where to from here

First time posting on this stock - I am somewhat intrigued as to the price action in light of yesterday's announcement. The choke being used on Pathfinder is extremely tight and to be pushing through the amount of oil that it has done so over a 12 hour period strongly suggests a very high degree of pressure (which apparenly is natural pressure). If we consider what happens when the choke is opened then it becomes relatively obvious that we have a good producing well here (of course, subject to decline rates etc).

From a next step financing perspective I am curious as to what sort of funding AKK will be able to attract. It will certainly not be any form of senior debt as it is a one well show at the moment which naturally carries a fair bit of risk to a potential debt facility provider. I suspect we will see a convertible note / bond issue although for a company of AKK's size this will be an interesting exercise - personally am not a fan of these as it is dilutionary and potentially will put a handbrake on the shareprice (although the dilution impact is delayed). One alternative would be potentially project finance - however a drawback of this arrangement will be the probable requirement for AKK to hedge their oil price risk which will somewhat limit any upside should oil prices rise (and at the end of the day we have bought into an oil project to in part benefit from any upside movements in oil price). One potential structure may be an oil loan whereby AKK can forward sell their oil and receive cash up front from the bank in question and then use this cash to put in additional wells. I am not sure of the probability of being able to get an oil loan being a one well company at the moment (discounting for the other Birch and Mis / Ken wells.

Either way - I am relatively confident (80%) that we will not see any further dilution in equity. With the number of shares on the market at the moment management will be very mindful of the implications of further dilution.