program.
It was very encouraging. He described the water and sand problems (separate issues), and what exactly they were doing about them. I feel comfortable now that they know what they are doing to bring those well back on and get rid of the water. Some of these things will take time to fix, and we need some patience. Some wells are pumping water since it leaked into the resource through corroded pipes from some of the older wells. In these cases, they need to plug the leaky pipes, then over time the water that they pump out will return to oil.
Regarding the sand, it was causing collapse in the casings, so they need to clear that and extend the existing holes with stronger linings. Again, this will take some time as they had to order in the new stronger pipe. He reminded us that they lost about 3,000 barrels/day for these issues, and if you add that back to their production figures, their growth is still impressive.
I was also impressed with the soundness of the balance sheet, their cashflow even at low oil prices. He said that if necessary he would cut capital spending, but at current prices there is no reason to reduce the capital program. Also, they have a billion barrels of reserves, wow.
He also attributed some of the stock weakness to the financial chaos in Europe and their proximity to Greece. He reminded us that Albania is a democracy and looking to be added to the EU. He says the political risk is low.
They will be issuing a production update on July 5.
I feel I can sleep better now, as I have lost considerable winks over this stock since it is a decent part of my retirement savings. Hope this update helps for all you faithful out there.