VOG 2005 New Thread

right dia43; this is the issue... what is the local marginal cost of production and will vog's west med compete with that (to enable it to have some (profit) margin)? It is unlikely in my view that west med's marginal cost of production will be less than Gazprom's in the main Medvezhye field (if Gazprom know, on western accounting terms, what that would be... to compare one would have to look at west med's stand-alone avoided cost of supply to... where!!!???)
In any case, it's timing to first gas (production) will be determined by Gazprom so, like FPL in Algeria (monopsonist, or close to, buyer in Sonatrach), what will VOG's strategy be to realise value for shareholders for the west med asset, if proved-up?
- prove-up with the 3 wells then sell-out to Gazprom or a third party (with knowledge or price perception arbitrage)?
- prove-up and develop (maybe with a view that russian industry structures will change (unlikely in the timne frame)) taking the view that Gazprom is going to behave in a "gentlemanly" fashion rather than on a purely commercial basis?
- or...????
[NB there was no match between sellers and buyers for FPL's algerian assets so they have been left to continue "proving-up" reserves so that a buyer might value them. This entails capex. and the sole gauge of following that strategy is whether the capital expended retruns sufficient proven resreves to outweigh the cost of that capital].

Where does this leave the "private investor" (I prefer the "private speculator")?
In my view the private speculator has to understand, as a base case, the fundamentals of the situation so as to enable a judgment to be made whether "the market" is significantly under-valueing a stock or over-valueing it. "The market" usually leads to over-reaction... both on the upside and on the downside... giving the "trader" an opportunity. Right now "the market" has a marker of £3.06 (set by an institutional broker analyst). Do I believe, on fundamental grounds that VOG is worth that? NO, I dont. But, when do I sell, or buy? This depends on whether there is a trading opportunity... which, given the popularity on this board recently, tells me that there is... but, in my view it is significantly over-valued on fundamental grounds right now (ie the stock is almost pure speculation). Do I hold? No (sold out at 98p). Do I re-enter? Possibly at tomorrow's open... but only on the basis that it is a pure trading opportunity and NOT on fundamentals' logic.