rfe 21/3/11 onwards

hi holders

not sure how to start this post, but as everyone is aware it looks like RFE are going to raise $30 million in 2 tranches via Baillieus and GMP Securities.

i am amazed that this article can be released in the AFR on street talk before management have released information to their existing flabbergasted share holders.
how is this possible?? a deliberate leak??

anyway, noted a few comments and done a few figures, will start with the number of shares that will shortly be on offer.

our current share base is 139,535,000

raising of $30 million @ 32c 93,750,000

we then get to the converting notes, now that shares will be issued at 32c, the converting notes can be exchanged for shares at 27.2c, another 18,382,352 shares

we also have options that will be taken up at 30c, another
7,165,000 shares.

by the time the second tranche of shares is issued RFE will have 258,832,352 shares in play.
my initial first thought was, this should slowly sort out RFEs share liquidity issues.
second thought was at 32c this has completely changed our market capitalisation over night to over $83 million.

this is what RFE SHOULD have been valued at recently but have been constantly held back, especially since 22/12/10 when the initial announcement was made concerning the Big River Play.

to everyone who has held RFE over this time, and especially to sellers who were tricked, scared, what ever you want to call it out of shares, i understand the anger, that was my first impression also. Most people realise this has been someones play toy for at least 4-5 months, who, i dont know.

but, i then spoke to someone else whose first thoughts were positive.

suppose its the way you look at things, with money in the bank RFE now has the means to develop the oil acres and unlocked the value.

there have been enough articles up here showing the value in this play, now management have no excuses, NONE.
oil prices are high, get the 3d results and drill some successful wells.

re some of the other comments concerning the frittering away of the money obtained from the previous raising at $1.20 and where gas prices partly responsible, imho there is no doubt this has hindered RFE, not anymore, we are going for oil and prices are high. NO EXCUSES FROM NOW ON!!

re wages, imho they are exhoritant
the reason i am told for this is because RFE is 100% owned and operated, not sure how that justifies half million $$ salaries.

re managment( exception of Michael Fry ) not buying shares on market, have asked the question my self. To take up the options on offer every year it is not possible to do both.

back to the $30 million being raised

Rabiez, i think you mentioned you didnt think this much would be raised straight away. a few days back i posted that RFE would need between 25 and $35 million, and low and behold the information on friday suggested $30 million is to be raised.

spoke to a broker and these are the numbers he came up with, definitely a smart cookie.

costs of acreage have increasing rapidly in this play, we still want to get our hands on another 28000 acres.
not sure if this is gross or net acres though, assumed it was gross.
we then needed at least enough money to drill 2 wells as well as accomodate managment for at least 2 quarters.

this is why its going to be raised stright away, as these acres will need to be paid for upon leasing, ie before june 30.

dont have any details from the company yet so suppose have to see what the terms are and how much space there is between tranches.
had an idea this is how much was going to be raised but personally disappointed with the 32c price tag.

will also need to see what revenue we can get from our first 2 wells as to whether there is another raising this year.

re GMP securities, mentioned this previously but they have had a big influence on AUT, certainly hoping that they can attract another cornerstone investor or 2, preferably from the US, these investors are far more cluey when it comes to valuing US oil and gas plays.

now the issue of RFEs up coming share price, what will happen this week. are we going to have some holders try and sell out on open and buy back in at 32c???
are we even going to have any buyers above 32c???
another thought, will Baillieus commence coverage straight away or wait for the second tranche of shares to be issued.
think for longer term holders this might be a great week to leave the computer off once the announcement has been released.

overall thoughts, disappointed in the 32c raising price but RFE will now have the means to unlock value in the Mississippian play, get on with it!!