capital raising, page-25

I would be quite interested to know if CVN was every approached for their share of the Thailand assets. If the new program is going to get quite expensive is it possible our partner could take advantage of our clear lack of cash to fund this, I note that this cap raising only sees us through until next July? They have been unlucky that there has been so much production shut in by regulators over the last 12 months, which has eroded the cash faster than could have been expected 12 months ago.

On the other the timing of the raising makes me think that there was a previous expectation from management that financing was possible from another source, which we expected would be the phoenix farmout. Does this mean this is not going so well, or was that ever only going to get us a partner committed to pay for developments there. What happens thin next July? I think we will be ok by then because I think the management have shown a clear, well justified path to 3000 bopd.

In the mean time then what do we have that could move the price up? The thought of an offer from Towngass did it, but there does not seem to be much reaction from the Phoenix prospects. Increase in production from the sandstone should be a gradual increase, although maybe countered if the oil price drops. I think when the shut in production is released, that will show a big jump in production and remind the market CVN is back on track. Also management comments that the initial production when it comes online may be significantly increased. Even if this is temporary if it can be replaced by more sandstone wells as they plan, continual monthly increases in production should be enough for a re-rating.

I think CVN is undervalued mainly because the production has been dropping consistently. Fixing this is the best chance for the price to go up. So I am staying in through this ordeal for now, and bought some more (unfortunately a few weeks before the capital raising as I was expecting the Phoenix announcement to make capital raising unnecessary).