new gang in charge

Are the new Directors flexing their muscles already?

Consolidation of offices to Aktau, away from the 5 star hotels of Almaty, seems like a good cost containment move. Aktau, as described in the cut & paste below, has a temperate climate with the temperature several degrees above zero in January.

I was surprised at this temperature description as the company reported severe winter conditions last December /January at the drill site which is only about 70 km east of Aktau and about the same altitude (-10m approx). Perhaps the new drilling will not be affected by the weather over the next couple of months.

The latest quarterly report stated that the "Company now has funding to drill 2010 and 2011 commitment wells and to bring NWZ 2 onto production testing." Cash at the end of the end of the September quarter was $9,013,000.

Whereas the 2010 Annual Report stated:

"The funds raised from the Offer are planned to be used in accordance with the table set out below:

Drilling of 2010 Commitment Well (J-51) $6,000,000

Bringing of NWZ 2 Well onto Production $500,000

Extension of Block 31 Permit $500,000

Working Capital $1,827,838

Expenses of the Offer $344,543
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Total $9,172,381 "
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It appeared to me, at first blush, that the reports were in conflict but the quarterly report stated "Cash reserves of the Company as at 30 September 2010 stood at approximately $A9.10m. With the final proceeds from the Rights Issue being banked in early October, this figure increased to $A14.0m."

So! the two wells can be funded as stated with a bit of a top up from pending oil sales...less the extra Directors fees of course.

With cash in hand for the second well, and 23 or so employees in Kazakhstan, one would think that J-51 should immediately follow J-52 so that the rig could be located to the new drill site at a considerable saving in drilling and overhead costs and, potentially, earlier cash flow from sales.

Now we have the new Directors in place, and a new country manager about to be appointed, let's hope that the long suffering shareholders are considered in the direction taken by the new gang.


AKTAU DESCRIPTION:

"Stuck between the desert and the Caspian, hundreds of kilometres from anywhere else of any size, with all its water derived from desalination, Aktau is perhaps the most oddly situated of all the weirdly located places scattered across the former USSR.

Local uranium and oil finds were the reason Soviet architects began to lay out a model town of wide, straight streets here in 1958. Thanks to the sandy beaches on the blue Caspian and temperate climate (several degrees above zero in January), the place was also developed as an elite Soviet holiday resort.

Now uranium and tourism are in decline, but the oil industry is picking up the slack. With its broad streets, benign climate, seaside location and reasonable standard of living, Aktau is a pleasant town to spend a day or two. More of a reason to come here, though, are the natural and manmade wonders of the surrounding region, Mangistau."