The June quarterly report is more about what it doesn’t...

The June quarterly report is more about what it doesn’t say.

Average production was 735 barrels and you can calculate that they sold at an average of $40 for each barrel during the June quarter.

If you looked back at their other announcements and reports it costs them about $66 per barrel to run Cliff Head. This is TEG’s own numbers and this cost was achieved during a time where they said they had achieved cost reduction. On top of this cost are the TEG costs in their other permits and other corporate costs.

So what is new.

Already they told us from June 17 that things had started to go wrong and production was reduced. We now learn that production is around 560 barrels each day. That is about 16,800 barrels each month.The costs to run Cliff Head each month based on their past reports was about $1,500,000 every month. Just these numbers require them to get $90 per barrel to break even when production is at 560 barrels. You can see that they would have to reduce the spend to around $1,000,000 per month just to break even.

The short term fix, as they announced, was to stop spending on everything and hope. Cliff Head is costing shareholders money every day it operates at 560 barrels. Just how much it costs the shareholders depends on what they are now spending. Their own numbers suggest they could be losing up to $500,000 per month but by taking pay cuts and not doing the proper maintenance it is probably half that. They ended the quarter with $871,000 cash. Don’t expect the escrowed money to be released soon. We are now in August so it has been a full month where, at best, they have lost $250,000 in July plus any other corporate costs. TEG is probably now down to around $500,000 cash and has less than two months cash reserves.

Be ready for some hard news. More capital is needed.

Some other information in the report....If you read closely you will see that TEG reported a spend on investing activities of $1,424,000 yet says nothing about this in they quarterly report. Why? Word around town here in Dongara is that TEG hadn’t paid their bills from the last pump replacement and this spend is just catching up on the past invoices not paid. Someone should telephone Mr Turner and ask him if any of this money was spent on getting those two wells back into production and when can shareholders expect them back.

Further reading will show that nothing has happened for the Cliff head renewal project and their other permits. Why it is simple, they have no money and noone is interested joining a failing business in Cliff Head with over $20 million of abandonment costs due very very soon.

Shareholders are faced with a company down to its last $500,000 cash, a MD, a COO, a CFO and full Board and a business loosing money. Why you need such a top heavy executive team for a tin pot business is beyond my understanding but that is up to the shareholders. Is TEG insolvent now... others can make that judgement.

When shareholders are hit with a capital raise soon you are now fully informed.

And just to brighten shareholders day that GAS company is running out of money too.