entitlement issue prospectus, page-90

Hi Willeydel,

Yes a another CR may have been mentioned in the prospectus in the words- more capital will be required-

I was surprisded by this statement but I think the company is just covering itself if it needs more in the future.

The need for more capital comes down purely to the rate of spend they choose. If you have wells that have been previously paid for and are producing income and will provide a profit after eight months then you are making money and its a timetable of future expansion costs that are important. Some maybes above but with the PB there appears to be little risk of a duster.

My spreedsheet of the companies cashflow actually shows they are flush with cash until August which is the last month I anticipate they will fracc the 10th well, a horizontal. What income the wells generate before then will provide either a selffunding future for the next 10 wells or a few million requirement if they continue a rate of at least 1-2 wells a month. If each wells takes 8 months to pay itself off and the 10 well programme is now paid for with this SPP which it what it appears, it is what the company spends in months 9,10 11 etc that may require more capital than say 7 producing wells income can generate.
Maybe last 3 under fracc unloading, production facitlity, gas tie in etc.
I have increased the cost of the 1st horizontal to $4 million as it appears it will now be a 30 stage fracc.
After paying for this well which I believe is the cashflow key the company should have $4.5 mill in the bank. Remember they have $2.8mill at the moment and income from wells which I have reset back production 8 weeks from fraccing completion. A 3D siesmic cost I have not included.
So to answer your question they will have $4.5 mill in April with 5 wells paid for and have $2.8mill now with 4 wells paid for. Really your question is one of how much cash will flow from the first 5 wells. That is something we can only estimate.
Hope that helps.
Exciting times and days ahead, Good luck all in your decisions.