Thanks very much for this Oilbull. I had thought there might be...

Thanks very much for this Oilbull.

I had thought there might be something like this going on but I couldn't figure out how it would work until I looked at the what happened on December 19 2011.

Gee, I thought management were investing their own money. How naive I am to believe what they said in the announcement.

It could be a coincidence but it sure looks like someone sold about 5 million shares (short) on Dec 19 2011 with the proceeds used to finance (directly, or indirectly through a 3rd party-perhaps a large US investment bank) the exercise of a large portion of the 20 million options which were due to expire on Dec 31, for an instant profit of over 12 million (now worth about 3 times that much).

I'll have to be careful about buying more shares after mid December in future, or wait until all that year's allocation of FREE Options have been exercised. I see management and employees were given around 4 million options to exercise this December too. Only 750,000 odd have been exercised so far but no doubt the remaining will go before Dec 31 and maybe we'll see an increase in that short position.

I note that unlisted FREE options currently sit at about 5% of issued FPOs. Seems a tad greedy to me, especially when it's not your skin in the game but that of the naive shareholders like me.

Personally, I don't agree with the option mentality. Why do people expect something for nothing? I don't mind paying good salaries to people who are worth it. And I think employee share ownership is a great thing and can be fairly valued at the time of allocation, thus fairly reflecting the value of the employee to the company. But options are mostly used as a sneaky way of transferring wealth from shareholders to management. For this reason I have given my proxy to vote against the remuneration report and the further allocation of options.

Sure Eric and the team have done a great job, but we should all know that this option conversion last December was a dilution of nearly 10% of our shareholdings, with another 4 million likely exercised for 2012, and more on the way next year, and probably every year thereafter. In my opinion, this is not sustainable and should be discouraged by shareholders, lest the ones RISKING their hard-earned money end up with nothing to show for it.