Everest2011One thing we were taught is that co-incidence is not...

Everest2011

One thing we were taught is that co-incidence is not causation. The facts on which one may base a decision to be long or short a stock and the price reacting in your favour does not necessarily validate the proposition on which you acted. Too many people see the stock price as the only validation of right and wrong. Many stocks hit a rough patch but they are still sound - stocks are overbought and oversold in the course of the market action.

There may or may not be structural problems in the MAD story but the price fall is directly related to their failure to meet their targets over the last two quarters. The reasons are the close out of drilling contracts, the selection of a limestone target rather than the conventional sandstone and the slow build up of the rig fleet. It does not demonstrate a structural problem.

I note you are predicting a $9 million fall in the cash position from the $US64 million last quarter. I certainly hope so as this money was raised to buy drilling equipment to drive production - this to counter another round of criticism that there were not enough rigs to push production. I saw that MAD bought 9 rigs in a single transaction.

Gulf South has stated they are happy with the performance of the most recently drilled wells - they are paying all the costs of the well for 1/3 production - who to believe?