I am still around, just a bit busy. I had to prune the all vineyard and it is quite a job.
Bobby is right I am also licking my wounds, November was not a good month for me. I went from one disaster to another. Still way ahead for the year (thanks to Mart) but not as good as it was a month ago. :-(
I wanted to answer Bow's post because he had some very interesting questions and he spent a lot of time thinking about it. So here it is to the best of my knowledge:
1) Mart provides "technical and financial services" to its partners. Technical is operation of the field. I assume that "financial" service is paying for the drilling and getting paid back later in oil, which amounts to free financing. Any other thoughts on this from anyone?
This is not a "free financing" it is just part of a global deal. Mart gets paid 50% of the production plus gets to count 50% of the reserves in their books for a field they don't actually own. All of that for "technical and financial services". No bad!!
2) "Nearing conclusion" on the pipeline is still pretty general, but he could not be more specific. One can only hope that it is done before the end of the year.
Not much Wade can do but check the mailbox everyday. Shell is busy selling assets in Nigeria so Mart and the other co-venturer on the pipeline are not Shell's first priority. It will happen, it just takes time. It is Nigeria where clocks run a lot slower than anywhere else.
3) Interesting that he hopes the pipeline will be "operational by the middle of next year". I think previously it was hoped to be done by the end of the 3rd quarter, but now they seem to be talking about the beginning of the quarter.
Pipeline was scheduled for a 12 months completion. That included 4 months for the actual construction. A lot of work has already been done on permits, land rights, ordering long lead items like steel pipes and pumps, Etc. There is also several ways to accelerate the construction. All it takes is more money but considering that a month at 15K BOPD net to Mart in 2013 is worth $5m extra in earnings just for Mart under the Tax holiday verse today's production level. Mart and the pipeline JV partners can afford to pay a lot of overtime and incentives.
4) Interesting that he emphasized that the dividend will be a "minimum" of 5 cents a quarter. Given that Mart has no debt and gets paid back for its drilling costs so quickly (about three months or so usually, although UMU 10 cost recovery got delayed further out in time), and given the amount of cash it is generating and dividend it is paying, it is almost functioning more as a MLP or Unit Trust than it is a typical oil company. Given Wade's statement about increasing the dividend as cash flow increases, it seems that Mart is going to be a cash cow paying out MOST of its earnings as dividends.
At a rate of 15K BOPD net to Mart the company will be nowhere close to paying most of its earning as dividend even at 10c a quarter. By the way they should not pay too large a percentage of CF. Mart will need extra front end cash for a second rig for Umusadege and other rigs for the new fields in 2013.
5) When production is doubled (next summer given the above) there will be " a nice bump up in the dividend". Wade stated this will occur "by mid to late next year", assuming, of course, that everything goes according to plan.
The production will increase when the pipeline is ready and that could start in Q3 2013. I do not expect Mart to increase the dividend before Q1 2014. They will need 6 months of extra production before they start distributing cash. Expenses get paid in 30 days and AR are about 45 to 60 days if I recall. They need to time to fill the coffers. Once you declare a 10c dividend you want to make sure you have enough cash to pay at least the next 3 quarters At 10c a quarter that's about $100M.
6) Full Toronto and London listings in the middle of next year.
Another event has to take place before that. Read what you want in that.
7) He hopes that new marginal field bidding will occur "early next year." What was surprising (at least to me) were the numbers. There are 125 marginal fields with roughly 2 BILLION BARRELS of discovered undeveloped oil that might be coming up for bids. Given those numbers, "It makes sense for us to stay focused in Nigeria". Thus, do not expect Mart to diversify into another country. While it will diversify into other areas of Nigeria, this is likely to stay a one country company.
Mart is in Nigeria and will stay there until the foreseeable future.
8) He complimented Midwest and SunTrust as partners. Thus, do not expect Mart to join forces with any other indigenous companies in the next bidding process. Wade stated that relationships are the key to this business. It is likely our partners would be insulted if Mart bid on a new field with other indigenous companies.
There is nothing wrong with Mart having other partners if their present partners do not see a conflict. They all know each other in Nigeria and MW or ST could be a partner with a new Mart partner. This is very usual in the oil business not only in Nigeria but worldwide. The pipeline for example is a JV that includes several other companies outside of MW or ST. Yes relationships are key and Wade knows how to play that game. I think that's why he gets a very nice paycheck from Mart.
As usual the above is all IMO
Cheers an GLTA