Hope everyone is now trimming the fat on their waistlines after the festive break. The first time I've ever lost weight over the festive period, not because I was being healthy, but because I upped my exercise. The same however cannot be said for Mr Plump, aka Ian! Who is now currently in Cameroon of all places, so I look forward to a promised update.
As Oli kindly pointed out yesterday, and the followers should have noticed with Churchill Mining (LSE: CHL), there was a belated RNS's regarding an Issue of Equity in Lieu of share last night. I haven't run through the figures in terms of costings, but Churchill Mining plc Issue of Equity 7th January 2014, can't be suggested they are not aligning their interests to those of the shareholders.
It was amusing to chat to one chap that believes Churchill is a dead cert short over Christmas, till I explained the International Arbitration process in basic terms. Is he converted? Time will tell, but amusingly it's another prime example of someone believing the negative view when its actually very difficult to establish the short argument in any way save for financing that is needed/will be needed.
Financing will come after the Jurisdictional argument has been clarified, and for that reason, people should have de-risked or acknowledged the risks on the last spike in anticipation of the judgement. I'm holding but it would have been rude not to close longs on the last run and bank some profit. The positives of Arbitration game are the long ball means you can make trades as well as hold. I have to acknowledge CHL raised monies at a premium to the SP last time, so its highly likely that they're protecting shareholder interests again but not guaranteed. Personally I'd like to see an open offer without a discount or perhaps a premium to the current SP.
Now when is good news not good news? Victoria Oil & Gas (LSE: VOG). From an investor perspective, what can they not expect in terms of building in 'unexpected' shut down of operations for companies. There are formulae for this, it's amazing how other energy companies allow a certain % for this but amazingly VOG don't appear to have allowed a certain amount for "unplanned maintenance" and the like. To me this is saying someone/parties are not understanding their company and business model. For example: If you are anticipating X mmscf/d then you build in an allowance for the unplanned. This is simple, asking your end user about their model and demand then building in allowances for events / contingency.
Personally I think it's time for a change at VOG in terms of management with a clean sweep with people that understand production/energy supply as their expertise found. Simply because, their targets have on the whole never been met in full, always diluting and worse still, the cost to shareholders as a result has been significant. People need to utilise VOG as a reason for why targets are missed and a share price has performed in such a way. I've mentioned this before but today's RNS is a prime example of sandwiching the proverbial. Yes there are positives within the RNS today, however, the history speaks volumes. I was trying to work out how much of the book is underwater in terms of their holdings, but I'll not waste my time!
So assuming VOG can sign the parties mentioned and assuming VOG's targets are realistic, the share price should perform better. I am happy to hold, but its purely based on the fact that things beyond the current Board's control will make the business viable. For this reason, save for further 'crap' to be sandwiched between expectation it should go further. I will however be expecting people to vote through change on the next AGM. Its about time companies and their Directors started to be accountable for their actions, targets or lack of. However, I don't hold out much hope, as most PI's just moan about their stock and do little to enact change.
Atb Fraser
