the elephant in the room

I just rechecked the Gurame drilling announcements. MEO's cash position may be much worse than many think.

MEO indicated that Gurame would take 35 days to drill on an untested basis at a cost of approximately $25 million. MEO took control of the drilling rig on the 21/9 and it isn't due to be released until next week on the 20/12. That's 90 days.

Assuming it's $25 million per 35 days then (90 / 35) * 25 = $64 million.

At the start of drilling MEO had $48 million. It raised $9 from the SPP and $10 million from Noonday. That's $67 million.

At a guess I'd say they have less than $10 million left. Less than 2c per share cash backing with extremely little prospects of doing another capital raising unless there is some good news from left field.

I think they're in serious trouble. Management went for broke and it looks like shareholders are going to go broke.

If Gurame wasn't production tested everyone would have assumed it was a gas discovery. It would have kept the share price above 10c and it would have helped to farmout Gurame and Ibu Horst. It would also have left MEO with more cash. The production test has cost MEO $10 million dollars, confirmed their incompetence and severely damaged their technical reputation.

If I was a major why bother with a farmout when I could wait for the administrators or do a complete takeover for about $30 million.

It's a pity the AGM has justed passed. It sure would be interesting if it was on next week.