OK after a quick read here is why I think this report isn't worth the paper its printed on.
1. at the time it was based on a total of 1.09 Bill shares (905 Mill S, 184 Mill oppies) its now currently at 1.46 Bill total 1.08 Bill shares, 390 Mill oppies) So that instantly reduces the value per share from 17 to 12 cents.
2. It calls for 35 Mill capex over the next 5 years 13 Mill in the next 18 months. So where does this capital come from. The existing 12 Mill credit facility? or more SPP. It took 400 Mill shares/oppies to raise 2.2 Mill. 13 Mill will take what 2 billion pluss shares at current levels? not to mention repayment of current debt converted into shares once they start making cash? Either way I think you can count on at least 100% more dilution lets be kind and say 6 cents PS.
3. Big risks in the assumpitons. 5 wells producing 5mmcf by December maybe 10 wells in 2012 6 are new big stretch considering the $12 mill capex required to do so.
4. a 10-20% decrease in either gas prices or production basically kills any value in the company. It seems to be marginally economical with all their assumptions.
5. the only potential upside is proving significantly more reserves but given the inevidable increase in shares on issue IMO that might only maintain the 17cent price target.
6. Assumption of $2 mill overheads PA . HAHAHAHAHAHA
7. wheres the cash flow for the next 6 months come from?
MAE Price at posting:
1.7¢ Sentiment: Hold Disclosure: Not Held
