The reason why the placement would have been taken by someone is that the price (including the free option for every 2 shares purchased) is effectively 16c.
For every 40c they pay, they get 2 shares + 1 option (currently valued at 7.8c), so if we deduct the 7.8c from the 40c, it comes to about 32c for the 2 shares, or 16cps.
It's no wonder the share price is under pressure!
Project Margarita is doing ok with a total estimated rec. reserve of 2.4BCF, or 400kbo. Their 15% NRI (approx) would land an additional net reserve of 60kbo to VPE, hardly earth-shattering. What it has achieved (by the time you deducted the cost of drilling, farm-in, risk taken, etc) is that they have proven the existence of widespread shallow gas pockets, which would pay off the cost in their own rights over time. They'd also have the drill data, which is valuable as it will allow them to calibrate their seismic data to get a better idea of the deeper prospects.
WF is an interesting one, with not much info given other than the multiple zones of "oil and gas shows". The fact that they have run prod casing is a good sign, but whether there's a commercial accumulation down there remains to be seen.
The key to any price rise over the course of the next year is the prod testing of Growler, Wilpinnie and Wirraway. If they can prove up Growler/Wirraway and Wilpinnie to be both approx 4+MBO discovery with decent flow rates, then it should perform well.
What improvement they can get from Mirage prod remains to be seen. Let's hope they have learnt their lessons from the last round of development drilling, which cost a packet and gave back pretty much nothing in terms of ROI.
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VPE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
