At a guess, the company has sold a large percentage of the 23 million small-holding shares, capping the previous rally and effectively "sinking the ship" along the way. At some point they will need to disclose exactly how many were purchased (from small holders) and the net price achieved. Whoever the broker was, I am guessing they were left with a few mill and when it broke back through 2.7 they panicked (and dumped the balance) which is why we saw some large orders come through. At least, that's my best guess as to what has happened during the past two weeks.
The rally has also been killed off by lack of communication by the company. They have literally "gone to ground". Six weeks of silence, which breaks AP's promise of "try to do better" on that front. I have written to the company several times, and unlike previous occasions, they have chosen not to reply. Mind you, I can hardly blame them given the tone of my last email.
All that aside, the fundamentals (of Block 9) have not changed - particularly during the past 6 weeks. Melbana are sitting on a decent set of reserves, with the probability of further upgrades (for those in doubt, read McDaniel's previous observations about the upper units and 1B West). But as some here correctly point out, oil in the ground ain't worth much if you can't get it to the surface. I will concede on that, and admit that even a 90 year old sucking on a straw may have better luck of sucking the oil out.
Putting my bullish hat back on: let's assume - for a moment - that the company's did indeed communicate with one shareholder and indicated that the well was complex and that they were addressing various zones, hence the delay. I assume that this means isolating and treating each level (of Unit 1B) in order to maximise flow. If that is correct, they may not have achieved their perceived maximum flow on each level, but DID consider that the treatment was indeed working and that further washing would lead to better flow. In essence, there must have been some evidence that flows were increasing (as a result of the acid wash) but they were yet to achieve their desired level of flow. If flow rates were totally "dead" (did not respond to acid wash) It would be unlikely that Melbana - with Sonangol and CUPET looking over their shoulder - would have persisted. They would have just moved on to Amistad-2 and published an update which dribbled on about what a great learning opportunity A2 was.
If we are to believe some here, the update will most likely come early next week, thus it was not surprising at all that it didn't come today. Admittedly that does tell you that there is nothing "fantastic" (reportable according to the ASX Listing Rules) in that update, so anyone thinking that Christmas is next week may need to adjust their expectations. Most likely, the update will give us further detail as to why the delay, and further detail on the current actions being taken. Hopefully I am right that they will note that flows have improved and that their prognosis is that further treatment will results in further flows, but even if I am correct I am not sure how the market will take it. They may also provide further detail about Amistad-2, but - in line with Melbana Time being akin to Fiji Time (anyone who has been to Fiji will understand that concept) chances are that we are still a few weeks away from spud.
Bottom line: Rome wasn't built in a day, and Cuba takes a hell of a lot longer. Rule of thumb seems to be to take any timeframe "promised" by AP and the team and double it. A four week remediation (as conveyed via their timeline, which they published) is an 8 week program, and so on.
My personal view is that Melbana - pre any announcement - trades around 3 cents. South of that, buy. Too much north of that, perhaps lighten up a tad. If the remediation produces north of 2k bbl/day, we will see 5 cents. Spud Amistad-2, add 1 cent, and so on. Once 7 weeks put out 15k/day, then we can start to see some real value in the SP.
Until then, chill.
Enjoy your weekend all.
Kit.
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