Also, a few comments on why I am not a fan of a Gulfslope acquisition. I have said it before and now looks like a good time to bring it up again.
Maybe if this had been accomplished a couple of years back, when marginal producing assets were something operators were anxious to divest away from, and before prices skyrocketed to the levels they are today, perhaps this was a viable strategy.
But for a company with limited liquid assets to be talking of purchasing producing GOM properties at today’s prices, just seems to me to be wishful thinking.
There are plenty of scenarios one might envision where something could be worked out. But without cash how will the seller benefit? Surely an all stock deal will not be the deciding factor. A partnership perhaps? I cannot wait to see how that deal is structured and how GSPE shareholders benefit. In my opinion, it would be more difficult to structure an asset purchase or a partnership than it would be to drill the Tau.
And, although the Gulfslope management team is top tier, it is not like the company itself is some industry renowned offshore operator steeped in efficient production methods for making profits, and blessed with an experienced team of well trained staff employees available for management to execute their business model.
No, they will start from scratch, likely using the same people and facilities the previous operator was struggling with. When prices stall or fall, or when one of the many inevitable operational issues is encountered, it is ‘red ink’ all the rest of the way from there.
The renown Gulfslope expertise is in discovering new reservoirs and reserves. Their success (or failure) will come from drilling not from operating marginal assets.
As Gulfslope Energy is now supposedly focused on purchasing assets at the top of the market price, put me on the record as saying that I am unimpressed, and I cannot pretend to support this deviation from the drilling goal and the reallocation of limited assets.
Hopefully this just a stall tactic to appease shareholders through this period of uncertainty. A best case scenario.
Yet, I am still optimistic that the management team will not neglect there drilling vision. As that is the pathway to Gulfslope’s success.
I guess we will need to wait and see what John Seitz finally decides to really do.
Mrs. Smith
