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Contango Oil & Gas Company Message Board

  • hzhou2000 hzhou2000 Aug 10, 2007 8:49 PM Flag

    10k/a

    Anybody read the 10k/a, to me it is just an amendment. Anything special? At least I don't see anything significant. Thanks in advance for any input.

    hz

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    • I skimmed through both the quarterly and annual amendments and could not figure out why the amendments were made. It appears all the basic interest figures and production numbers, including well counts and flow rates, are all the same as the prior report.

      Glad to see you bought some more shares; I would do the same if I was not already maxed out on available funds. I just think the revenue figures are going to go ballistic over the next 3-5 quarters. Looking back through the amendments, along with the two most recent Dutch #3 press releases, creates a fantastic picture going forward.

      First, the latest press release has MCF's net production up to 30 mmcfe/d and Peak's "$1 billion company cash flow analysis" was based on 60, meaning they are half way there. In rough numbers and using a $6 sales price, that puts the current cash flow of the company at $5.4 million a month -- whereas it had $5.4 million in revenue for the entire first quarter.

      Second, the press release has Dutch 3 test flow at 34 mmcf/d but it says MCF expects it to produce at "45 to 55" a day, and then the release says "Mary Rose 1 should be just as productive." Well (pun intended), if these numbers are right and we end up with 2 wells at 50 a day is 100 total, and MCF's interest is 30%, so there is another 30 mmcf to add to the existing 30 mmcf and with just these two new wells -- if they produce as expected -- Peak gets his 60 mmcf production for his $1 billion company analysis.

      Then third, and as Valueguy has noted, there will be "5 or 6 additional wells" to fill out the 300 mmcf expanded capacity pipeline -- (the expansion of which Valueguy noted as a signal that Ken thinks the field is much bigger than earlier expected even though the numbers cannot yet be formally raised. If MR#1 is 50 of that 300 count, another 250 from future wells would mean another 75 mmcf to Contango! It may take a while, but the increased cash flow from the wells coming on line should allow the drilling pace to increase. And maybe I am just missing the point, but if Ken offered his view that 60 a day net to MCF justifies a $1 billion company, what does 60 + 75 more do to market cap??? (Valueguy: am I thinking this through correctly and, using Peak's CC analysis, doesnt this suggest MCF should be a $2B company down the road?)

      Fourth, Fayetteville continues to go forward with several hundred well locations identified in the Tier I and II zones. And it looks like approximately 5-7 wells are currently being drilled at a time, so I suspect we will see 2 to 3 new wells coming on line each month for the foreseeable future.

      And then, the wildcard -- the LNG port facility. I dont know if anyone has tried to figure out the cash flow potential of this giant animal (if someone has seen any calculations for it, I would appreciate a link), but the deal is massive. Phase 1 involves 1.5 bcf/day and opens in February, and phase 2 is significantly on its way with another 1.1 bcf of capacity plus some significant salt dome storage capacity. I am really curious to learn how the numbers play out, but I just have to think that MCF's 10% interest is going to be another goldmine value adder come 2008. Check out the basic overview at www.freeportlng.com

      All of these factors seem to paint a great picture and it all makes me envious of Faloleadr's large position... :)
      Go strong and long with MCF...

      Again, if anyone has any information on how the LNG facility might contribute to value, I would appreciate your feed back. As HZ says "thanks in advance for your input"

 
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