big profits, page-5

re: big profits & cashflow Well, PSA finally delivered the goods. And if the big seller has any more to sell, well certainly would have got rid of them today if they wanted to.

A lot of these reports requires some reading between the lines. With the help of my trusty calculator, I would out was the gross cash inflows were for the qtr:

Opening cash - US$5.7M
Outflows ($5.5)
Outflows ($6.7)
Cash in flows $13.6 (ie the balancing figure in the equation)
Closing cash US$7.1M

Hence, gross cash rec'd during the qtr was US$13.6M. That makes $US4.5M a month, which will prob go past $5M with extra Vermillion well now on stream. With that inflow plus the US$7M on hand, plenty of money for Main Pass drilling and development you would think.

4 more qtrs of that in 2005 and they will be awash with cash. And also buying a second hand platform for Main Pass, what a cracker, will save them a bundle.

Also looks like they have hedged in a canny manner. Anything above $5 is really profitable for them, and above $6 is a cracker.

No DD&A figure, but I think it would be foolish to pre-empt your auditors on that one so we will have to wait for the official results. But WC is still churning out 4.4mmcf a day so must have some value still left in it. I suspect DD&A may be overdone in 2004, so could be underdone in 2005 accordingly.

Also looks like total production is somewhere in the vicinity of 28mmcf a day when Vermillion, WC and the Ship Shoal royalty is added in.

Will be interesting to see where the onshore stuff goes. Lower risk, but also way less expensive to do, so will not burn up loads of cashflow up front like the offshore stuff does. Miles less development costs as well. Once they have the critical mass from the offshore wells, the onshore stuff is icing on the cake really.

Roll on PSA. If the 4th qtr report is anything to go by, 2005 is going to be a cracker. Also I am looking for a dramatic increase in their cash balance over the course of the year as that is ultimately where my sh'er wealth builds up. I think this now looks more likely.

Giddy up. Still cheap at $1.20 on fundamentals.