Lightstream Resources Ltd. LSTMF

RE: Share Volume / SP Close / Dividend

[JohnDD]

Agreed that it is probably a good buy at these levels but I have said that at higher levels.  I was stopped out of half my position at around $15...but bought it all back around $12 or so...thinking that was rock bottom - and I was lucky to get more at the lower price - BAD CALL. I will NOT buy another penny of this company. I hope to only be a seller and at hopefully much higher prices.

My own sense is that more fiscal discipline is required at the company.  I was a taken aback after only the 1^st quarter they had to bump the budget up by $100 million - the justification was inflation. A 15% increase in inflation in only a few short months didn't hold water with me - seemed more like poor fiscal management.  At the time, it should have been a big red flag, but I choose to stick around - the rest is history. 

My sense is that the management team loves to drill wells, buy new land and and try all sorts of new well completion techniques.  Fine, it is good to be innovative and ahead of the curve on new plays, but I believe we need someone to say you can't have all 10 toys right now - we can only afford 6 at this time.  Once the family can afford it we will buy the other 4.

 

Here we are at debt levels that are hurting our share price and we have been sitting on the NE BC gas resource that is costing us millions to maintain the leases.  I assume it will be years before we can generate any cash flow from this. PLEASE SELL IT – and put every single penny to reducing our debt – NOT buying more toys.  I am not saying we give it away and sure it will be at a discount, but we have time to work with now to negotiate a fair price – don’t wait until the situation is desperate and it has to be sold at firesale prices.  We simply cannot afford all these toys.

I believe we have stretched ourselves and if the world economy goes into the tank and the price of oil falls to $50 or less...we could be in real trouble – it is not clear to me what the company will do in that scenario - but I know it is a concern for me. That is why we need to be reducing our debt levels right now – it needs to be a top priority.

 

They announce an NCIB and I’ll bet the hedge funds just laughed.  If we were in better financial position, we could have actually executed the NCIB.   It appears to me that financial discipline is missing at the company.  An individual with the personal strenth to demand more fiscal displine appears to be missing from the management team and board.  I could be wrong, but that is my perception.

In the next Q results I sure hope they provide a much clearer strategy about how they plan to manage their balance sheet in 2012.  Set some targets like - debt levels will DECREASAE by 15% in 2012. This in my opinion is just as important as how many wells they plan to drill, production targets and new plays they are working on.

 

John