where have I stated it doesn't have a future right now?
I think you have misunderstood my comments.
I think the shale formations are excellent. The prelim flow rates are pretty good too.
However, we need to also take into account what the market thinks because as a cash strapped company with a small market cap, cash and the ability to raise funds is critical to shareholders maximising their returns.
NWE needs a higher market cap in order to fund its participation in the A-2 well and I am not convinced that flow rates will necessarily get them there.
I'm not saying that flow rates won't push the SP up higher, just that so far the market hasn't been moved to respond positively to the work NWE has undertaken on A-2.
You could look at prelim results, extrapolate what those total flow rates might be and ascribe x-value to the SP...and so could insto investors with access to higher quality technical advice, but they haven't.
...and here's my main point:
Unless the sector sentiment changes, I am not convinced progress of a fundamental nature (total flow rates) is going to make much difference to NWE's SP, therefore it's ability to raise further capital to fund a horizontal may result in much more dilution than you are expecting/considering.
Now of course, if sentiment does change for Aussie shale - and there could be any number of catalysts - then good total flow rates will certainly be fuel on the burning fire.
But don't expect flow rates to turn the tide for NWE against the sector sentiment. That won't happen IMO.
Nothing wrong with A-2 - but you've got to combine that with commercial reality + market sentiment.
If you are happy to hold for years (like Tui) then that's fine. Ignore what I'm saying. You'll get your 4-5 times return eventually, if it isn't taken over on the cheap in the meantime.
Long term - undervalued. short-med term - need a change in sentiment.
NWE Price at posting:
3.2¢ Sentiment: LT Buy Disclosure: Not Held
