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AIM listed board lifestyle, sorry I meant oil technology, company Vialogy (LSE:VIY) has issued a “CEO statement” today which is bizarre. Bearing in mind that this company will be almost out of cash by March it is clearly part of a share ramp campaign ahead of a placing. Before the Bulletin Board morons have a go at me I ask them to consider a) timing and b) content. This stock is a slam dunk sell at 2.125p as its cash crisis intensifies. This statement should alert you to that.
I explained very clearly why Vialogy is running out of cash the other day. If you want the hard numbers ( and also details of the ludicrous boardroom pay ) click here
I start with timing. Vialogy has a March 31st year end. Last year it released its interims on December 31st ( when no-one was around to see how bad they were). We are yet to see this year’s interims. Normally companies issue statements regarding trading ( bar profits warnings, etc) as follows:
Interims
Full year trading statement
Full year numbers
AGM trading statement.
That, essentially, gives you a quarterly update. But this year Vialogy is sticking out an extra statement. And it does so when the interims can only be just days or a couple of weeks away. What critical information does it feel the need to impart now ( in a thin market when even small scale buying or selling can move the shares sharply) which cannot wait a few days?
There is not actually any concrete information in this statement at all. Just flannel, blather and promises of delivery in the future. There are no hard numbers. The only reason to issue a Santa Clause trading statement is as part of an attempt to ramp the shares up ahead of a placing we all know is coming. Natch that placing will be to institutions and at a big discount to the prevailing mid price. So right now the entire Vialogy effort is on stock promotion for Christmas.
Jingle bells, Jingle bells, Jingle all the way
Ramp the stock for Santa Claus
Every single day….ooohhhh
Jingle bells, Jingle bells, jingle all the way
we need more investor cash
we have boardroom bills to pay
And now to the content of the CEO statement. Well if you are looking for hard numbers you will be disappointed. For those we will have to wait for the interims and I bet you 5 Albanian Lekke that the top line will show revenues of sod all.
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What does the statement offer? Vialogy says that it is moving away from revenue share deals with small US E&Ps. In past years it boasted of its relationship with such firms but it seems that the Yanks were not keen to embrace the world beating technology of Terry Bond and his merry band.
To see how this operation has performed I remind you of the (then) much vaunted 2009 agreement with a Texan company Atascosa which has now drilled three wells on the Galba field. If you read this article from the excellent Rigzone website you will see that after the first success, based on just one well and a $40 oil price ( heck it is now $100) there was speculation that Vialogy would trouser $300,000 from the life of well. And since then there have been two other finds at Galba. Vialogy did nothing to play down such speculation after all it had placings to get away.
Hmmm.. Revenues from oil working interests totalled £10,437 in 2011 and just £6,983 last year.
So now Vialogy is going after agreements with global majors such as Chevron. How this company boasted of its first contract with Chevron last year. The Bulletin Board Morons frothed as speculation mounted as to its size. The company would never say how big the gig was because of confidentiality agreements. But the frothing allowed Vialogy to issue yet more shares. And then the 2012 results showed that the deal was worth a maximum of £44,000. You will remember that Chevron spends £50 million A DAY on exploration so Vialogy was really that big a deal for it.
So right now the CEO statement says that Vialogy ( a name you cannot find if searching the Chevron website, because it is THAT important to Chevron) is working on a second contract for Chevron, a contract with the Indian National oil company and a third for an un-named supermajor. That we already knew. But the CEO statement tells us again. But it gives no idea of what any of these contracts are worth. So you know the name of two of the three clients, and the value of none of the three contracts.
This statement says nothing. I await the interims and then if Vialogy is serious it will at that point state what revenues to date ( nine months into the financial year) amount to from the contracts with Chevron, the Indians and the un-named company. I cannot see why if the company that signed the third contract wishes to remain anonymous, Vialogy cannot disclose its value.
It is Christmas so with seasonal spirit I make an offer to the Vialogy board:
You disclose the value of these three contracts so that shareholders can form a fair opinion of the value of your company
I will agree not to compose any more Christmas songs in your honour AND not to remind your long suffering shareholders that you are a) paying your board a small fortune and b) fast running out of cash.
I cannot say fairer than that. The shares are a sell – target price buttons. Chocolate buttons. And to show that I am embracing the season of good will I offer up a second Vialogy carol:
God Rest you Merry Directors
And shareholders who dismay
For Chevron uses your old kit
But little does it pay
To save us all from penury
As the cash seeps away
Oh promises of better times
Better Times
Oh promises of better times
Tom Winnifrith is a speaker at the top UK Investor Show, UKInvestor Show 2013 on April 13th. Also speaking are superstar fund manager Mark Slater, Britain’s Buffett Nigel Wray, Nick Leslau, Evil Knievil, Clem Chambers and a hots of other people who really can be called a master investor. For more details and to book your free ticket click HERE
