Some great recent posts here related to investment strategy and the dangers of being swayed by HotCopper Posts.
My own investment decision was based mainly on Heron South-1 drilling being successful. I also saw MEO's Carnarvon acreage as having potential.
I always appreciated the risks for MEO going alone on Gurame (but sometimes you are lucky). I flagged those risks and what I saw as a misplaced exploration strategy (e.g. going for gas not oil at Gurame) here on HotCopper last year.
I also correctly predicted that MEO would attempt to raise additional capital last year during the drilling program. This was based on what I believed was a significant underestimate of Gurame drilling costs - e.g. testing was not included in the $25 million pre-drill cost estimate although it was always flagged as being part of the drilling program).
And things do go wrong with wells. Geology is sometimes unpredictable, although in Gurame's case as the sixth well on the structure, I thought that the risks would have been well understood and accounded for by MEO prior to drilling. I was therefore surprised that Gurame had so many drilling problems and took so long to drill. The proposed TD was not reached leaving the lower objective undrilled.
I have seen some suggestions that the actual cost for Gurame was around $55 million (but can't verify that figure).
I read the posts from Dr Daz and wondered where he got his information from. I also wondered about his motivation.
His many posts contained a lot of what seemed to be very detailed information which added to his persuasiveness. I wondered where his information came from. How was it he was able to spend so much time posting on HotCopper? Who did he he work for?
The impression he gave(or what I got from his posts) was that he was some sort of a business analyst who was an investor (perhaps a significant one) in MEO.
My suspicions about Dr Daz increased when he expressed his doubt that MEO would need to raise additional capital in 2013, "not now, possibly in 2013" he said. I thought that a capital raising was a Monty and it would not be the first time. MEO also had a history of raising capital during a drilling program.
For my efforts I was denigrated by Dr Daz as "clown" for this assertion. It seemed as though I had stepped on a hornets nest as other Posters ripped into me. Why? I thought that the argument I put was reasonable and wondered about the motivation behind the scorn. A smokescreen perhaps? Of course a week or so later MEO were out rattling the tin.
For someone apparently so knowledgeable about MEO, seemingly so confident about his predictions, why did Dr Daz not see this coming? Why the denial?
Dr Daz's posts were invariably optimistic and seemed to follow the optimism exuding from MEO at the time (remember their AGM?). I seem to remember that his posts were particularly vibrant during the period of capital raising from shareholders (remember cruises up the Malacca Strait to watch the flare from the gas light up the night sky?).
My own investment decisions were not swayed by him or other posts but I was concerned that others might have been.
My problem of course was that Dr Daz had a big following here on HotCopper amongst MEO followers and he might just have been right about Gurame being a great discovery. Also difficult for me because I hoped he would be right.
Of course if Gurame had come in then all the real problems and risks about MEO's exploration strategy in Thailand and Indonesia would have been swept aside and never seen the light of day. A triumph! I would have looked like a fool.
MEO Price at posting:
7.4¢ Sentiment: None Disclosure: Held
