GDN - Golden State Resources

[Broadside]

my concern Mr Right is we are really relying very heavily on what the directors tell us are economic gas shows, nothing has really been quantified...so if they are wrong it could be ugly....time will tell...thus far all their announcements have been very encouraging I just hope the cold hard data backs up GDN's initial evaluation, they are in the best position to judge at this point.

 

[Agentm]

i saw a post saying about a week ago that the company has $137 million in shares, if $111 mill was gone through in the last few days and similar last week then who is holding long term?

If your a long termer like i am in stocks then sure,, wait for the final result,, but when i see the amount of hype the directors have put into the secondaries and then dump stock themselves at the best opportunity,, and guess what.. teh price still goes down,, then i begin to smell something..

hey if you sold and made some bucks then ok,, but look out if you a director and your playing the market and suck me in,, i get pretty nasty.. i dont invest my hard earned dollars on any single minded directors aspirations..

if you were a director and knew the things you just posted, then why would you sell??? wouldnt that be insane? just curious..

sometimes when it looks like a duck, quacks like a duck, then its a duck..

i want to know from someone who is making massive losses here and bought at $1.20 ish... are they confident?

 

[chris1983]

There is a very respected US company doing the drill though. I am definately putting my trust in their reports. I was hoping the wireline logging results would be out today. Once again I am waiting for those results to make a decision. I still think it will be a successful well. There are many sceptics..thats fair enough..but based on what has been said everything seems to be going well. Positive announcement out today...Things should be clearer by the end of the week.

 

[maverick11]

my concern Mr Right is we are really relying very heavily on what the directors tell us are economic gas shows, nothing has really been quantified...so if they are wrong it could be ugly....time will ...thus far all their announcements have been very encouraging I just hope the cold hard data backs up GDN's initial evaluation, they are in the best position to judge at this point.

and there's the problem. They have been pimping it so hard with no hard evidence and everytime more is revealed, the potential gas reserve is getting smaller and smaller. And how could anyone have faith when the director himself doesn't??! Wouldnt touch it. I just hope she picks up, cause I hate to see people lose money.

 

[Mr Right]

my concern Mr Right is we are really relying very heavily on what the directors tell us are economic gas shows, nothing has really been quantified...so if they are wrong it could be ugly....time will ...thus far all their announcements have been very encouraging I just hope the cold hard data backs up GDN's initial evaluation, they are in the best position to judge at this point.

You got a point but people close to the company are very confident of the results. I have $10,000 just in case, people close to the company are in with alot of money so i think its a worth the gamble but yes the risk is there and i could lose $3,000 - 4,000.

 

[chris1983]

and there's the problem. They have been pimping it so hard with no hard evidence and everytime more is revealed, the potential gas reserve is getting smaller and smaller. And how could anyone have faith when the director himself doesn't??! Wouldnt touch it. I just hope she picks up, cause I hate to see people lose money.

What do you mean no evidence? Im just curious what more they could report. They are saying they are hitting gas at every interval... It is a drill..all they can say is what they have been saying..such as

"The well intersected a major pressured gas interval, from 12,549’ to 12,577’ indolomitic sandstone at the top of the Alkali Gulch member. Gas (methane and ethane with trace propane) was present at levels of up to 2,300 units.

Connection gas ranges from 2,000 to 3,300 units. Background gas has increased 40-fold to consistent levels of 500-900 units. Trip gas ranges up to 3,520 units. All gas levels are highly significant, however full assessment of the production capacity of reported gas shows will follow testing at the completion of the well."

They have to complete the well first before they can confirm everything such as the production capacity..drilling a well is a process..but at the stage they are in right now..they look okay in my mind?

 

[Mr Right]

To be honest i am confused as well but ( director selling off) who knows and as Chris says its all been positive so far so worth the gamble.

 

[Agentm]

i firmly believe in my own research, and if you do the sums and its right for you then do what you have to..

i am staggered with the volumes, if the are many long term investors then the stock is obviously been traded into the sky by daytraders,, so let it fly, your not making any losses.. i worry about the investors getting ripped by buying at $1.20 ish and now smarting at paying for daytrading folly..

i want everyone to get infront in their investments,, i querie anything like this when theres no data to support the price..

 

[maverick11]

What do you mean no evidence? Im just curious what more they could report. They are saying they are hitting gas at every interval... It is a drill..all they can say is what they have been saying..such as

sorry i should have been more specific. They are constantly pumping the stock and haven't even released wireline data yet. Which by the way, they keep mentioning they are doing in their regular pump reports, but still "show me the money"?!

I know for a fact that gas fph and units can greatly vary before, during and after drilling. God knows which of the 3 they are telling us...if I could take a guess going off the 'professionalism' of this mob, i would put my money on the highest of the 3 numbers.

Mate, I aint arguing with you, just pointing out that something smells fishy - which is reflected in the drop of sp. Still, if commercial, chances are this may pick up, but the way things have been handled, I would feel more comfortable with money elsewhere than gdn.

 

[MalteseBull]

sorry i should have been more specific. They are constantly pumping the stock and haven't even released wireline data yet. Which by the way, they keep mentioning they are doing in their regular pump reports, but still "show me the money"?!

I know for a fact that gas fph and units can greatly vary before, during and after drilling. God knows which of the 3 they are telling us...if I could take a guess going off the 'professionalism' of this mob, i would put my money on the highest of the 3 numbers.

Mate, I aint arguing with you, just pointing out that something smells fishy - which is reflected in the drop of sp. Still, if commercial, chances are this may pick up, but the way things have been handled, I would feel more comfortable with money elsewhere than gdn.

true to some extent
GDN is a high risk, high reward stock put it simply..

i am holding to see what the outcome of all this is by the end of the week until i make my next move..

 

[chris1983]

Fair enough. They have informed the market time after time about the wireline logging results. We have been kept up to date..they only did it last week. All they can say is what they have released. It takes time to analyse the data..

Im not arguing also. Just trying to see where you were coming from..I can understand why people are edgy with the director selling. Like I said all I can do is wait for the results. Its less than a week away. May lose..may win. I still feel confident we will get positive results.

 

[mahmoodf]

Hi everyone

I would like to clear up the confusion that many people seem to be having regarding the director "selling" shares. This is quite basic math and doesn't take a rocket scientist to work out what actually happened.

Referring to the change of director's interest notice, Richard Sciano did the following:

- Exercised 6,600,000 options at a cost of $1.32 million. This is money that went directly to GDN from HIS pocket.

- Sold off 3.03 million shares at market price. If we assume an average price of $1.15 per share, this equates to approximately $3.5 million.

- Sciano's net proceeds were $3.5 million less the $1.32 million for the options exercise (approximately $2 million plus). So Sciano pocketed $2 million.

- Out of the 6.6 million options exercised, 4.4 millions were converted to ordinary shares.

- The net result was that Sciano actually INCREASED his shareholding in GDN by 1.57 million shares (4.4 million shares that were converted from the options less the 3.03 million sold on market).

I hope this helps. The West Australian's report on this matter was poor and showed how little the transaction was actually understood by the journalist covering the story.

I hold GDN shares and eagerly await the wireline logging results.

Good luck to everyone in their capitalist endeavors. ;-)

 

[MichaelD]

- The net result was that Sciano actually INCREASED his shareholding in GDN by 1.57 million shares (4.4 million shares that were converted from the options less the 3.03 million sold on market).

The net result was that the director put $2 million into his own pocket.

Why?

If the shares have a lot more to run, why cash these options in now? Why not wait for the price to move further and make even more money?

 

[bigdog]

The West Australian's report did not provide details of the sales:

This will make the sale of shares situation viewed much better to all where Richard last sold Aug 25 when SP was 24 cents
http://au.finance.yahoo.com/q/ait?s=GDN.AX

Date----Insider----------Quantity-SecurityType--Trans----Post O'ship
25/8/06 Richard Sciano 1,500,000 Options ---------Sell ----13,500,000
02/6/06 Richard Sciano ---16,300 Direct Shares ----Buy ------- 16,300
09/3/06 Richard Sciano --561,500 Indirect Shares --Buy -----4,190,500
23/1/06 John Hasleby ----370,000 Options ---------Exercise -1,110,000
23/1/06 John Hasleby --1,110,000 Options ---------Cancelled ------N/A
23/1/06 John Hasleby ----370,000 Direct Shares ----Buy ---- 4,420,000
23/1/06 John Hopkins --2,960,000 Options ----------Exercise 4,440,000
23/1/06 John Hopkins --4,440,000 Options ----------Cancelled N/A
23/1/06 John Hopkins --2,960,000 Direct Shares -----Buy ----2,960,000
13/9/05 John Hasleby -----30,000 Direct Shares -----Buy ----4,040,000
01/9/05 Richard Sciano -2,960,000 Indirect Shares -- Buy ---11,960,000
01/9/05 John Hasleby ----370,000 Options ---------- Sell ----1,480,000
01/9/05 John Hasleby ----510,000 Direct Shares ---- Buy --- 4,010,000

I need to find out how to present layout without dashes

 

[bigdog]

Richard sold 1.5 million "options" which would not have realized a significant amount

Richard last sold Aug 25 when SP was 24 cents

http://au.finance.yahoo.com/q/ait?s=GDN.AX

Date----Insider----------Quantity-SecurityType--Trans----Post O'ship
25/8/06 Richard Sciano --1,500,000 Options -------Sell ----13,500,000

 

[mahmoodf]

MichaelD

Firstly, the options that Sciano exercised ARE NOT tradeable on the ASX. Secondly, they have a fixed exercise price of 20 cents. Please refer to the annual report for details.

So Sciano could only exercise them for a maximum of 20 cents, regardless if the SP was at $1 or $5. BUT, if the director does exercise his options, he gets more shares. And if those shares rise in value, HE CAN make more money. See where I am coming from? He is converting options to shares so that he can make more money if the SP rises. If the SP falls, he loses out too, unless he starts dumping shares before they reach 20 cents (the price he paid for the conversion). I don't see any mass dumping at this stage of shares by director's.

Also, by his exercising, the company has received $1.32 million to help with any further drilling costs etc. So this is a good sign to me.

I agree there is high risk/reward here but I am prepared to take that since the payoff could be very sweet.

If Sciano pocketed $2 million, good on him. Director's are allowed to make money too. And they are well aware of what signals this can send to the market.

But in my analysis, this director's transactions mean nothing and are irrelevant. All that matters is what results come out from that big hole being dug in Utah.

 

[MichaelD]

So Sciano could only exercise them for a maximum of 20 cents, regardless if the SP was at $1 or $5. BUT, if the director does exercise his options, he gets more shares. And if those shares rise in value, HE CAN make more money. See where I am coming from? He is converting options to shares so that he can make more money if the SP rises. If the SP falls, he loses out too, unless he starts dumping shares before they reach 20 cents (the price he paid for the conversion). I don't see any mass dumping at this stage of shares by director's.

Also, by his exercising, the company has received $1.32 million to help with any further drilling costs etc. So this is a good sign to me.

If Sciano pocketed $2 million, good on him. Director's are allowed to make money too. And they are well aware of what signals this can send to the market.

Hang on just a second.

What he exercised;
2,700,000 Class A Options
2,700,000 Class B Options
400,000 Class C Options
400,000 Class D Options
400,000 Class E Options

He exercised 6.6 million options (at 0.20) which cost him out of his own pocket 1.32 million dollars. Thus, he received 6.6 million shares for 1.32 million dollars from GDN.

He then sold 2,435,500 of these shares at market and kept 4,164,500 of them. He likely sold them at around $1.10-$1.20, so grossed around $2.7 million.

Net profit for this transaction for him was around $1.4 million.

These options were granted in May 2006 and expire in May 2009. These options cost him NOTHING. He's made $1.4 million dollars for NO initial outlay on his part.

Now, I do NOT begrudge any director such a gain. It is his undeniable right to take it.

What I wonder about, however, is WHY he chose to exercise the options NOW rather than some time in the next 2 1/2 years.

1. Perhaps he wanted the company to have another $1.3 million in cash right now.
2. Perhaps he needed the money to pay a debt.
3. Perhaps he recognized the madness of the then current pricing and wanted to take advantage of it while he could.

Yes, he can lose the value of the new shares he now holds...BUT THEY COST HIM NOTHING. They were conjured out of thin air and gobbled up by the punters in the market. He's better off by $1.4 million in cash. The company's better off by $1.4 million in cash. Who's the loser here?

 

[mahmoodf]

I think you answered your own question. The company benefited by receiving cash, the director benefited by receiving cash and the director increased his share holding.

At the end of the day, IMO, what the director did in this instance is irrelevant and not material enough to think that GDN is being hung out to dry by the director's.

What will kill this stock is if their wireline results are poor or if the gas they have found is not economically viable or they cannot get it to production etc etc.

What I am trying to say is that there are a host of other risk factors that we should focus on, not the director's share transactions.

GDN is still a high risk/reward play, but not because of one director's share transactions.

I won't be commenting on this particular issue anymore as perceive this to be an immaterial director transaction. If you don't see it that way, that's cool. Everyone is entitled to their opinions.

 

[doctorj]

He's better off by $1.4 million in cash. The company's better off by $1.4 million in cash. Who's the loser here?

The other shareholders perhaps? The money wasn't just created. If the well isn't commercial or doesn't warrent the 600% increase, someone's going to out of pocket that 1.4mill.

I still question their announcements. They are providing raw information with lots of exciting big numbers under the guise of being transparent. In reality, they're giving the market information they're not able to interpret and I suspect they've been caught up in the questionable commentary the company has provided. "Significant gas shows" and "40 fold gas increases" provides NO INDICATION of the wells commerciality.

 

[MichaelD]

The other shareholders perhaps? The money wasn't just created.

Well, yes it was. Suddenly one day there were 6.6 million more shares in GDN which weren't there the day before which have now been sold at above $1 to other at the time seemingly irrationally exuberant shareholders. There's now a rather large number of shareholders in GDN in a loss position. That's not to say that they won't all be counting their riches in a few days/weeks/months/years, but right now, they're sitting on a loss.

What I am trying to say is that there are a host of other risk factors that we should focus on, not the director's share transactions.

Indeed so. As a technical trader I am only concerned with one thing - price. Right now, GDN's price gives me no reason to own it and every reason to sell it. It did give me reason to buy a while back, but I'm out now.

Nonetheless, I find it interesting that on the very day that the share price hit its peak that a director feels the need to make some money. Coincidence? Altruism? Opportunism? Who knows. Does it matter? Who knows.