agm updates?, page-8

Hi all, just back and catching up on all the posts. There have been some spot on comments but also some assumptions which are not so accurate. Good to see some quality posts.

I met some fellow hotcopperites in Sydney which was great, including Andy Bee, and the 4 of us were having a coffee downstairs from AGM when Richard Cottee turns up 20 mins early and joined us for a chat. Now how decent is that to come over and introduce himself to everyone - friendly, open and obviously a passionate guy. Great start to day and we also saw the strong open...rest is history, ouch, and a shame it pulled back so far.

We had the chance to meet all the directors before, ask many questions during, and also spoke to them after. Guy Gouldy is a gentleman and stayed and spoke with us after most had left.

So, firstly, the news put out before AGM is not market sensitive no matter how the market took it, as they are not IP rates.

I feel the board decided to put the announcement out before the AGM because of the pressure to update the market, even though they really hadn't got the information we and they had been all waiting for and they are accutely aware that they didn't do a good job with Birch comms (other posters have covered this already and RC apology) and I assume Seeeebastian was also in the room of approximately 30 attendees.
Mark Hart could not make it due to illness and stayed in the US. Only apology for directors.

Richard did most of the talking, well nearly all, and he made it very clear to the room that we are in an "unconventional" O&G company and with that comes more patience than conventional flowbacks...so he apologised for the comms after Birch first hit O&G but NOT the technical situation - that is what it is he said, 10,000 feet below.

TEXAS
This well will flow O&G, and the expectation is still 200-300boepd. One thing noted at AGM was speaking with Guy directly was the 10% can suddenly turn up and do not apply the logic that the time taken for first 10% applies to the next 10 and so on.
He told me the nearest well (T Christico ??) flowed 298bopd at 50% of fuild recovery, and the flowback becomes expotential. He is very positive of the 250-300 flows but will take time and patience and that Pathfinder will come in first (now obvious because of the flawless horizontal and great start there).

Richard said they will prove the Taylor and Austin and then go for EFS. Remember these were appraisal wells, and secondary targets with results good enough to keep working here.

Now for the interesting part. Farmout.
It probably was the most surprising news and I questioned how we could or would farmout such small acreage. RC answered that it wouldn't happen in Oz, but in the US, 3 well farmouts are common.
He also said the previous owners and others in Texas have been trying to get the acreage back, and also many other almost "daily" enquiries on this project. Values have increased 4-5x since they acquired.

Don't be surprised if they are already talking with a farmin partner already...and remember there are multiple targets.

COLORADO
Pathfinder is looking great, I cannot understand the negative comments apart from some punters are ignorant on how this works in shales. Unfortunately I think this ann was forced out to a hungry market before really ready.

They are expecting more than 500 boepd on this well and very confident. Pathfinder is a goer.

Guy showed us a 30ft gas flare coming out of H2 and they didn't expect that. This will assist the oil flows and $$$. Read again - production facilities are being set up. Wake up shareprice!
We will get news on Pathfinder IP very soon imo, and before Birch as all is going to plan.
A farmout here is also on the cards, as this well will prove they have the goods, and RC is a gun at getting good deals. This will speed up our cashflow, and save remaining cash and retain acreage. I agree with this now, and we need a 3rd well to hold full acreage.
jmo, but I would expect another 3 well program here.

Richard was asked his highlight since he joined:

A: "Cracking the Niobrara code" !! first time and also mentioned a major had drilled 6 wells and failed in all.

He is very proud of the team for this, and extolled the fact they are under market rates for pay, and hence why he introduced the exec management options plan, to retain and reward them.

COOPER
I asked why the date had been pushed back to 1st half from 1st quarter.
RC said Beach decided this as they are the operator and is dependant on their own programmes. Out of their control.
Cooper is now due to spud in June 2013.
The well traget depth is 3000m and will cost an expected $3.5m (completed) so will cost AKK 50% of spend after BPT $1.75m spent. This is very low risk as they won't complete if no shows so will cost us nothing, or if successful and completed, around $900k.

OTHER

No current consolidation plan (but not ruled out)

RC said upside in his opinion is 3-4 fold over next 12-18 months...ie 10c

David Nairn has introduced a number of corporate governance initiatives since RC arrival. (for insto's imo)

500 SQUARED PROGRAM
i asked if this is still on target and RC answered yes, and should exceed it. I confirmed this would bring in approx $15m revenue pa. They concurred, yes.

PROFIT
Currently due to early nature of program and smallish number of wells, profitability including aquisition, exploration, production is about 50% (or around $50bbl). This will of course increase with accelerated success in all our locations (+ farmouts) which leads nicely to Richards next point he raised loudly

WE HAVEN'T HAD A DUSTER, something like 11 recompletions, and 6 wells and we haven't a single duster!

I read some talk about the $1m saving not being worth much. Wow, it's really important. Do you realise that 110 boepd is just $3.5m revenue pa, and going by RCs 50% comment, $1.75m is gross profit. Savings FALL straight to the bottom line. $1m is huge in our current growth stage.

Overall, I am really glad I went down, met some really nice people, and unfortunately we had a major overreaction.

I think the news in December will turn this all back around again. I think they had taken on board all the emails to them on Birch. Expect much improvement here.

According to RC, all we need is patience and he will build this little company into something.

DYOR

2.2c with Pathfinder result is crazy.
EV = $21m

Any questions, please ask.
best to all holders and lookers, SL.