Pullback has been because there is a capital raising coming as per the statements made at the general meeting. Raising could be at a fairly hefty discount based on 5 day WAP. Check out the details as they have been stated by management. One of the likely brokers for this is Patersons and the SIs there will insist on a discount. This is the primary reason for the fall.
Another factor is slow implementation by management - not exactly much forward thinking or concurrent activity happening at present; ie contract for oil produced??. Remember without this 'well' the company would have been seriously floundering. So management were recently focused on other things and have been very slow to change gear. It will happen but at present it is all happening slowly and this adds to the share price uncertainty.
Management also seems inexperienced. Will the inexperience mean that they will demand that the operator open the choke up to get a larger flow rate and then unfortanely stuff the well. Or will they keep it at half the maximum flow rate and keep it running for years. This hopefully will be decided by the operator who seems to have a better grasp of what is needed to be done. These factors all have a bearing on the share price.
What I ask myself with these type of stocks is why the share price is so low compare to the potential. There is always a reason(s). Fools say it is because the market is misjudging the value. The market by definitions does not misjudge the value. The value will come when the facts change and/or the implementation proceeds and the risks abate.
IMO management have no idea how to conduct a capital raising to maximise the benefit to existing shareholders. It could well be that the raising is done prior to good news. This would allow the raising to be a success and for SIs to sell into the good news when it comes. The benefit of this is that the raising will have no trouble being completed and the discount to the 5 day WAP will be far less that otherwise (20%??). The other way of doing it is to put out good news and hope the share price goes up and then have the discount.
The share price is low for good reasons but IMO the future looks good for those who want to hold for the longer term when hopefully some of the above risks have passed.
CTR Price at posting:
2.1¢ Sentiment: LT Buy Disclosure: Held
(20min delay)