Positives & Negatives For MartPOSITIVES
"Mart and its co-venturers continue to have strong production at the Umusadege field with 520,000 bbls nominated and delivered thus far for Q312."
Only 408,638 was was produced and sold in all of Q2 with a fairly significant amount of the produced/sold oil not nominated causing underlift. Also, this was at an average of $105. Brent Crude has been hovering over $112 for awhile now and were premium to Brent.
The UMU-10 well commenced drilling on July 4, 2012. The well is currently at a depth of approximately 7,688 feet. It is ANTICIPATED that the UMU-10 well will reach its targeted total depth of approximately 9,700 feet before the middle of September 2012."
Key Word: Anticipated
According to AGM presentation where at $509 million in proved reserves alone which equals to about $1.48 a share. Market right now is giving no value to probable reserves at $142 million or about $0.41 a share.(source: page 19) https://www.martresources.com/wp-content/uploads/2012/06/Mart-Resources-AGM-Presentation_28Jun12.pdf
"Subsequent to June 30, 2012, Mart has collected $41.6 million of its accounts receivable and other receivables related to oil sales from the Umusadege field."
So why are people worried about dividend sustainability going forward when we just placed $41 million to the cash line of the balance sheet from receivables?
Don't forget UM-9 had 430 feet hydrocarbon pay. Um-10 could be very significant.
NEGATIVES
The 18% AGIP Pipeline loss is concenring. Even the 10% stated loss so far in Q3 is worrisome
Sustainability of dividend going forward if we continue to have more quarters like Q2
All the risks that come from operating in Nigeria
Possible negative catalysts in unsuccessful wells or delays in pipeline construction
Continued lower percentages of oil produced due to lack of drilling