A few thoughts from last Friday’s AGM in Brisbane (note: my personal recollections only – based on the AGM presentation and discussions with management afterwards).
Michael Yeager noted that throughout his career he has held practically every job on the Maverick payroll. He understands the business, and whilst acknowledging the hard work of Don and the team over the last four decades, was not afraid to make changes and target some low hanging fruit.
Whilst pleased to be running one of only a couple of oilers with their own rigs in the United States, he noted that the rigs were 1980s vintage, and despite the quality of their crews, the technology meant they were not drilling as effectively as they could.
He indicated there were cost effective modifications available for their rigs that would contribute to their current priority; faster drilling with a better hit rate.
This approach will be further supported by additional 3D seismic on the Northern half of Blue Ridge Dome (I was surprised to hear they only had 3D seismic on the Southern half).
Additional 3D will occur over Boling and Nash, however the company will continue to focus on Blue Ridge (makes sense – plenty of targets and operationally more cost effective). They expect to increase the limits of the dome and note they have some promising deep targets, however their own rigs aren’t really designed for drilling at such depths (hence the challenges to-date). Michael Yeager suggested he would consider (amongst other options) contract rigs for some of these targets in future.
They seem confident they can increase their hit-rate and drill faster at lower cost.
They expect outer band drilling and additional 3D to increase reserves further.
They expect the strengthening USD/weakening AUD to benefit shareholders.
They are currently on track for the ADR listing in December or (at latest) January. They noted they were receiving enquiries from US based investors on a daily basis. They anticipate US based investors overtaking Australian based investors for a majority of the register in around 5 years (my view: a positive for the share price – current value looking favourable for those looking to purchase ADRs in the near future).
We shouldn’t expect any more near-monthly production updates with daily gauged numbers. The CEO is only interested in publishing the quarterly production numbers as they are all that matters (my view: fair point).
So in summary, this year's AGM was all about the new guy laying out his priorities, and it seems to me that the additional 3D, rig enhancements and ADR listing will be money well spent.
FDM Price at posting:
42.5¢ Sentiment: LT Buy Disclosure: Held
