Thoughts on shorts, page-172

Let's have a look at what we know:

1: We are drilling SAMO.

2: We are well cashed up and for that reason alone it's unlikely they would raise before SAMO, it's a well that will cost between nothing and perhaps $8mil .

3: We know the rig contract has allowance for up to 2 extra wells.

4: Any extra wells drilled that involved FAR are material, so at this stage no decisions have been made beyond SAMO ,just preparation.

5: We know that by FID we will be needing hundreds of millions, not a few million , at this stage FAR seem confident on having that in hand..that determines a lot of things with regards to cash requirements and also means that any cash requirements between now and then will be purely top if needed .

6: BAMBO and SOLOO, a two for one, are being made drill ready, which as far as I'm concerned means that success at SAMO might mean they would drill that instead of an appraisal well in SAMO, I would be a big fan of that.. IMO if SAMO doesnt come in then that will likely be the only well in Gambia with this program.

7: That CNE are looking at putting a well into FAN . The logical conclusion is that would occupy the second slot, they have had several months to prepare for that possibility and we know they are in talks with the govt..it also gives us time to prepare for another well if needed.

8: Management have quite a bit of skin in the game and are no more interested in unnecessary dilution than we are.


What we don't know:

1: We don't know if there will be any more wells after SAMO with this program... but there will be a maximum of three.

2: Would they raise if successful with SAMO...IMO almost certainly and it could be large.

3: Would they raise if SAMO doesn't come in but they are committed to FAN...that would likely be determined by the cost of SAMO...if it was nothing then there is no good reason, our cash position would still be strong but again if it happened it would be a top up only.

Conclusion:

The odds against raising before SAMO are strong IMO but inconclusive..

Cheers Whisky