pattos report, page-5

Hi Bello.
IMHO nothing has changed AT Utah. Lots has changed IN the financial world as we knew it. Why so quiet? Well I have had nothing new to add to previous posts.

Management has been consistent in failing to advise market of what is happening. As of today they remain consistent in making promises, promises etc. There have been various reasons (not excuses) for the many delays. So nothing much has changed up until the hydrates announcement of 12 Sept. That was a good sign I think, more details of the reasons for the delays. Could be that 0.40 has caused a rethink on communication.

Big question here is do you believe the reasons offered. Well, I have a big stake in MAE and have always checked out the reasons, from multi sources, as best I can, and I believe them. I don’t like it but there it is. Any non believer has only themselves to blame if they did not get out 12-18 months ago. On this point I am fed up with the bitching posts. You are either on the train and accept the reasons for the delays or you should get off.

Please don’t construe any of these comments as support for management. JC’s policy of refusing to update the market and failing to support the SP has a lot to do with where we are now relative to the 30% drop in the market. I recall at the last AGM JC saying (in his presentation) that the Chairman “put the phone down on me” after a heated discussion re releasing updates. JC appears to run the company as his personal and private wealth creator.

I agree with recent posters here speculating on “imminent” (a very poor choice of words) announcements. IMO we will see 20mcft at Helper, maybe one well at a time, coming on stream over the next few weeks. That fixes the cash flow. IMO the resource report will indicate huge reserves (we know this from the first report years ago and announcements) and will specify how much is recoverable. The reserve report will IMO at least double the 2P 319Bcf they have now (opinion based on wells now vs wells then). IMO we will see 1P, 2P and 3P values. (Why? Because GS need this to sell the company).

Bottom line IMO is that asset value will equate to a SP of US$4+. The value should be established by the AGM in November so we should all know what we could have had if Wall Street had been better regulated and free of poltically motivated decisions. (As an aside here, can you believe that Congress members put their own reelection ahead of probably saving the country, the world??? and certainly their constituents from the greatest financial disaster in history, and then took a holiday.)

So what will the believers, and a lot of the whingers, be rewarded with? If there is a low bid hostile take over – bugger all, maybe $1.30. Thankfully these are not common in the US. If we are prepared to wait for buyers to appear once the asset value is determined my prediction, IMHO only, is that the US$4+ will be discounted to US$2.50 (pessimistic!) which is still over A$3.00.

Will buyers appear? Gas demand and prices look to be sustainable even if the economy is belly up. Exploration is a lot more costly and risky that buying 1P and 2P reserves off the shelf. Big oil companies are under pressure to reduce costs. They are also cashed up. Competition is strong. God willing (the real one, not JC) and GS pushing it, we will have an auction. Who knows the result. Not me unfortunately.