Hi Friends,
Last 6 months had been a terrible period for Swala and many factors contribute to the downfall of SP. Though, external factors like Oil Price cannot be controlled, SP situation could have been handled much better if Management were proactive. I believe Management had failed in more than one occassion and am extremely dis-satisifed with issue of convertible notes to Magna as this is not what I expected and invested my hard-earned money in Swala. Though all is not over, certainly we are not in right track and direction taken by Management is a disaster waiting to happen. Hope Management learnt their lessons and never ever repeat such mistakes.
Now coming to Convertible notes, at a glance it looked like NOT SO BAD decision. Since SPP was not supported and Market outlook for Junior oil was poor, Management did not have other option than to go for Convertible notes. But devil lies in the detail and Convertible notes were issued in such a way, lender benefits the most and gets a hefty returns on the investment. Just looking at the price at which convertible notes were converted into shares (from memory, 7.8 cents earlier and 6.7 cents now), we cannot help but let out a loud cry, why did Management go down the path of Con.Notes. We have not had any good news that can support/raise the SP for a very longtime. We were long over due for Seismic results, CPR for K-K;Pangani and 12B, Farmout, Eyasi license update, Plans for 3 drills that were suppposed to happen before end of CY2015. I wonder why Management is very silent as hint of any of these good news will uplift the SP and VWAP would be decent enough so that Magna should convert at a high price which would mean less dilution and less number of shares on issue.
We have a very long road ahead and Magna deal might not make much of a difference if we hit OIL during drilling. But, Management should take all decisions with a long term vision which I believe is not the case with Magna deal. I stress again, IMO I cannot imagine a deal worse than the one we have with Magna and if not handled right, is definitely death spiral for SP. We need the Management to Act and Act Right Now, if Swala needs to be taken seriously and if they are committed to 3 drills later this year. When I spoke to David, he highlighted Management were left with no option than to go for Magna deal as SPP was not supported. My only question and worry is, why there has been no news that can support SP and let Magna convert at such a low price ? Why VWAP is always kept at such an all time low after the deal was put in place ? Why there is so much selling pressure and where is it coming from ? If we have any news on Farm-out or Drilling Plan or 2C resources from Competent Person Report or any news on Eyasi, that would definitely help Swala SP and is a WIN-WIN situation for Swala and Shareholders ? Will Management look into concerns that I have raised, only time will tell.
David told they are not going to issue any more convertible notes to Magna and I still trust the Management. A Man is as good as his words and I hope Management keeps up the promise. I still believe Swala has very good assets in EARS region which is current hot-spot for Oil Exploration and could very well be future hot-spot for OIL Production, very good Management team and excellent Partners. Swala has the potential to multi-fold its Market value if they strike Oil during drilling and prove the resources similar to what Africa Oil did not so long ago. But Management have to storm the weather if we are to see the sunshine in Future. Trust that Management will deliver but they have had many wake up calls in the past and I sincerely hope, they woke up and are ready to rock.!
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