RE: Rights & Stock price Don't think the price the stock will fall to is the rights issue price of $0.16. If it does, it will not stay there long and you should be buying. Rather the break-even price for those that buy rights will be $0.185. Here is the logic:
- Shareholders who don't exercise their rights will sell them. The market value for each right is 0.5 cents each.
- It takes 4.25 rights to buy one share at $0.16 or 2.13 cents per share.
- So the cheapest a person who purchases rights can buy the shares is 16+2.13 cents or 18.13 cents
When the rights are issued is the beginning of December. This is when things are going to get interesting as all the equipment is lined up and waiting for the muskeg to freeze. Similar to the Windy Island well drilled in 2011, speculation will start increasing the stock price long before the well is completed.
A little bit of encouragement for those of you who do not have access to all the data. Unlike the Windy Island well, this exploration well is low risk. It is really a development well as it is located between two old wells - I77 and I55. They were logged and I have looked at the logs. There is over 70 metres of oil saturated rock. Water saturation are only 17%. In addition there are seismic lines that clearly show the Canol. Unlike conventional plays - sandstone and limestone - the issue with shale is not whether we are going to find oil. The issue is whether it can produce in commercial qualities. Hence the need for cores, horizontal wells and multistage fracs. Hence the risks for the MGM exploration well is much, much lower than a conventional exploration well which may have a 10% chance of success. I would say that chances of finding oil is 90%. The big issue is whether it will produce in quantities necessary to justify the hugh capital expenditures.
So bottom line for the USA investor is to buy more share to prevent dilution. The extra few cents you have to pay will seem trivial when the stock is priced in dollars instead of cents.
I will stop here as my posts tend to be too long, but if anyone is interested, I can explain why I am pretty sure that this well will produce at commercial rates.