back live...

....thanks Ciggys.

After being in the wilderness for some time my summary of the last 12 months:

1. Company presentation: 12 months ago the company had repeatedly said that ERH will be producing 2,000 bbls by 2010. Management points out of 10 - zero.
2. Field 330 - Paca 1 still producing however what has happened to the development of the field. What has happened to Paca 2 which was 'completed for production' over 12 months ago but still no oil yet. There is cash in the till so what has happened to Paca3,4..... Management points 1 out of 10.
3. Field 430 - 24 months ago the find of the year with the sp screaming to 50/60c, 18 months ago Tatu 2 was going to deliver all unanswered questions and here we are now with no release to the market on field size or flow rates. Management points 2 out of 10.
4. Relationship with JV partner - we all know is a zero out of 10. Manga who ?

So, where to from here -

Positives - they have some good territory (and some good new territory, If you are a buyer, low sp.

Negatives - JV partner disputes, no action plan, lack of information to the market, oversized and expensive board.

So where to from here ?

1. Kiss and make up with Gavea. I almost think they need to get a professional in. I can't really understand it? both companies have the same goal being "maxmimise wealth for shareholders" so if egos are in the way let someone who is good at disputes resolve it.
2. Get a production schedule to the market on both 330 and 430 and stick to it. Give updated cash forecasts and EBITDA levels also for (say) the next 3-5 years. Funding requirements = cash on hand plus capital raising plus borrowings.
3. Cut out the dead wood in the board. Imagine if we could then get someone with the right experience actually based in Brazil. In fact I would go with a local who is well respected.
4. Finally get the media right, more frequent announcements with detailed info that will enable brokers and Joe public to be able to assess a fair valuation on the company.


I know it is easy to put the boot in from the sidelines but current management need it. I just look back at the progress in last 12 months and see lost opportunities.



Spozzie