RE: RE: FINANCINGAnother surprise here. Didn't see this one coming, but having owned this stock for what seems like a lifetime, nothing should surprise me.
A couple things here I believe could explain the 70 cent offering. First of all, it's a bought deal, which means we get the 80million whether or not it gets filled. That's likely the main reason for the discount. Essentially, the underwriters are our new partners. Remember a long time ago, Sully said an operating partner or a financial partner.
They could have asked for 90 without a bought deal, and risk not raising the money. I'm not sure investors would have lined up at 90 and I guess we'll see if the over allotment gets filled or not.
Secondly, we're way out of time on Corentyne. Lease says we have to drill a well by end of this year as part of our work commitment. How much longer is Guyana going to wait for CGX to drill with no JV or money? We likely have been negotiating for months with the government and now they're giving us the gears, drill or we give it to Anadarko or a major with deep pockets, and surely they are lining up since Tullow's discovery.
Without money, we can't contract a rig, or prepare for drilling. You need millions to buy materials in preparation for drilling.
I would have preferred a JV myself with a carried interest so we wouldn't have to raise any more money. This dilution is a real thorn in my side, but it is is what it is and we don't need a jv any longer. 80 -90 million is enough to get a deep well completed. Jaguar will likely come in sooner and if an additional 20 - 30 million is required, it shouldn't be a problem to raise the money at a future date.
At the end of the day, if we find oil in Jaguar and/or Eagle, this won't make much of a difference, in fact, it could be to our benefit.
GLTA