Wow. You are on a roll with your scare campaign this time....

Wow. You are on a roll with your scare campaign this time. Everybody else would have seen this as good news, with more than USD4M slashed out of expenses and payments delayed for 9 months interest free, but not you. But I’ll go along with your logic, for argument’s sake.

First of all you are assuming oil to stay at USD30 for the entire 2016 to generate USD10M in revenues from Manora. Good one. Whatever happened to your references to UBS reports? I recall you handily used them on your previous scare campaign to drive down the SP to the low 20s. Maybe is it because they are now predicting oil to hit USD60 in 12 months and to average USD50-55 for 2016? That would certainly ruin your “analysis”, wouldn’t it?

But I’ll humour you some more. Let’s say oil stays at USD30 for 2016. Tap will have the following incoming cashflows:

1. USD10M at 3500bopd from Manora
2. USD12M from gas contracts (~18M AUD)
3. USD9M settlement from NGP (probably USD10M with interest, but I will use USD9M) - realistic view to have this setttled this year

That is USD31M in income with oil at USD30 for 2016. Not including what is raised in the current SPP. Enough to pay for USD21M debt repayments, USD5M to Mubadala, with USD5-8M left for admin costs and other incidentals. Again with oil staying at USD30 for 2016. (Which it will not by the way). So where did the “need” for a capital raising of AUD20M for a staggering dilutionary effect of 200M new shares come from?

For all the other readers, here is a more balanced analysis of what Tap can earn in 2016 respective of oil price average:

1. USD30 oil price – USD31M (USD10M from Manora)
2. USD40 oil price – USD43M (USD23M from Manora)
3. USD50 oil price – USD56M (USD36M from Manora)

If you go with market consensus, choose option 3. If you want a more conservative view, choose option 2. Both options hardly life and death scenarios. Even option 1.

I feel for the nervous investors out there. Austosime has done this scare campaign twice before driving the SP into the low 20s and then buying and taking a profit on the rebound. The first time I think he sold in the low to mid 30s and surprise surprise around the same levels when he started his scare campaign. I do not need to read previous posts as I vividly recall the incidents. I have no doubt this is what he is doing right now. It is obviously your decision to hold or sell (or buy some more) but I feel obligated to log this post.