ADI - Adelphi Energy

[estseon]

I thought that EME's 2nd placing this month was just to 'catch up' with ADI & AUT and be in a position to fund further drilling in S/L this year but, as agent remarks, this is suggesting an acceleration of plans. I thought AUT to be pretty much on par with ADI for S/L drilling. So, perhaps it might be a case of watch that space.

Hilcorp's efficiency in drilling just seems to be getting better and better. They must be scything the costs as well. We're not even 4 months into this year and they've drilled 4 wells, fracced 3 (including Kowalik), drilling on a 5th well is in progress, fraccing of a 4th well is in progress and they originally reserved 18 months to complete the initial programme. If they had originally said that they would drill 7 new wells and frac 10 in 6 months, as is now looking likely, we'd have fallen over laughing.

So plans may well have changed. Why stall the momentum?

I confess to being a bit gutted by the capital raising, particularly in advance of IP figures for Morgan and Rancho, but this rate of drilling progress was just wishful thinking when they were drilling Easley.

 

[jancha]

i think getting new blood into the share registry is a brilliant move myself.

conoco has put an new permit in karnes county called edith gray 1h


pretty near the bordovsky well

hilcorp put in another pilgrim permit in gonzales, making that 2 for that county

Agentm one of your positives about ADI in previous post was that they didn't need capital raising with money in the bank.
Now your saying getting new blood into the registry is a good move with the capital raising?
Aren't the shares being diluted by this?
Can you explain why this is good or necessary?

 

[nioka]

i think getting new blood into the share registry is a brilliant move myself.

conoco has put an new permit in karnes county called edith gray 1h


pretty near the bordovsky well

hilcorp put in another pilgrim permit in gonzales, making that 2 for that county

Seeing that I promote thinking outside the square I'm going to suggest a possible partner that will prospect the Yemen leases. That sort of new blood would be an asset and could signal a boost to the SP.

Maybe ?.

 

[jetblack]

i think getting new blood into the share registry is a brilliant move myself.

conoco has put an new permit in karnes county called edith gray 1h


pretty near the bordovsky well

hilcorp put in another pilgrim permit in gonzales, making that 2 for that county

Agree Agent, thats exactly what ADI are after.

Hilcorp are powering through this play at a rate of knots. Management are on the ball, in, or be drilled out, they need the cash to keep up with Hilcorp. I'm sure ADI management know that they are getting close to becomming producer status.



Drill away, drill away.

 

[Agentm]

Agentm one of your positives about ADI in previous post was that they didn't need capital raising with money in the bank.
Now your saying getting new blood into the registry is a good move with the capital raising?
Aren't the shares being diluted by this?
Can you explain why this is good or necessary?

jancha

hilcorp have done their thing, no more wells needed in the ami

so why raise capital?

think it through yourself.. either they need it or they dont..

my view is that they will need the capital, and everyone was aware there was a need for new blood and for a cap raising, the timing is first class, on the eve of some amazing progress, with wells being drilled in 20 days, and the fraccing is going ahead full steam..

time to introduce the share to the new generation, and time to see some welcome positive news flows and some positive news ahead

you can always look at negative and argue that the dilution is such a bad thing and the end of everything.. but imho capital is needed, and a new chapter as producer is about to transpire..

not seeing anything too negative in it at all.. just part and parcel of what is needed imho

 

[bazollie]

The equity raising that's happening now has been timed to perfection IMHO.
Hilcorp are in the process of some serious fraccing and with some positive news ( fingers crossed but they have the runs on the board) we should see renewed interest in ADI.

What better time to entice some new major shareholders to the company than now! A chance where these new majors could see some serious appreciation in the SP if the news follows suit with the other drillers in our area.

I thought that there would be no more equity / dilution but I would rather see them trying to raise say $5M now , than when the SP was at say 10cents!

The next 3-4 weeks should be very interesting, and with the results released by others next door, ADI could be a May Stock Tipping Winner!

AUT have had a good run, now it's time for ADI to kick some gassy butts!

Regards
bazollie

 

[condog]

Under normal circumstances most dilution concerns me. But given ADI's progress in the AMI a CR to persue further wells asap in the AMI will add far more value to the company in the medium term. Assuming thats what its for of course.

Consider the worth of a multiple extra wells compared to the dilution of 5 or 10% at 3c. Its never nice to have dilution, but sometimes it is actually for the shareholders benefit., and right now appears to be one of those times.

 

[basilio]

It would be really great for ADI to tie up it's capital raising before the capital markets are well and truly roiled with issues around the Greece et al debt problems.

And you know, today is probably a equally great day for a stock to be closed. If I was ADI I wouldn't be in a hurry to reopen for a few days

 

[Sdajii]

I openly confess to being somewhat green, but why did they say "raising equity finance" rather than simply "capital raising"? Is this significant in some way or is it just said colourfully for the sake of it? If they are in such a strong financial position in that the near future should have oil sales bringing in plenty of money, could they be getting a loan rather than having a SPP?

One thing which seems very odd to me (but likely has a perfectly good explanation I am simply too green to see) is that everyone says this is a perfect time for raising capital. This seems like nonsense to me; if the SP is about to soar, why not raise capital at 40-60c rather than at the current price of under 30c? Sure, it's better to do it now than a few months ago, but surely any time before an expected increase in SP is a poor time for capital raising. As I said, maybe I'm wrong and if so please set me straight.

The next 3-4 weeks should be very interesting, and with the results released by others next door, ADI could be a May Stock Tipping Winner!

I certainly hope so!

 

[Hatchy]

the timing is first class, on the eve of some amazing progress, with wells being drilled in 20 days, and the fraccing is going ahead full steam..

not seeing anything too negative in it at all.. just part and parcel of what is needed imho

I agree, but allow me to add a different spin on things (Sdajii this should answer your question). Timing is indeed spot on perfect. We're at a stage of having drilled 3 wells, but without results on them as yet. We've learn from the Kow that things can go wrong at just about any stage in the operation, and fraccing is included.

The board doesn't want to risk the company. If a frac goes wrong, or 3 fracs go wrong we're right back at 15c, and going out to institutions for more money (or having them come to you) is bound to be as hard as getting blood from a stone.

It's time to get some cash under the belt to drive this thing forwards, and not much has been said about it, but how good is it to have the option of exploring Yemen? 12 months ago it was a near certainty that it would need to be sold, something I wasn't all that happy with at the time. It's great that this company has a field that is proving itself and also an opportunity for some major exploration.

Time to re-rate.

 

[Sdajii]

So basically they are hedging their bets in case the three fracs go bad? For all three to go bad, wouldn't a scenario of "Oh, crap, there's no hydrocarbons down there!" be required? Stuffing all three of them up due to human error/mechanical failure seems pretty unlikely (as does a lack of oil for that matter). If they are feeling the need to hedge their bets I am a little concerned at their level of confidence in operations. Then again, maybe I am just more of a risk taker than most, so going for all or nothing doesn't seem as good an idea to most people, including the ADI board, as it does to me.

 

[rock86]

I highly doubt that we will see any of these fraccs stuffed up like Kowalik (touch wood), and I agree with Sdajii here that I don't even think there will be a SPP here, but a line of credit/loan of some sort if needed by the company. All this points to is the ramping up of this field, second half of 2010 will see a fair few additional wells being drilled and fracced IMO, that's what I take from this.

The Morgan frac should be pretty close too, I'd say we'll have news on it either next monday, tuesday

 

[Hatchy]

Sdajii and Rock86

It's not that these fracs are going to fail, but there's money that is needed going forward. What would you rather, the company be run poorly with poor forward planing or to be run in a way such that it negotiates the risk that is presently here?

The board has done a great job in staying this company through dire financial times, and it is through this careful management we see ADI in it's current position.

I reiterate that I believe it will be an institutional raising as this is the least messy, and it's over with the soonest.

We'll all know in a few days.... Enough of this speculation.

 

[chand]

Hi,

I think it will be a semi quasi equity raising like some sort of convertible bonds (hopefully priced at well above current market prices and maturing in say 2 to 3 years)

 

[gdaf]

we could bet on it - enough speculation to get a real pool going

My bet is they issue options that expire in June 2012 for a strike price of .30, or .25? Should be a 1b company by then

 

[Lucky_Country]

Personally Im more focused on the wells than the capital raising.

Sure dilution is not something anyone wants but capital is needed.

Yemen will hopefully be kept drilled and producing after all it has been a long term asset held by the company and lots of work has been done on this project and sounds to tempting to sell.

Sugarloaf will be fraced producing, drilling fracing producing etc etc.

Doesnt matter how much money is in the bank or how many shares are on issue its the results that count.

 

[jetblack]

I cant see it being a rights issue or options issue for that matter, its too messy in the short time they have.

They will probably raise up to about about 15% of their issued share capital to institutional investors. Strike price to be determined but I would not discount it being around 25c. Agent M hit on it earlier with the new blood into the company.

Management are gearing up for a Hilcorp explosion of the Eagleford.

 

[WRONG'UN]

The fear with a CR is that the additional shares created will dilute the value of the existing shares. But this implies that the value of the company remains the same. However, unless the funds raised are used to feather the nests of the directors, or are frittered away in overheads, value will be added to the company, perhaps many times the value of the funds raised. I am sure this will prove to be the case with ADI.
The current directors have managed ADI prudently throughout the GFC, to the extent they are now well positioned to fully capitalise on the exciting resource that they are sitting on. Whatever their plans are for the CR, they have my trust.

 

[Agentm]

I cant see it being a rights issue or options issue for that matter, its too messy in the short time they have.

They will probably raise up to about about 15% of their issued share capital to institutional investors. Strike price to be determined but I would not discount it being around 25c. Agent M hit on it earlier with the new blood into the company.

Management are gearing up for a Hilcorp explosion of the Eagleford.

cheers jetblack.. i think we are on the same page here

The fear with a CR is that the additional shares created will dilute the value of the existing shares. But this implies that the value of the company remains the same. However, unless the funds raised are used to feather the nests of the directors, or are frittered away in overheads, value will be added to the company, perhaps many times the value of the funds raised. I am sure this will prove to be the case with ADI.
The current directors have managed ADI prudently throughout the GFC, to the extent they are now well positioned to fully capitalise on the exciting resource that they are sitting on. Whatever their plans are for the CR, they have my trust.

value comes through the wells flowing and getting you increased reserves, through using capital to gain more assets or to expand the ones you have and further achieve value

cap raising doesn't mean you lose the value, the value is kept in cash unless spent. a point missed by just about everyone i think

plenty of time to see the well results achieve some solid sp gains .. imho each well will cause a significant re rating of adi and with the reserves upgrade becoming a short term probability, looks good for new blood and a healthy short and long term future in every respect. including yemen!

good luck to all holders

 

[Ramblin Round]

So if they need cap, why don't they just sell off other asetts such as Yemen ? I thought that's what they were going to do...sell Block 7 ? Hell.....a couple weeks ago Petrohawk sold out 800+ million $$$ worth of the sacred Haynesville shale, a play they have been in for quite some time to gather more cap for the Eagle Ford play. What is the strategy for Adelphi if they are not selling Yemen ?