quarterly reaffirms my bearish view

I would most definitely not call this a positive quarterly and if the price rallies materially I'm likely to look to go short again on the basis of this report.

Highlights of the quarterly:
1. Production has increased materially
2. The rate at which wells are being P&A'ed is decreasing (though for some reason wells with up to 5 'sands cored oil productive' are being plugged - can't explain that one).
Lowlights:
1. Where is all of the cash going?
2. Where did Gulf South go?
3. Production concentration on single lease highlights the reserves concerns YET again.

My thoughts on the above:
1. Cash Burn
The company generated revenue from oil sales of $7m but cash balance went down by $10m (assuming that the company is using the same methodology as always to calculate cash balance and that it didn't previously lump AUD bank deposits into 'cash balance' and suddenly change the methodology this quarter).
So expenditure was $17m for the quarter.
Assuming:
1. Opex at $25 / GROSS (not net) barrel = 1,286 * $25 * 90 = $2.9m
2. Wells drilled @ $300k / well (assuming no GS carry) = 19 * $300k = $5.7m
3. G&A (guestimate based on annual report with extra fat added) = $1.5m
This leaves a gap of $7m. Surely this didn't go on leasing 1,230 acres?
Furthermore, at what point is this company supposed to turn cashflow positive? The prospectus said 2 quarters after listing and yet here we are years later with significant volumes produced and a strong trend of increasing production and yet the cash continues to fly out the door at a rate which will see them out of cash in a year or so. At that point you could assume they could then stop drilling but this would reduce quarterly burn by $5.7m at current rates so they would be treading water until production rates commence their inevitable decline.

2. Gulf South
No word on Gulf South. Only recently its program was declared a 'smashing success'. With such a tremendous record, oil consistently over $100 a barrel and rapidly improving sentiment in the US why aren't their investors flocking to drill more wells? (And if so, any participation they did have in the quarter should be added to the cash hole I have identified above since I've assumed that MAD fully funded all wells).

3. Reserves
I know I have banged on about reserves many times but May 2013 Texas Railroad Commission data is highlighting some pretty serious issues (in my own opinion) with the reserves figures:
- A single lease (West Schenck B) now accounts for a full 75% of total gross production from all company leases.
- Nash Dome is now contributing a total of 0.09% of gross production, despite having 23% of total 2P reserves. It drilled a well in the quarter and it was a duster. At the May rate it will take over 94,000 years to produce its 2P reserves
- The Boling Dome is now contributing a total of 1.4% of gross production, despite having 40% of total 2P reserves. No drilling occurred at the Dome whatsoever in the last quarter. At the May rate it will take 11,667 years to produce its 2P reserves, only a fraction of the Nash Dome figures but still unheard of for any other producing field I have ever seen globally.

I currently hold no position and I'm changing my sentiment to sell from hold.