By Tom Winnifrith, The Sheriff of AIM | Wednesday 3 August 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Oh dear Oh dear, things are looking ever bleaker for Neil Ritson and AIM dog with fleas LGO Energy (LGO). Interims out next month will be diabolical, the cash position by now is looking grimmer than a wet Thursday in Scunthorpe and ramptastic announcements are just not having any impact on the share price, surely it is time to bring back Big Dave Lenigas. Cometh the day and all that.
The last placing on May 4 2016 raised £3.25 million gross at 0.2p. Let's call that a net £2.75 million but sadly we know that froggie banksters BNP Paribas have already already trousered £850,000 of that so lets call cash (for LGO was running on vapours pre placing ) £1.9 million. However we know that the company has been busy drilling wells in Trinidad so one must asume capex of at least £400,000 since May.So lets call that £1.5 million left in the kitty and I am being generous on capex.
In 2015 ordinary non capex operational cashburn was c $1.1 million a quarter but that was on average output of 830 bopd and at far higher oil prices than today. As I speak WTI is cratering again. But I am a nice guy and will assume underlying operational cashburn is broadly unchanged so that would see net cash by the end of September c£1.5 million lower than it was at the start of May.
Uh Oh....so on that basis at the end of September LGO will have an - on call - loan facility of $3.4 million and cash of sweet FA and it will be burning cash. Oh dear. It needs another placing big time but that is going to have to be at a stonking discount to get the spivs and bucket shops playing ball. With the shares at just 0.14p to sell shall we say 0.08p? 0.07p? Lower?
I am only semi-joking in saying that the only way out is to bring back Big Dave Lenigas, tell him to put his best ramping boots on and try to steady the share price. I regard LGO as being worth 0p at anything near current oil prices but say what you like about Mr Lenigas, he is a damn good promoter of fundamentally worthless stocks.
If stock promotion was an Olympic sport, Australia could certainly bank on a gold medal in the individual event thanks to Big Dave although I fear that after a poor year for Pirate Pete Landau, Andy Carroll of Mosman and Ken Judge of Gulfsands Petroleum the Aussie team in the freestyle relay ramping would get knocked out in round one by Upper Volta.
I digress, ahead of the next bailout, LGO shares are a storming sell at 0.14p.
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