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LGO Energy - cash bonus in Spain not enough, another placing inevitable & another sleight of hand by Ritson

By Tom Winnifrith, The Sheriff of AIM | Wednesday 30 November 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.


Loons, like our very own LGO Energy (LGO) owning fanatic Wildes, will have yesterday celebrated news that 11,200 barrels of Spanish oil which had accumulated over the summer had finally been sold. But shares in LGO still fell to just 0.11p. Here's why.

The cash will help but this thick arsenic heavy oil does not fetch that much and the company is still clearly burning cash. An indication of how tight the situation is comes from a little slight of hand you may not have spotted.

On 27th September 2016 the hapless CEO Neil Ritson updated the market telling the mug punters (inc Wildes) by RNS.

"The Company plans to continue with the heavy work-over program and has selected wells GY-193 and GY-240 for work-over operations in the next 4 to 6 weeks. Since announcing the heavy workover program aimed at increasing production at the Goudron Field in April 2016 a total of six wells have been recompleted.

Neil Ritson, LGO's Chief Executive, commented:

"As planned we are maintaining production output at Goudron through a carefully managed program of low cost, rapid payback, heavy work-overs prior to the anticipated drilling of new infill wells to the Mayaro Sandstone which it is hoped will commence before year end."

Ends.
Quietly on the 28th November the company edited FAQ 28 on its website dropping the bombshell that previously announced heavy workover on well GY-240 was being canned in favour of of 2 cheaper reactivations!!

It is in itself not major but it is yet another indication of just how tight the cash position is. The fact that the shares fell on the good news from Spain is another indication that it is placing ahoy! And that placing is going to be at a big discount to get anyone interested in yet another bailout promoted on promises of jam tomorrow


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