RE:RE:RE:RE:RE:RE:Strong volume, odd closeYou are assuming many things. I've been following this company for a while. They did not release a coporate presentation or plan yet. The management discussion and analysis is not clear if the company is 100% finished with all the problems with the subcontractors from the last failed well they drilled. I'm positive they will clear everything as they have managed thus far to eliminate most of the debt. From what I read, there is at least one contractor still a problem.
The idea is to grow the company in some manner whether it is through drilling another well or expanding the gas plant. Unless you have inside information, no one knows what the plan is.
I do agree with you that the gas plant is generating cash flow. But they are not drilling shallow wells that cost 250K. If the wells cost 250K$ to drill, the company would already be drilling.
The wells cost over 10 million $ to drill like the last well which almost bankrupt the company..
Joint ventures are hard to come by these days. And why let someone else have 50% if you can go it alone by waiting longer once you have the cash if you don't want to dilute? Again, we don't know what the plan is.
DocPat wrote: Hello Kevin, welcome the board. Do take the time to read the Rock's post .. Well researched and very in the mark. Just to bring you up to speed a bit .. ArPetrol have numerous completions to do before going after the big offshore stuff. These completions are very inexpensive .. Estimate $250,000 per well. Assuming 5 wels of 10 warrant recompletion and they make 200 boe/d (the existing wells made 300 boe/d) you have a company now producing in excess of 1100 boe/d .. Without issuing one share. This is in addition to a plant that is making 5 million a year net cash that is un encumbered by any royalties. The next step would be to work out a deal with a joint venture partner to drill the 3 development wells. As they own the land they can ask for a partner to pay for the drilling of the wells for. 50% interest. This provides an additional 3 - 6000 boe/d net to the company with their partners gas going through the ArPetrol plant, which makes us more money.
The next step is to expand the plant to double it's capacity and optimize to get more liquids from the processed gas .. Again, more un encumbered cash flow ..
Rhe price of gas has gone up significantly since they started this company .. They drilled the well and got the target they were looking for .. It was only mechanical problems that kept this from going to $0.30 preconsolidation .. $7.50 post consolidation.
A good company you say .. I would say one of the best opportunities I have seen in the market in years .. .. IMHO .. Hope this is helpful.
Doc.