The Stanwell deal will go through now no matter what...you can't unscramble the egg. So the initial certification process will go through. At least that is what I am assuming.
Occam, obviously the new board know the difference between GIP and certified reserves. I think their overall point stands thought that $6million for an option over a potential resource of ~800PJ is extremely cheap.
Another issue/question I have been thinking about, is when Icon will have to raise cash. Assuming Stanwell like what they find after the initial $6million spend, the announcement reads like $30million does not go straight into Icon's pocket (i.e. it is not a cash payment like the $6million). It seems to be Stanwell's share of ongoing development costs (50-50). Which means, Icon will have to raise $30 million themselves within 6 months. What happens if we recontract the wrong rig again? What happens if there are extended dewatering problems remaining before that $6million is spent? Icon might be raising that $30 million without any 2P reserves and without flow rates. There could be large dilution at prices not much above current levels. If things get ugly with the board and contracts need to be paid out (on top of the already high wage bill), more cash might be spent before wells are drilled, dewatered and flow rates established. From past experience, I am worried that $6million won't be enough to get those flow rates going and, thereby, to push the share price up so that the next share issue is not very dilutionary.
Icon really is a mess. I think the current board is wholly responsible. When assessing the new board, I completely discount the details of the past clothing company as well as the terms of the contract between Icon and Baldwin (i.e. it was instigated by Icon). However, the allegations of fraud in the past do worry me. When you add that to the share price manipulations, we have two instances of dodginess. Two points make a line, which is the beginning of a trend...it really is becoming a choice between the lesser of two evils. I still lean towards putting new people on the board just because we need some degree of oversight. Whether RJ stays or goes, is somewhat secondary to that. Depending on how the voting goes, we might end up with 6 directors!!! But something needs to change.
ICN Price at posting:
22.0¢ Sentiment: Buy Disclosure: Held
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