bru vs nse geology, page-17

Anatol, the geology may not have changed from 2007, and the business opportunity may be the same, but not so for the capital structure or the shareholders. At end of fiscal year 2008 the diluted weighted shares were about 31.5M. At end of fiscal 2012 that diluted sharecount was 254.5M.

The management may have done okay with their dilutive options and high compensation packages. The service providers did fine too. The shareholders from 2008 were in around 40 cents and might have a much different perspective. The company valuation certainly went up strongly all along, but the constant share dilution means the value per share did not follow along at the same pace.

My own view is that if you can buy in cheap enough, and get about a free year of exploration without risk of a capital raise, you get the upside from exploration surprises without strong downside from dilution. But there is a narrow window of opportunity for that speculation. It's not a marriage to death do us part. You can believe in the company and its opportunity and still want to sell at the end of the year if another capital raise looks close.

Oil and gas explorers are usually a treacherous investment. You need to be on top of the capital structure or you get flattened fast.