Long Run Explor Ltd Ord WFREF

RE:RE:Analyst post

[wilwal]

I am not going to defend the article but to suggest that it is an intentional distortion on asset sales is not necessarily accurate. It is more likely an error by an author who believes that the $100mm paydown is achieveable only by asset sales. On that, he/she is probably right.

The company is guiding for higher production costs now and today we learned that interest expenses just increased by 44%.  And to believe that $100million will keep production stable is not guaranteed at this point.

Personally, I'm happy that the bank negotiations weren't worse because they could have been. Banks are spooked by oil these days.  The banks were somewhat smart in forcing the company the fix the debt problem. Their blunder was that they just put the company in a weaker negotiating position but banks tend to not see their own destructive actions. They should have given the company a better deal with a promise to hammer them into the ground in six months if they didn't pay down $245million. Banks create their own losses sometimes and this is no exception.

Regardless, the market hates the bank deal. This is the real money speaking, not us little two bit investors.

How to play it? Simple. All the bad news is baked in now. I doubt anyone is going to get an order filled at $.65 unless oil price takes a header toward $45 at which time we will see under $.50. However, if you see oil prices stabilize above $55, this is a screaming buy now.

My thesis on this company remains solidly in place.  Buy in now as the company is being forced to make an accretive deal of some sort to resolve the debt problem.  The bet now is whether or not management has the acumen to make a good deal if they can find one.