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Drilla, i do not want to make you work more.....but i did not see the tax credits included in your calculation.
So i guess your calculation is even higher. Some people here mentioned that in Brazil there is a way to change those credits into profits.
Thanks for keeping the score!
Clip, thanks for letting me know who is BroStar. Find time for a Starbuck time when you come to downtown.
Now, going back to the share price. I suspect that it might stabilize and probably start rebounding soon now that the Namibian campaign is over.
Probably the short sellers run out of ammunition. The share price is well below real valuation. Some of you know exactly how much below!
Rzbern from Brazil also believes so because he sees that Bovespa already started to turn around. It appears that BOVESPA hit bottom few weeks ago.
That should give us a respite.
Now that all the Namibian dreams have been shattered. Reality will settle in and management, and shareholders, and the market as a whole will finally see the value of the gas at hand.
Based on all the news that Rzbern has been feeding us from Brazilian local news, HRT management is very much aware (although they did not say anything openly) about gas needs in Brazil and the opportunities.
I suspect they are playing this close to their chest and will come with some gas news soon. Solimoes gas impact in the share price will make most of us happy.
After i read some news from Brazil. I appears HRT management has been chastised well and learned a lesson. Moreover, the continuous present of Canadian Hedge Funds makes me feel confident that rectification is taking place.
Brazilian local news really assuaged my deepest concern.
I believe we will be fine.
Although, to those that doubt my intentions....
Buying shares in a company does not automatically annul freedom of expression or suspend rational thinking.
Powerwalker, please do not fear me. I do not bite, I only think.
Instead, probably you should start fearing the share price.
Breaking news indicate that it is like 97% down. Watch out!
By the way, who is BroStart?
Northsun, i came to fully appreciate the invaluable contribution of your positive comments on a perfectly broken share price.
Your wisdom is quite invaluable indeed.
I just do not attempt to claim wisdom, just logic.
This is the last time i refer to you. So please stop attacking personally because i have been quite respectful.
14 other oil companies, that is wisdom.
Northsun, another disclosure about my position (i forgot to mention)
I had Global Petroleum and Pancontinental. Just US1000 each but i sold them at loss and left a substantial oil bet in HRT.
The truth is that despite all my criticism, HRT drills (though expensive in the past.) Not like many other bullshitter companies.
I walk my talk.
And please do not worry about my amateurish investment practices. I will be fine.
My behavior clearly indicates my assessments.
HRT will make it in time...and faster if prudence takes over.
Northsun, probably the only one here with ulterior motives is you.
You have the temerity to continue the Namibian campaign, despite evidence of 3 failures.
Do you know why? Because you had invested in another 14 oil companies as you said. Your risk is quite small.
I only invested in one oil company, MM's company, its name is HRT.
My price is US$0.59....and i have never short sale.
So for me, they better make it. For you, HRT failure will probably only embitter the first sip of your afternoon champaigne gustation.
You have many horses in this race. That is why you are willing to race this horse to its death.
So stop your senseless cheerleading. I think nobody here needs a cheerleader but some different but sincere point of view to asses their investment allocation.
Northsun, could you please stop attacking me personally? or is it impossible for you to debunk my arguments?
Also, I doubt at the possibility that a professional investor like you would had trusted a fortune to guys like MM, whom you claim had a two or two studying Namibia.
In fact, let me refresh your memory. The whole HRT raison d'etre is predicated in the assumption that the glorious Petrobras geologic team, led by the superstar MM, who had under his belt the world record pre-salt oil crown, also studied and understood the geology of Namibia.
That is why he went there, he was sure.
HRT selling point was that! The years of experience in deep water drilling and pre-salt geologic formations and the tectonic theory displacement. And the had the Santos and all other Brazilian successes to prove it.
I did not say that. They said it. Even check the videos.
But that past important experience is not important anymore.
Probably now they are like novices reassessing all their assumptions and data all over again. As any responsible scientist should and the new CEO implied so in the last press release.
Rzbern, the more local gas information you bomb us with here, the more evident it is that HRT will probably nicely surprise us with some gas news.
The short term problem is how many more weeks or months do shareholders have to suffer until the upward share price trend starts.
Forget about the Namibian pie in the sky and get the gas in the pipe.
Dreams can wait.
PRUDENCE
After 3 failed attempts in Namibia, prudence is needed and I feel the new CEO gave such hints in his last news release.
If a Post analysis of targeted chemical weapons factory indicates:
1st. bombing, no factory
But the analyst confidently said "we found a lot of nitrates"
I say it was a fertilizer store.
2nd. bombing, no factory
But the analyst forcefully said "we found a lot of metal casings"
I say it was Uncle Joe's hardware store.
3rd. bombing, no factory
But the analyst gleefully indicates that "we found hydrochlorides"
I say it was Aunt Jemima's cleaning utensils.
Now, the general has to make a choice: to continue or to stop.
The smart analyst would argue "One more time, we are getting closer.". He is completely confident that the 4th surgical strike will be Bingo.
Yet, a prudent general must call all its Intelligence analysts and ask them to revise all their assumptions. A continuation of the same strike campaign is flawed and will probably result in more collateral damage and further expenditure of the national treasure.
Of course, you could have a LeMay type of general who would argue for carpet bombing. But that choice is impossible for HRT. Besides, it has been proved that carpet bombing never degraded Germany capacity for war.
But anyway, going back to the subject at hand.
HRT studied for years Namibia and took years to build up the Namibian Campaign. Now, after failure it is time to recoup forces, mend the wounds, amputate some limbs, questions all assumptions, reanalyze all the data, and in the meantime let allied forces attack the area to narrow the targeting area.
What is the hurry in Namibia? Or you do not read what you tell us to read? The article about the 1.5 trillion barrels in the Gulf indicates that the whole process took like 10 years. HRT is not the Rolling Stones. Time is not on its side.
To continue with Meerkat is unwise, especially when assumptions might be flawed.
At least the three holes can further clarify the real situation about whether there is commercial oil or not.
Now it is time for gas, to secure the perimeter.
Namibia can wait if gas is developed. Besides, it has been there for billions of years...I am mildly confident that if it is there, it will remain put for another year or two....enough time for HRT to lick its wounds, dust itself off, stand up and jump back into the ring.
I am sure, next time, HRT will be wiser.
Absolutely wonderful......another one on my Christmas list. I heard Barra is one of the largest beaches in the world. Absolutely...just that...absolutely.
Thanks for sharing.
I live in Taipei. The island is like 1/150th of Brazil. The east coast here is beautiful but unlike Barra.
Cliffs of high green mountains arising straight up from the bottom of the blue Pacific, with regular waves crashing against the rock walls, and no sandy beaches to walk on.
The beach are just black rocks covered in spray water where weekend fishermen regularly loose their life when they are sweep away by unexpected freak waves.
But beautiful of the different kind.
If one day I show you one from here, please do not laugh.
But i also want to pass by Curitiba. They said the former mayor, an university professor of architecture i think, really transformed the city into something really good, without spending a fortune. Just smart policies. So i have to pass by Rio too.
And i would like to visit Embraer and see how the built the Supertucano. Amazing and effective piece of flying power.
And visit Matto Grosso and see the place where Brazil fought against Paraguay.
Wao, the list continues. I will spend a fortune on that trip. HRT better make it!
About the pink dolphins, shame on you! Stop counting your dollars, and fly to Rio Negro. You can use your Robinson (with many refuelings though)
But i also want to pass by Curitiba. They said the former mayor, an university professor of architecture i think, really transformed the city into something really good, without spending a fortune. Just smart policies. So i have to pass by Rio too.
And i would like to visit Embraer and see how the built the Supertucano. Amazing and effective piece of flying power.
And visit Matto Grosso and see the place where Brazil fought against Paraguay.
Wao, the list continues. I will spend a fortune on that trip. HRT better make it!
About the pink dolphins, shame on you! Stop counting your dollars, and fly to Rio Negro. You can use your Robinson (with many refuelings though)
OK. Keep it there.
Once i spent months driving from North America all the way to south to Panama, driving through each and every country in Central America.
My next long drive is from Cartagena, Colombia to Ushuaia, Argentina. In Brazil i want to see the pink dolphins of the Rio Negro, the Tapuis in the north, visit Manaus and see its museum. Then go to Fordlandia and also see the places where Teddy Roosevelt almost died.
I will be glad to spend money with the people that made it possible.
Cross fingers because if we pay your dinner, it probably means HRT had a happy ending!
Rzbern, i owe you a dinner.
My question was full of sarcasm (with a little trepidation in case you answered positively.) Your negative answer is a relief.
Power, very good article.
Rzbern, nice piece of information. Do you think that HRT management is sizing this and many other opportunities there? Or should we start emailing them this pieces of news? (it will be quite sad if we have to do that)
Northsun, wildcatting by definition is run on a shoestring because of the risk involved.
Wildcatters are never as wasteful and improvident as this elegant Copacabana outfit was.
Of course, some people would argue that "HRT drilled!"
But the cost in equity of every drill is in the hundreds of millions of dollars.
Who can defend that persuasively?
All of my points all logically consistent.
Northsun, thanks for your reply. I will mention some point but first let me clarify that i did not say that HRT management is stupid.
1. The phrase "HRT management has to be consistently stupid to fail (in the Solimoes gas development)" conversely means that HRT management has to be occasionally smart to succeed.....because the development can paid for itself and help the company secure its future.
They could be morons, half smart, intellectually not curious, normal or geniuses and still succeed. That gas field is a win by itself. So I hope that now you can see clearly that I did not say they are stupid.
2. It is argue that quarterbacking Monday morning is unfair. But listen, to bear the burden of failure is also their responsibility because they get paid a fortune even in failure.
Or do you think that losing 97% of some else's money must be sweep under the rug and forgotten?
If management knew that the market was penalizing share price for failure, they should have taken countermeasures. But they just let it run it course in a very cavalier manner.
3. About the helicopter fleet used to achieve air superiority over the Amazons. Brazil has the largest usage of helicopters in the world. More businessman use helicopters in Brazil that in any other country in the world. Helicopters are a status symbol in Brazil and I suspect they bought that little Air Force to show off.
Otherwise how come they can get rid of them and the company still can achieve all his plans?
Moreover, has you ever seen a patio sale where the owner sells the family jewels? No, you never. Simply because patio sales items are superfluous by definition, like the HRT Air Force.
4. About the deals BP/TNK, Polvo, Solimoes and whatever else. As i said earlier. Being late is also a strategic mistake.
They bought assets and found stuff long time ago. Yet there were no press release about real actions. There was no urgency about them until Wingat showed a can size of oil.
Only when they started running out of rope (two holes left, Murombe and Moosehead) that they finally started to run in panic to do something. Sadly, while all along, the tools for success were right there at their disposal, in front of them.
Only at that moment Marcio is shown the door. Then they are talking about sales of assets, and committee to develop this and committee to develop that.
5. I am an amateur in this business but i can see clearly strategic mistakes in this management. Otherwise, why the share price is US0.22
That speak for itself.
Northsun, thanks for your reply. I will mention some point but first let me clarify that i did not say that HRT management is stupid.
1. The phrase "HRT management has to be consistently stupid to fail (in the Solimoes gas development)" conversely means that HRT management has to be occasionally smart to succeed.....because the development can paid for itself and help the company secure its future.
They could be morons, half smart, intellectually not curious, normal or geniuses and still succeed. That gas field is a win by itself. So I hope that now you can see clearly that I did not say they are stupid.
2. It is argue that quarterbacking Monday morning is unfair. But listen, to bear the burden of failure is also their responsibility because they get paid a fortune even in failure.
Or do you think that losing 97% of some else's money must be sweep under the rug and forgotten?
If management knew that the market was penalizing share price for failure, they should have taken countermeasures. But they just let it run it course in a very cavalier manner.
3. About the helicopter fleet used to achieve air superiority over the Amazons. Brazil has the largest usage of helicopters in the world. More businessman use helicopters in Brazil that in any other country in the world. Helicopters are a status symbol in Brazil and I suspect they bought that little Air Force to show off.
Otherwise how come they can get rid of them and the company still can achieve all his plans?
Moreover, has you ever seen a patio sale where the owner sells the family jewels? No, you never. Simply because patio sales items are superfluous by definition, like the HRT Air Force.
4. About the deals BP/TNK, Polvo, Solimoes and whatever else. As i said earlier. Being late is also a strategic mistake.
They bought assets and found stuff long time ago. Yet there were no press release about real actions. There was no urgency about them until Wingat showed a can size of oil.
Only when they started running out of rope (two holes left, Murombe and Moosehead) that they finally started to run in panic to do something. Sadly, while all along, the tools for success were right there at their disposal, in front of them.
Only at that moment Marcio is shown the door. Then they are talking about sales of assets, and committee to develop this and committee to develop that.
5. I am an amateur in this business but i can see clearly strategic mistakes in this management. Otherwise, why the share price is US0.22
That speak for itself.
The challenge for HRT management is to finally brake away from the Namibian dream and embrace the Brazilian gas.
In doing so, automatically any potential Namibian jackpot's multiplier must be reduced because HRT will not be nimble (and vulnerable) anymore.
But, by developing Solimoes gas, HRT will be heavier (debt load) but would have secured its future.
In cases like Solimoes gas, HRT does need a partner for capital injection for two main reason:
1. Banks provide capital with gas as a collateral
2. HRT can get present value cash based on the gas contracts' future sales signed with ANP. These contracts last 10 years or so.
So there is no reason to rush to embrace any Russian or foreign company.
What HRT does need is a technical partner to share the construction and manage the running of plants. Whether it would happen to be foreigner, that is a superfluous consideration.
Rzbern, what you bring to this conversation is valuable because we lacked the view from the inside. Thanks. Your material helps see the whole picture much clearer.
Real, that would have been the logical strategic approach. Balancing prudence and risk. Consolidating its base in Brazil, financing gas production with gas as collateral while keeping cash reserves intact for the Namibian campaign.
The problem was that MM was cornered by his own promises to Canadian investors.
He promised riches. But that was only possible if the company remained debt free. The return multiplier in case of jackpot is inversely proportional to debt load.
By going utility like in Solimoes, the company would have shown debt, thus making the original multiplier impossible to deliver.
So MM pressed forward expecting to find oil in Namibia. It was a deliberate decision to keep Solimoes gas on hold....so he could keep his promise alive.
Now that reality broke his promise, HRT has to go back to basics....to the unwanted gas that today appears to be much more attractive.
Some thoughts about Solimoes Gas.
1. It was MM mistakes to have left the impression that Solimoes commercialization was in hibernation, left on hold until further discussion.
Probably HRT did so because HRT was too concentrated and confident of finding oil in Namibia. However, a good manager must be able to multitask and he failed terribly.
Even to those still believing in the Namibia story, not working on Solimoes is hurting your prospects in Namibia.
Because now that HRT needs to find partners for further exploration in Namibia, HRT is weakened and wounded. His negotiation position is weak, with the result of giving away more percentage of ownership in each Namibia farming.
2. If the development of Solimoes gas had been taken seriously from day one, HRT would not be where it is now. I do not have all the information but they made an strategic mistake. A delay is also considered an strategic mistake. Napoleon lost in Waterloo because the left flank divisions arrived late.
3. The value of the farms in Namibia are pure speculation. The gas in Solimoes is real. HRT valuation will be based primarily on gas valuation of $3 or so (as some said). I do not know how much but it will be about gas but as i said earlier, utilities in Brazil are at the US$10 to 20 dollars level, witch a lot more shares issued.
4. As Rzbrn shared with us, 50 kms link to the PB pipeline, which now is underutilized, makes the whole picture clear.
PB constructed thousands of kilometers of pipelines in world record time. Solimoes pipeline comparatively speaking is a walk in the park, a real piece of cake.
5. Dream about Namibia, but the gas is what will fill your stomach. Thus invest in term of gas return and not oil returns. That is more realistic.
6. Management has to be consistently stupid to fail. By default, HRT must make money in Solimoes. Unfortunately, not at the level Canadians investors expected originally, but HRT will make something.
7. As some point, BOVESPA should turn. Probably the World Cup will tame pessimism there. A bit of samba could lighten investors view there. Then, just then, we will take a breath here.
Rzbern, Urucu line might be 100 kilometers away from the field? I cannot ascertain clearly in Google maps. However, the investment is a ridiculous fraction compared to that done for the Bolivia pipeline.
A secondary line is necessary but in Bolivia, PB installed them so fast that a parallel one should not be much more complicated because they are 18 inches max. (my amateur observation)
If so, why HRT appears to be slow launching the development of the field?
If i were Brazilian, i would be able to see the value physically.
HRT Solimoes is inevitable, more over, it is a share price's safety net. The price should not pierce certain level....
So what is going with Brazilian investors? Investors do not trust the management's capacity to transform the project into reality?
Or was Mello so concentrated betting on Namibia's riches that he disregarded Solimoes?
Rzbern, I appreciate the details in your information. From abroad, it is difficult to perceive the value in those relationships. Thanks.
I suspect that it will be hard for the Brazilian government to ignore Solimoes gas value. The logistics of installing new pipelines to connect to Manaus lines are easier and shorter than the one PB installed from Bolivia.
Of course, it is a gigantic project, but PB did it from Bolivia quite successfully. I guess, the second time around should be easier since the largest obstacle is not present (the Bolivians).
(Please forgive me for the message's duplication)
Do you think HRT management has personal relations with the Brazilian government at the Presidential level?
Do you think HRT management has personal relations with the Brazilian government at the Presidential level?
Rzbern, the discovery of Solimoes gas was relevant in the national media? Does Solimoes link into the discussion about national energy independence policy?
Rzbern, the discovery of Solimoes gas was relevant in the national media? Does Solimoes link into the discussion about national energy independence policy?
Rzbern, thanks for the clarity. Yet, the Brazilian market is perverse at this stage and investors are penalizing companies wholesale, irrespective of fundamental differences.
It is absurd yet the share price is real.
Do you think the World Cup next year could be a catalyst for change? I expect it could be if government spending in infrastructure is felt in the real economy.
Because at this stage, foreign investors are at the mercy of Brazilians' pessimism.
Rzbern, you are right and closer to the market. How is OGX's tribulation impacting local investors in oil companies and HRT in particular? The share price is indicating something strange. Both cannot be right or wrong simultaneously.
Rzbern, you are right and closer to the market. How is OGX's tribulation impacting local investors in oil companies and HRT in particular? The share price is indicating something strange. Both cannot be right or wrong simultaneously.
Powerwalker, no no no. I am new here. I started watching this board around Wingat time.
For the amateurish quality of my comments you must realize that i am probing ground here. Although probably more than the professionals in HRT.
OGX $0.179 VS HRT $0.210?
One with billions of debt (with accusations of being a scam) versus another that is quite clean (of debt and any accusation).
One with Blackstone and Pimco onboard versus one with some Canadian hedge funds.
There are other comparative issues, but....
is this very symptomatic of something very screwed in the Brazilian economy now because it does not make sense.
Who wants to ride this bull?
Hello Clip
I am downtown, in front of Brother Hotel.
How is your hemorrhage? A tourniquet could prevent amputation.
Enjoy the ride.
938114015
Northsun. Thanks for the guidance. I am with you on holding it....but it sucks to see that red spot on my screen everyday.
And your last point about SH is taken. I will be more careful.
Northsun, by the way, could you tell me the other 14 companies you are in?
I always do my own due diligence but your ideas will narrow my search.
I promise you I will not raise idiotic and uncomfortable questions about them.
I confess I am a novice in oil so I observe the old timers.
Northsun, you do not offend me. My mother had said a lot worst things about me, and she really knows me.
But you just prove my point and showed that you are a reasonable and successful investor, who is only 7.14% confident that HRT will find oil.
Your sucesss rate is a lot lower than all the originally success percentages assigned to the three failed HRT reservoirs. I think they averaged 23% or so, but they were independent events.
So if we recalculate your confidence of HRT finding oil, I guess is even lower now.
Northsun, I do not think you are confident of HRT finding oil. Otherwise why have you invested in 14 other oil companies?
Confidence (or gut feeling as you said) will make you invest all your monies in HRT.
Please show me how confident you are that HRT will find oil. (Caveat: it is a rhetorical statement)