Public Musings to Private Email
No, I have never owned Dragon. I do own interests in oil, a bunch of ETF shares in GSG and XLE, the former 70% in oil, the latter a blend of 32 oil and gas sector stocks about $170k. I haven't invested in Dragon for the same reasons I've recounted over and over on this board.
I have never been short Dragon either. I have never shorted any stock, but, in their case, I almost wish I had since it was pitched to me as "about to run to $3". I've never shorted any stock, no rational reason why. In retrospect, after having been told that management had been on alternating sides of the trade it might have been a good idea - but not being privy to the inner workings in the PR Machina I had no way to know which way they were going to play it. Overall though, glad I didn't play, shorting seems like profiting off another's suffering and there has been enough of that here to last you guys a lifetime.
Are they going to make it? A qualified maybe. There is a huge disconnect between the "office" and the "field". Some very had lessons have been taught but I do not know if they have been learned.
What has to change, IMHO, is to have some real organizational structure, a Chain of Command and accountability. Maybe the right people are close to being there (and that's very hard to do in the stripper well market since the best hands are working offshore or in Wyoming on God knows where else for 4X what is paid in Pine Island). Don't misunderstand. You can get really premium service with EXCELLENT hands but one screw up on paying bills timely and you will never get them again, not without certified funds paid up front. A number of operators I know pay their contractors WHEN THEY PULL UP TO THE JOB. Operators who are slow to play are frozen out of the game, get poor people who give poor advice, the first tier is quite prime, the second tier is basically 8th grade dropouts, and equally expensive because of their inefficiency but they will wait a bit before being paid. It's false economy.
I know this for a FACT.
If you have:
The right people,
in the right place,
at the right time,
with the right tools,
doing the right thing...
You can make a lot of money in stripper wells with 65 dollar oil.
And I know this too.... notwithstanding any complaints about larceny or bad intentions... good heart DOES NOT equal knowing how to operate.
My best prescription for a turn around from Dragon's perspective is:
1) Find out what you've got. Work on what can be improved. Ignore the rest.
2) Pay all your personnel on a reliable basis. Give performance/production bonuses. Reward thinking and innovation.
This is 2007. Doing everything the way your gran'daddy did it is not usually the best way - sometimes, but not often.
3) Don't buy anything else. Every wellbore is a 3K plus liability. Find out what you've got and get some competent help and take their advice. The days of PR'ing on "potential" are over. Accept the reality and concentrate on results working with what you have.
4) Be transparent. NOBODY invested in the company can understand WTF is going on, what actual production is. Establish a baseline and keep a trendline from that anybody can understand. Reinvest, economize. Reward excellence.
Somehow, get some fresh thinking into the mix. My sense is that the present crew is exhausted from doing crisis management all day, every day. Where that would come from I don't know.
