Afroboy, Kiwi, Kooks and Co, we all have valuabel contributions to make to this forum.
I am being misconstrued by some as devaluing the company. I again wish to stress that my analysis is based on company facts presented. The facts are:
1. In the absence of another capital raising or sale of Oklahoma, this company only has about 3 months $ left in the kitty - cash in bank + available loan facility. We are potentially talking insolvency (yes, worse case scenario but it's a possibility. The credit risk of MAE is high at the moment.
2. Yes, the company is producing gas. But it insignificant and they need to produce monthly revenue of $3M at the minimum to be a sustainable business. This means daily gross production of about 15mmcft. The March quarter report was concerning. Whereas in previous annoucements management was indicating production at CC's 5 wells in the range of 1-5mmcft/day, where one could deduce a worse scenarion of 5mmcft/day being produced from CC + a further 2mmcft from Helper and Oklahoma, the last quarterly report only said the 5 CC wells were producing at varying rates. In other words, one could no longer establish a base production level of 1mmcft/day per well. By implication, I construe this ommission as an indication the the 5 CC wells were producing at less that the previously advised range at the time of print (end of April). This is not a good sign for a company desperately in need to cash flow.
A final point. Patto's hold recommendation simply means this. If you don't own this stock, then there is no compelling reason at the moment to buy it. Patto's has put the onus on MAE management to prove sustainable levels of production before they review the company's position. From where I stand, I'm now on the side of Patto's. Until Management confirm production rates in the range they have indicated and for a period of time, I do not believe anything they say. Remember this same mob indicated projected cash outflows of $2M for the MArch 2008 quarter as recent as Jan 30 2008 and then reported an actual outflow of 10.5M a few months later without explanation. Good luck to you Kiwi and Kooka if this level of reporting warms your respective hearts that this mob are in control of the situation. Again, remember they are fast running out of month with no evidence of sustainable production rates thus far. Two years of reporting of "imminent", "substantial" and "management is very confident" has nothing to show. On this basis, I have no confidence they will be producing at 20-25mmcft/day in the latter half of the June Q when this level of production is so critical for the company's future.
MAE Price at posting:
0.0¢ Sentiment: None Disclosure: Held
