Simple Reality

Its a simple reality really that EGO is 'Asset Rich" and cash poor. We own a gas plant, some gas, some oil and have the rights to a number of other prospects. Each prospect will cost about $10,000,000 to develop and with two or three on the horizon we are in a catch 22 here.
At present we are producing gas that would see the first tranche agreement expire in 12 to 14 months, we then have to satisfy the second tranche agreement. The plant as it stands, is producing at its optimum almost leaving little room to earn extra funds through gas and oil sales to pay the running costs of both the plant and the office. So we are at least 14 months from being in any real position for the company to make enough money to develop any new wells.
It has been floated that EGO may look at selling off the plant. After screwing up my face at the proposal lets have a think about it. Lets say we sell the plant for $25 mil. lease back of $5 mil. over five years leaving in the first 2 years $15 Mil. available to pay for further exploration. Should those drills strike it rich increasing the income stream a partnership to develop / increase the plant capacty could then be formed to increase the income to the company. Its just a thought we are faced with two options. Sit back, wait for the second tranche income to develop new wells or sell off the plant now and develop the income capacity of the company.
The other thing I wanted to raise is the Quarterly Report and its perceived lack of detail / action. Reading between the lines there was/is insufficient financial records available for the current management to make any determinations. It revives memories of the retreating Russian Armies burning all sources of food. There would be a lot of work (expense) in chasing up lost records, invoices etc. These records have statutory obligations to be held. Rather than the company bearing any further costs, and holding the current Board to their word, I reccommend that the report and any other material EGO have be forwarded to the authorities ie ATO and ASIC for them to investigate. To me its a win win, by the time this is finished the current leagal action between EGO and three of its former Directors should have been resolved.

Merry Christmas.