call to neon, page-18

This is my second and last post for a while I would imagine. So let’s have some fun – it’s time to smile again! Sorry if it is a bit long……

So firstly in reply to a few of the posts……

To MMMoney – No, I am not on the payroll, very droll lol !
I did speak to management. I did not speak to the tea lady (now there’s a blast from the past!), and I did not speak to Nigel the Interior Decorator who was in the office at the time putting up a Neon Bio-Tech.Com sign! I can only go on what I was told over the course of a rather long conversation. And yes, I have quite a substantial shareholding – probably more than most and more than I should have! I am happy to hold.

To those who believe there should be an announcement or Trading Halt:

I can totally understand your frustration. There used to be a saying “no news is good news!” although maybe that does not apply here.

Let’s close our eyes and imagine…….

Say it was your business (it does not have to be Oil & Gas, just any business).

You over capitalise on a venture that does not work out as planned and you end up owing someone a lot of money.
Everybody knows you owe the money, so they don’t want to know you!
You are against going begging to someone else (a capital raising) as you are in enough trouble already plus who would want to give you money anyway!
The best option is to sell some of the viable assets you still have.
Trouble is everyone else knows this and realises you’re desperate.
Do you get a good/fair price for your assets? Maybe not, unless you are prepared to wait and negotiate with all your might for a fairer price. You have a little time to pay so it would be judicious not to use the time wisely. On the other hand the strategy does not guarantee a successful conclusion.

So how might an early announcement to the market read in the meantime;

• We are currently in negotiation to sell xyz asset to fund our debt obligations. At this time we are not sure if we will get $2m or $12m!!! OR

• The bank has sent the bailiffs in. They have just arrived with a furniture van to load the last of the office furniture. Further updates will be available from our local Centrelink office! OR

• The Blue Sky Oil and Gas Company is in negotiations to buy NEN. We want 20 cents per share and they are willing to pay 2 cents! We reckon the end result will be somewhere in between! Stay tuned for updates!


Now I may be wrong but an early announcement without much substance may panic the market just a fraction! This is especially so when negotiations are far from finalised. Better to wait a little longer to get the full picture and a plan for the company moving forward. The market will then judge if it has been a success or failure.

We may get some updated production figures from California but I doubt if that will comfort nervous investors all that much. What else do you want to be updated on?

Better to know the overrun costs whilst at the same time knowing what the strategy is to pay the debt off, not what the strategy might or could be.

Re: The Kris Energy Share Price

Yes, it took a hit of almost 50% at the time. This was coupled with a poor January in the overall sharemarket as well. It is now about 35% off its high of $1.25 in December. The thing is Kris is a little different to NEN in so much as they have a bigger, more diversified portfolio of assets. They have 4/5 wells in production and others in the pipeline. They recently raised over $US200 million on the Singapore market at $(S) 1.01 and it was 6 times over subscribed! Whilst the Vietnam failure was a blow to them it was not as drastic as it was for NEN. You wonder if part of their decline was the $1.01 people panicking as Vietnam was not as successful has hoped.

So where to for the share price? Who knows. For all the supposed intelligence there is in sharemarket land it is a hugely irrational place. Shares are usually overpriced or underpriced but rarely are they at their true value. For every winner in the sharemarket there is a loser, although in NEN’s case the losers annual reunion might be standing room only affair at this stage! Does anyone know a cheap catering company?

I think in the near term management will be judged more on their ability to negotiate a deal rather than their ability to drill a hole in the ground!

Anyway I’m off to see Bruce Springsteen to be revitalised with a dose of salvation, motivation and passion – I certainly need it….!!! Cheers…………………