As I reported yesterday all is not well with this company. They have earned much less then forecasted Plus they now owe oil back and have taken on what looks to be 75 million loan - 25 million line of credit. The CEO used a formula based on 2011-2012-2013 earnings to administer a dividend which now looks to have been a little early, based on the current financials and upcoming financials. The rates for there loan looks to be terrible. Especially using ALL of there field assets as collateral. They should be paying 90 days libor plus 2 at most as the assets cover everything and then some. This is a red flag. The fact that the CEO did not address the $100 million loan right away is another red flag. Also he has only given general information as to how the money will be divided up. We will have to wait for another 1 or 2 quarters to see how he really uses the money.
Agip should rename its company to gip because every time Mart uses these old nasty lines they contribute to polluting the land and water. They also lose more then everyone is saying with illegal taps. Which I might add are still a very big problem.
Mart has again not taken proper security measures to ensure that the pipeline will remain fairly un tapped and safe for operation. Using Satellites are one thing that can be done but the capabilities are limited given the location. The pirates now have underground taps put in place. These do not show up as quickly. I have even heard that these punks are digging various tunnels in main areas of oil pipeline production just for tapping reasons. I thought shaw shank was only a movie.....
I have reviewed many security companies for pipelines and two seem to be good enough for this location. One is sensors that are placed along the pipeline which do detect taps through vibrations and flow pressure decreases and give detailed coordinates to be looked at. The other involves dyes... bio florescent markers. These markers are not viable and need specific reader to detect them. It allows you to see if the oil has been tampered with and allows the security companies (private boots on the ground) to see who is selling there oil.
This company was viewed only one year ago for great management and a CLEAN balance sheet with lots of growth. Since then they have taken on debt and have yet to truly attempt to fix the stealing of OUR (shareholders) oil. The CEO has now become very generalized in responses when questions are emailed ..IF HE REPLYS AT ALL. He has also chosen to NOT INFORM the shareholders when events happen. I asked 1.5 months in advance if the pipeline was shut down and for the date it started. No response. I asked what the $100 million was for...with some details.....no response....I even asked what measures where going to be taken for something more than a hope that others would not STEAL the oil....no response.
This has a making of a CEO that is hiding other things and is obviously not to be trusted. In November 2012 I spoke with him on the phone and he said EVERYTHING was fine and it was all steam ahead. This recent news release clarifies the same questions I asked back where lies. The dates indicated in the recent press release that the pipeline had ALREADY been shut down. The Local news and buzz from the locals that I was receiving from down there was right.
I will be looking my next move for this company. The CEO has left a scar on the company in my eyes. The assets are great but this lack of transparency is very troubling.
Regards