ALLIt is simply not good enough for the Executive of a listed...

ALL

It is simply not good enough for the Executive of a listed company to not communicate with their shareholders. Shareholders provide capital to a company, and, on an ongoing basis, provide additional funds as and when needed. Burn the shareholders (through ignorance or complacency - whether intentional or not) and you vastly reduce the chances or raising additional equity at a fair price. Equally, you reduce the chances of raising debt or forming partnerships with other companies.

As a banker myself (*Gulp* - that's an admission eh!) I know that when I consider granting credit to a company - whether in the form of unsecured funding, secured funding, or bank guarantees or underwriting - one of the first things I look at is leadership and the ability of the Executive to clearly communicate to all interest groups their strategy, resource utilisation, capital returns, and ability to repay debt and - if necessary - equity. When I see a share price languishing it immediately signals to me that either (a) the company has a corporate communication "issue", or (b) there is something that the market knows that I don't know. So in the case of MAY, I am left wondering which of these two it is.

I have also worked for a listed company in the past, and know that corporate communication is an important way of ensuring that all shareholders are fully informed at all times (within the bounds of corporate sensitivities) and that all other stakeholders - suppliers, partnerships, and buyers - are comfortable with the company. In the case of Melbana, a "rancid" share price (I believe that word is appropriate) may signal to partners - such as Sonangol or CUPET - that the market's perception of MAY is rather poor. It signals a "weak hand", which flows through to negotiations and leads to sub-normal outcomes which, in turn, have an additional flow-on effect into market cap.

Companies exist for their shareholders: That is the cornerstone of capitalism. So to ignore shareholders, simply because you think that some of those shareholders (perhaps a subset of them, such as those holding smaller parcels) comes with great risk. And when you are an O&G minnow, never knowing when you will next need to tap the market for additional funds, this strategy comes with significant risk: risk to the same shareholders who have already stumped-up their hard-earned-wedge to make you exist in the first place. When you bite the hand that feeds you, you need to remember what it felt like to be hungry before hand.

Undoubtedly there will be excuses here, that the lack of communication was due to resource constraints (we were too busy, working 15 hours a day type of thing), commercial-in-confidence issues (can't tell you, its a secret), and "nothing new" statements. But all of these excuses are not in line with the market's own expectation that shareholders be kept informed, particularly when in the midst of a drill into a lower zone where the company itself had a previous failure. The company have openly eluded to this being a "company maker" drill (both A2 and A3 drills combined) yet the absolute lack of detail provided by the comopany is astonishing.

In all liklihood our message of not good enough will not get through to the company, and they will continue with this "corporate silence" for some time to come. Sure, we may get one or two updates, but a leopard never changes its spots. So as a result, the ability to raise additional equity - at "fair" levels, the ability to raise debt, and the ability to negotiate on an eye-to-eye basis with partners is greatly diminished. The outcome from this is that the PE of the company will diverge from the norm and the company will never attain "fair value", forever being doomed to trade at a vast discount to the sector's fair value. If this is good enough for everyone here - defend the company and keep quite. If not, make some noise, ask questions, and insist that the central digit is extracted from the place where it seems to have been lodged for some time now.

Rant over. Hopefully common sense will prevail, and the company will provide an update. Hopefully good corporate sense will prevail, and communications with shareholders will vastly improve.

We live in hope.

Kit.