Chairman Foo and Board of VOG say one thing and woo investors with promises of sweets and treats in the future, but the market tells a different story. VOG share price is treading water. Why is it that the SP is paralysed and yet VOG makes cash daily? What is it that the Board are doing which does not make sense to the investment community? I can answer that one. They are spending rather than saving. It is appalling that cash reserves are below £5 million. Duffer reports VOG has already used half of its drawdown facility, leaving our company in debt. Thank you Chairman Foo. I see further spending crippling VOG, sending the SP plummeting. A saving grace would be a hostile takeover. Then the SP would rocket. Investors should not follow the Board over the cliff.
Some investors still lack clarity when they view VOG. They are mired in detail and are unable to see through the fog of war. VOG is no longer an entity which can be explained simply, but is lost in a maze of complexity and double entendre. If we cut to the chase, VOG< out company, is being exposed to the prospect of unspecified debt by Chairman Foo and his lieutenants, each of which will receive a handsome remuneration package come rain or shine, at our expense. They write their own blank cheques. VOG in contrast needs cash in the bank and a Board who do not see VOG as a cow to be milked. Every time the Board tries to blind us with technical details, they vex investors sorely to the point of despair. Keep it simple. VOG should be making cash now, not haemorrhaging investors money.
VOG is like a plane heavily laden with cargo which wants to take off but just can't. It accelerates faster and faster on the runway to the point where someone has to make a decision either to jettison some of the cargo, or else risk overshooting the runway and crashing. The cargo happens to be Chairman Foo and part of the Board. VOG is in its infancy as a producer and cannot afford to be burdened with debt. VOG needs cash and lots of it. Ask yourself why news of Matanda and yesterday's Quarterly Update failed to impress the market. Just who is telling porkie pies?
Can VOG allow Chairman Foo to gamble on Matanda? If the wells prove dry, then what? How low will the SP go? Has Chairman Foo lost his way and is has he the best interests of shareholders at heart? Shareholders must not allow themselves to be led into these new Board ventures blind.
Some VOG investors have capitulated to the idea of "No dilution" or "Back-up" regarding the US$ 25 m loan facility recently mooted for VOG. My medicine, in contrast, aimed at rewarding the long suffering shareholders, who are first priority on my list of company targets, would be to fill the war chest with cash. Cash is king, not debt! A very healthy balance sheet would propel VOG to the stars. Those who wish to stay for the drilling phase could do so. Those who wish to cash in their stock could do so too. I am against new drills will burden the company with debt or raid what little cash we have or will make in the near future. Let us not be led by a ring in our noses.
VOG is not in a position to drill new wells in a bid for more gas reserves, as its credit line is weak. We need to stop the drilling, at least for the moment, and ramp up production. When there is enough cash in the pot, then, and only then, do we return to exploration. If we start a drilling spree and hit a series of dry wells, then VOG is history. If Chairman Foo refuses to listen, then we should use shareholder muscle and vote him out. After all, his responsibility should be first and foremost to the shareholders. Another possibility is for a white knight to appear, see the potential in VOG, excise the rot within the Board, and start making some real cash. There is absolutely no reason why VOG should be mired in debt. Heads need to roll starting at the top, to protect this valuable gas utility, which equates to progress in the Cameroon economy.
Matanda is an exploration project. VOG is a production project. One burns money -- shareholder's money, and the other rewards shareholders. Chairman Foo gets paid either way. In fact, it looks better for him if he conjures up dreams of huge gas fields and promises of a company flowing with milk and honey. In reality we toy with unspecified debt, shareholder dilution, and low SP. Why have we not got £50 million in the bank? Why not? The SP would rocket. Investors would be rich. First build up a generous war chest and then talk exploration. Discovery of dry well has sunk many an oil company, as their coffers have been drained. None of us should be led by our noses. We should all be asking tough questions.
VOG needs to slow down and consolidate its cash position. Some projects burn up cash at an alarming rate, and these need to be put on hold. The cash cow is not there to be milked either, especially in the form of gratuities, remuneration or greedy fingers. Build the cash up first, and then forward looking projects can be considered. Stop the cash burn, and VOG would rocket ahead on full throttle. Notwithstanding, all things being equal, I don't think there will be much more downside action on SP, and i would expect the SP in the near term to plateau at about 50 p in the wake of the recent interims. If however a Mr Gekko appears on the scene, then a 100 p SP is not out of the question.
One of the highlights for the Interim Financial Report for the six months ended 30 Nov 2015 was the $6.3 m cash compared with $5.1 m in the preceding 6 months. Forgive me for asking, but is this a highlight? It says "flat" to me. I certainly wouldn't want to dance in the streets on hearing this news!
The recent rise in SP to about 50 p could very easily be unwound if VOG wanders off the "straight and narrow." Specifically, CEO Foo has a responsibility to the company's long suffering shareholders to boost SP. We need accountability both in month-to-month progress and for forward projects, and they need to be timely. Shareholders need to be pro-actively advised of Board remunerations including options packages, and there should be a link between remuneration and share price. These are issues that need to be thrashed out at the next AGM, with of without the Board's blessing. There has been some talk recently on these pages about "stranded gas." For VOG to initiate new ventures in different countries would be a financial disaster, as it has still to iron out its property in Cameroon and resuscitate its SP. Shareholders should not allow CEO Foo to destroy VOG in this way without a vote from shareholders. This needs to be on the agenda at the next AGM. What I find hard to fathom is that as soon as VOG makes some money, it is spent on plant each and every time. Why can't shareholders insist on a war chest, which is off limits as a honey pot for the Board, to boost SP. Perhaps this should be forced on to a meaningful and shareholder friendly agenda at the next AGM. If the Board are allowed to select an agenda at the next AGM, without censure, then we are sunk, or our progress stifled for several more years.