Kel2Kel2
I can appreciate what you are trying to say, and understand the situation.
I know that we've had some cost over runs at Durando, but we do not need $35 million! And yes, times can be tough for companies in the patch...but it's companies who lack cashflow! Compare the likes of Oilexco to companies like Antrim and Ithica. Cash is King! The scenario is night and day once cashflow is produced.
Ed Davies said $20 million/month is what they expect for cashflow..I spoke with him. That's $240 million/year.
Based on 150 million shares outstanding...$1.60/share cashflow....
With the new financing (approx 200 million shares outstanding)....That's reduced to $1.20/share (fully diluted)..
So basically if North Piper goes sideways (which is the most likely scenario)...We are left with Durango and a $1.20/share cashflow...Where is the risk? Who cares if you have to hold for 4 months! The Durango assets alone justify a price north of the issue price of $1.15... I do appreciate your opinion, but quite frankly can't understand your rationale. We're selling shares at less than 1 times 2009 cashflow and you think we need to entice investors with warrants?
Production is to commence Oct 1...First check to be received Nov 15...Thats a lot of money coming in the door. The reserves are not long life, but I don't think 2 times cashflow is unreasonable once we begin to produce. Thats a share price of $3.20/share.
Don't get me wrong, we may in fact need a few bucks to cover some over runs at Durango...I understand that. But $35 million...no way! (BUK would have been better off with a small issue) Point is...How important is it that we drill North Piper now? (certainly can be debated either way)...Piper is huge, no question, but in light of its slim odds I believe we are jumping the gun. It's all a matter of timing. Sure we've got the window of opportunity to use the Chevron rig for Piper and possibly Aspen but at what price? Thats a ton of shares being issued when we know that our share price is going to be much higher in the coming months.
Anyone have any thoughts? I'm just trying to understand why managment would do this as makes absolutely no sense...I've heard rumors of potential acquistions, but that has got to be one heck of an acquistion if it is infact true.
Cheers
T2