People seems to worry about MAD's cash position at the moment. With record cash revenue of 7.1 million, how could it burn 10.8 million cash (total cash outflow = 7.1+10.8=17.9 million). In the report, the explained total cash outflow (development+production related cash outflow) is close to 9 million. So it leaves another 9 million.
If we look at its last year's annual cash flow report, most cash outflow went to "payments to property, plant and equipment" and "payments for oil and gas assets".
My interpretation is that due to high impact program, MAD spent a lot of money on buying equipment in this quarter. Some equipment break down during the high impact drilling so that they need to purchase extra. I reckoned that's the cause of this quarter's high cash spending.
Anyway, we will know the answer when they release the whole year financial report.
I have to say that If I am MAD's management, I will cut my time spent on high impact drilling as the cost of the program really outweights its benefits so far.
Without high impact drilling, the company will only burn roughly 8-10 million cash every quarter and it will reach cash flow positive much quicker.
Add to My Watchlist
What is My Watchlist?