A call for a clearer SSN strategy

I've spent a fair amount of time learning about strategy and wanted to share my thoughts here on strategy (expressly not other company performance indicators) and see if anyone had further constructive commentary. The below is my personal thoughts as a long term hold SSN investor (that's being polite!)

A more comprehensive SSN strategy should be informing shareholders how to address 3 key areas.

1. Market conditions and response to risk

2. Why/where the SSN strategy has needed adapted over time - why does the company need to focus on the current year's objectives and how will executing the objectives return value to shareholders?

3. How is SSN performing and what assumptions have been made against forecasts?

So let's look at the last few announcements and see if we can make any sense of the 3 key areas.

The September 'good oil conference' slides (http://www.samsonoilandgas.com/IRM/Company/ShowPage.aspx/PDFs/2624-72815087/GoodOilConference2015)  lists a 1 page strategy as:

Produce existing drilled and completed inventory of North Stockyard and Rainbow wells.
Flow the Bluff well to determine whether an oil leg exists to the nitrogen accumulation.
Evaluate conventional targets in the DJ Basin
Complete the commercial arrangements for a new project area located in the Paradox Basin Utah, that is economically attractive at $50 per bbl.
Decrease overhead costs.
- Head count decreased by 30%
- Directors and Staff accepted a 15% salary cut

As far as a 1 pager, it's strategic value is diminished because the strategy doesn't tell shareholders WHY, just the what and the how. Where is the SSN vision? How has it changed in light of the company performance and market conditions? Questionable marks here against key focus 2 above.

There is some inference, but a good strategy lays this out, it shouldn't make the reader have to piece it together. SSN should link to other material to help close the gaps and make it easy for potential shareholders to understand the SSN value proposition (goodness knows we need investors!)

Little mention of market conditions, possible scenarios and key risks. No financial strategy, with commentary around POO - there was a financial strategy in past slides, slide 6 http://www.samsonoilandgas.com/IRM/Company/ShowPage.aspx/PDFs/2392-44239094/ShareholderPresentation, which seems to have dropped off in the the Sept conf slides. Questionable marks here against key area 1 and again, making investors and potential investors do the guesswork.

So how will the objectives listed in the 1 page strategy realise value against the (missing) vision? (the 1 pager reads mainly like a to-do list which is the hallmark of an average-at-best strategy). Well, there are some clues on the last 2 slides, the production estimate and the closing summary slides.

Production estimate is BOPD will diminish until Nov 2016. Let that sink in. No mention of the risk adjustment for the estimate or timeline (what is the confidence is those numbers?). Then the BOPD estimate spikes to over 3000 BOPD by around Jan 2017. Roughly 3x current production.

So what gets SSN the BOPD gain? Seems like the 2 new contributors are Bluff (DJ basin) and Paradox

The  15 Sept operation advisory did not clearly tell shareholders what SSN's Bluff plan was. There was an update, an option deemed previously not viable and a (imho a lesser) fall-back position.

Investors should be informed about the impact the advisory has on the forward estimate (irt BOPD and timelines), expressed as a risk adjustment (the announcement doesn't read like a gain)  or a material issue/problem.Questionable marks here against key area 3

In summary, investors would benefit from a more comprehensive strategy being released to the market that includes commentary across the 3 key areas outlined above.

Good strategy is hard to pull off, but when done well, it helps people understand a business. If people understand SSN, they are more likely to consider investment.

Food for thought...