Replies to post #655 on GulfSlope Energy Inc (GSPE)

[necrow]

Gspex: they undoubtedly have a lot of other great prospects in their portfolio; the concern for me, though, is that if Tau flops, Delek could decide not to pursue any of the other wells and GSPE could be in a load of financial trouble. I think that's a legitimate risk. Management will undoubtedly be willing to shell out a few million here or there to keep the company afloat, but if things really don't pan out with this first round of exploration wells I'd have to imagine they'd have a tough time staying afloat long enough to right the ship.

Fortunately, Canoe is obviously an incredibly high-success play, so I'd hope that site would be enough to keep the company above water (at least for a little while) if Tau is a major flop. I'm pretty sure Delek could still elect not to pursue production on Canoe after the exploration well is completed, but I'd have to imagine they'd still want to produce on Canoe even if they elect to bail on the later stages

[necrow]

Trip: I wonder that constantly. What GSPE does really have going for it, though, is that they had access to enhanced image processing techniques before the rest of the field and during the bidding process. As a result they got their pick of the litter based on knowledge only they had access to at the time. That competitive advantage does lead me to believe that other major players in the area are idle because they were too slow to the punch on some of the more lucrative GOM plots that were auctioned

It often does seem too good to be true--that doubt is healthy, though. There is, without a doubt, still a chance this company flops. I think it's dishonest to say otherwise. If these first two sites disappoint, I'd have to imagine the company is effectively done. If Canoe lives up to its modest expectations and Tau is a major disappointment, I think they're likely on life support. It's certainly still a bit of a gamble, but the odds are pretty good and the potential payoff is astronomical.

I would still absolutely love for someone to lay out the bear case for this company. Given their massive short%, it's incredibly frustrating that I've been completely unable to find anyone to do so. I have to imagine that most of those shares sold short are algo-traded based on the company's debt and lack of revenue. Looking at just their financials with no other context, I'd easily be short as well. I'll stay long until I find someone laying out an actual bear case