still a heart beat, page-16

As at June 30 they reported that they had $525k in cash and $64k on receivables. They also had $254k in current liabilities to staff etc. Assuming that they intended to pay their current liabilities in coming months that would seem to leave only $335k spare. But that was at June 30.

They operating expenses seemed to be running at about $160k per quarter and if that rate continued for the 3 month that has now passed since June 30, that would leave only $175k.

Now they have informed the market that they sold an asset which has raised $500k so their total financial firepower at this point would appear to be about $675k. Thats a very long way short of the $1.08 mil that they have indicated that they would need to pay for their share of FP.

So as of today, based on these crude numbers it would appear that they are approx $333k short on FP drilling costs alone and couldn't do FP on their own even if they wanted to. Not without raising more cash anyway.

Given that they intend to find a partner, an operator and still have to complete the proposal and get partner agreement to actually proceed, its hard to imagine that this will happen this quarter already underway, or even next, but if we were to assume they could do all of this by late next quarter and get a drilling result before the quarter ended, that would be an additional two quarters of operational expense. This would seem to sap another $320k from the kitty, meaning that they would actually seem to need $1.4mil if they were to complete a drill on FP by March 30. More money if it takes longer.

That suggests that their $675k is $653k short of the $1.4mil cash required to get to such a point on March 30.

When they say "Verus’ Board is also reviewing the potential benefits to farm down a portion of the Company’s interest in Fausse Point to offset the costs of participation and in order to prudently manage its funds in difficult capital and commodity markets", it infers they have a choice in the matter. You can't preserve capital that you don't have and based on these numbers VIL appear to have very little.

They have to find a farminee ASAP because every quarter that goes by drains the little remaining cash. Potential partners know this. They are a distressed seller sitting on an asset which has failed to deliver previously and where the previously partner walked away. If VIL is counting on somebody paying even half the costs then one questions what percentage they will demand. VIL might have a WI of 72% today but what is it likely to be if a partner agrees to come in ? 25% maybe ?

I guess they could always raise capital from the market for this last roll of the dice but at what price ? There is always somebody that will chip in on a high stakes gamble if the entry price for equity is cheap enough.

I just hope that they lock in a plan ASAP because time and money are short. They have has several years to sort out a plan for FP. Staggering that they are still working on it now.