RE: RE: RE: RE: Mart's Earnings Explained. Fernando2012 - Good points. I have a couple more important thoughts and rebuttals below:
To your points:
1) I agree that you need to include tax, so perhaps the adjustment is $7M. It gets a lttle complicated at this point so I was trying to keep things simple. I would assume production costs are production costs no matter what adjustements are done to revenue so perhaps add around $7M to Mart' Q2 Net Income.
Note that by adding this $7M we are not "normalizing" Q2 to try to make it look better, we are putting both Q1 and Q2 Earnings into perspective. Q1 as reported was too high and Q2 to low becuase of the underlift.
2) As to your second point regarding if we only need to look at Mart's portion for Q2 (52%) of the 373,552 underlift bbl postiion at the end of Q1.....I would have to assume that this is only Mart's (not gross or JV-level underlift bbls) portion becuase the MD&A says:
"At the end of the first quarter, Mart was in an under lift position of 373,552 bbls, the receivable of which had been recorded at the oil price in effect at March 31, 2012"
You have to keep an eagle eye out for every time a disclosure says "Mart's portion" to be sure they are talking about their % of JV production/revenue/costs, etc. I've been disecting Mart's disclosures since going long a year and half ago and I would have to say that they are talking about their % here.
Since Mart's % of Umusadege bbls in Q1 was 1,039,840, the 373,552 undeflift position at end of Q1 was 36% of Q1 production.
There is bascially a huge screaming signal here to hedge those barrels, escpeciallly since at the end of Q1 brent oil was at the highest levels in 4 years.
One thing to think about is the whole process of "nominating" and who holds the cards. While neither AGIP or Mart/Midwestern/Suntrust knew that brent was going to drop throught the roof, it would of been in AGIP's interest to purchase at Brent $96 instead of Brent $126 when they started watching the March-May commodities-complex slaughter.
I am not sure if the Mart/Midwestern/Suntrust JV or AGIP specifices when oil can be nominated, but regardless we can buy put options on a futures exchange to lock-in brent $126.
Now to start another speculation - maybe the underlift loss was just a small reason our old CFO is gone. I would lean towards no as we are getting a very experienced CFO.