Buddy, I suggest that you do some research around the principles of accrual accounting and the definition of "trading while insolvent".
It matters not that we had $7.7M in the bank on 1 Jan 2012. We burn cash on operating costs at $0.5M per month. I made the assumption that the cost of a second well would be in the order of $6M (I think thats low - the first one cost $10M). Then there's the cost of setting up and operating the ETP would have been - say $1M.
A second well plus EPT plus operating overheads and we're out of cash by the end of Feb. i.e. we are insolvent - and at that stage,
You conveniently ignored my comment about the Board's responsibility to manage risk ...
While we can always look at 'a glass half full' around the new well; around the fact that we could get Surprise to possible deliver more than the 400bbl/day ... assign risk and if those did not materialise - once again we are insolvent.
While the techos were encouraging another drill, the Board has the responsibiity first and foremost to ensure that we do not trade while insolvent and then also to manage risk - and when you analyse the financial history/information, they did exactly that.
CTP Price at posting:
43.5¢ Sentiment: Hold Disclosure: Held
