In this ¼ the first 2 months in particular were always going to...

In this ¼ the first 2 months in particular were always going to be good cash-flow wise, with minimal capex while enjoying the wells flowing at peak rates. Operating cash increase is roughly:

$8.4 Cash 30/9/08
$6.1 less Cash 30/6/08
$0.6 plus cash used for buyback during ¼
$2.9 AUD cash increase from operating and fx gain. They probably hold most of their cash in USD, so part of this will be from an unrealised fx gain, rather than from the oil business. Still a good result.

The negatives are:
McCool is a failure.
Nowhere near the 2,000 bpd being forecasted a while back.
September production dropped by 16% to an average of 719 bpd for the month. The month end rate is probably closer to 670 bpd.

So good short term cashflow, but this looks like their peak performance for a while.

While some specific drilling costs may have been recovered in 3-4 months in the past – there is an inference here that all capital costs are quickly recovered. This is clearly not the case. Previous annual losses have all resulted from depreciation and amortisation of costs (being the expense of drilling costs, capital works and acreage costs).

Zinc,

Has been a common fault in the past with people predicting huge profits based on the operating costs in presentations. Always a little asterix saying excludes royalty, but don’t recall them stating 22% in the past. The only way to get the full picture is to analyse the annual accounts.

Also worth noting the gross price SAE receive is about 16% less than quoted prices (being West Texas - on account of extra refining costs for heavy oil).

Post sounds to negative now. Good 1/4 and likely to post a good profit this year. If Paris Valley can be made to flow....

PE

Disc: no position at present, on watchlist