Empyrean Energy

Web site : http://www.empyreanenergy.com

Haystack ..... I think your statement is a pretty sweeping and not truly justified .... While it is accepted that exploration companies have a much higher risk factor that established producers, to sweep them all aside as "junk" is unwarranted ..... That said, there will only be a few princes among the shoal(?) of toads ...... How one prices any of them, it is true, is somewhat subjective and conjectural, but in my uninformed opinion, CHP, MHP (not so sure now), GFX and VOG all warrant more than cursory glance.

I did say "these oil exploration companies that are in make or break situations depending on the next well ".

I was not referring to all oil exploration companies, just the ones that people are ramping and saying that the price will fly if this well comes in. Many of these companies are very finely balanced at present. Their SPs are far too high for exploration companies that are not major producers. They are just cash sponges.

They raise new cash from new stock issues, bet the cash on one or a couple of wells and go back to the investors for more cash. This is nothing new in the oil exploration business. What has been new recently is that the companies have had absurd valuations because of the rising oil price. It has become an all or nothing gamble. There is a limit to how long this can carry on. EME is not the only one that has seen its price crash.

No ... VOG is another though (a) they do not have a record of asking for more cash, but offering shares to companies they take over and (b) I still believe they are sitting on a true resource ..... I shall certainly buy some back when I start reinvesting.

With that thought, it is good to see Dow at long last surging through 11150 and even 11200 ...... It tried last night and failed to hold, but I just feel that this time it will hold ...... or at least until the next "shock horror" probably from M/E

I think a number of people have been badly burned in VOG, EME and MRP, to name but a few. If nothing else, prices will probably fall further, as some decide that "enough is enough". Some may even decide to take profits in other stocks too, rather than risk a shock down the line.

DOW reaction was interesting. The inflation figure seems to have been largely ignored, in favour of believing the economy will just cool. A bad move I suspect. But hey, what do I know.....

As ever.....just my opinion.

Strawbs.

VOG raised 13 last year from a new share issue and it was quite dilutionary (16% of the enlarged share base). The shares issued to takeover targets are just a way of paying for the company with paper instead of cash. They were able to do that because at the time their share price was quite high.

In fact they spent about 10m in six months up to November, so how long will the 13m last. Their net assets are made up almost entirely of Intangible Assets. It looks as bad as EME to me.

VOG raised 13 last year from a new share issue. The shares issued to takeover targets are just a way of paying for the company with paper instead of cash. They were able to do that because at the time their share price was quite high.

In fact they spent about 10........................

I hope it was on a nice vintage..........lol

I suppose that based on the above calculation, VOG may soon be out of cash again.

Haystack ..... paper instead of cash is far better for the shareholders and the company, as the fall in price now demonstrates.

Strawbs ..... Dow has also ignored the psychological blow that UN are pulling out their unarmed observers for Lebanon ...... One can rationalise today that the market had already discounted continuing hostilities, but if it falls tomorrow, then it will be a natural reaction to the bad news!

Paper is only possible if the share price is sufficiently buoyant to convince the takeover target. Now that VOG price has dropped paper will be much more difficult. The takeover targets have had a poor deal by taking paper as the share price has tanked.

In the long term cash is the same as paper for the shareholders as the dilution is the same. It takes the same number of new shares to be issued to arrive at the same amount of money. The only benefit of paper is that it doesn't require another share offer, so the expenses should be less and it doesn't tax the pacience of either the institutions or shareholders in asking yet again for money.

I only agree that VOG may find paper in lieu of cash more difficult to sell in the future, but it was a very very cheap way of doing deals in the past ...... on today's price a 10m deal 3 months ago will now have been done for the equivalent of 3.5m ...... or am I thick as well as cynical?

No. The cost is the same in terms of shares issued as they were issued at the time. The target company would have wanted 10m, so 10m of shares were issued causing whatever dilution.

If it had been a new share issue to the market to raise 10m then it would have been the same number of shares issued and the cash raised would been given to the target company. The shareholders are in the same position either way.

The only loser is the target company shareholders who now have a diminishing asset (VOG shares).

Buying a company with paper is easier as a prospectus does not have to be issued for the new shares and the expenses of underwriting/legal would be less. The issue would be coverered by the usual AGM resolutions that permit companies to issue a certain number of shares without recourse to the shareholders for an EGM vote.

eme had a similar effect to Northern petroleum , last year this went down from a sp of 100p to 35p, but picked up to a new high of about 175p high but now levelled of. slightly. therefore eme will pick up again soon news is bound to stimulate the market. As Eagle 1 north is expected to flow 1000bopd +. Not to mention Sugarloaf is about to be spudded. So relax and wait a while good prospects are imminient.

Shadow .... you hope! I think Eagle 1 will prove a disappointment though Sugarloaf in due course may come to EME's rescue

Haystacks, it's not just the target company shareholders that are the losers, the incumbent shareholders are also losers because whilst issuing 10m of shares for 10m of assets is ok, if those assets end up being worth less than the value of issued shares (ie 10m ) then ALL shareholders are losers. Just look at VOD for example.
2517

It's what these outfits don't say in a news release that always matters most, I find. Read between the lines!!!

;-))

I'd be interested in knowing who stopped out and who didn't - reasons why and why not would also be interesting.

What makes you money in the markets is not entires, it is exits, i.e. cashing in.




WHO DID WHAT?

;-0

I got out, through gritted teeth, at just over 50p ...... As I have recently posted, I think this company is now a busted flush, much as it grieves me having supported it with hard cash over the last year or so.

cynic - the whole point about entering the market is that we have 3 potential opinions - good, bad, indifferent.

We must all have an exit before we have an entry.


Preserve your capital

that is why i got out ..... am now waiting for Dow to reach 11250 and will then think of shorting