Sefton Resources Does a Tony Blair as it pumps stock ahead of Death Spiral share issue

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War criminal, intern exploiter and former Prime Minister Tony Blair used to take great delight in announcing the same event a number of times in order to “work the spin cycle.” AIM listed penny share dreadful oil explorer Sefton Resources (LSE:SER) is playing the same game with an RNS today designed to show momentum but which shows nothing of the sort. This stock is still virtually worthless – my target price is 0.01p – but let me explain what is going on here.

Today’s RNS reads:

The interconnect between the LAGGS pipeline and Southern Star interstate system has been certified by Southern Star’s engineers to have the ability to flow gas.

 Transmission expects to have its Vanguard pipeline system certified by the end of November. Permitting and joining Vanguard to LAGGS is expected to be completed within 1Q 2013.

Transmission can now negotiate in earnest between end users and with local natural gas producers for transmission through its system into a national market via Southern Star. “

Okay 2 points here:

The first is that Sefton announced only yesterday via another RNS:

Southern Star-LAGGS interconnect is now physically completed and we are now waiting for certification to “flow gas” from Southern Star.

— Transmission revenue will commence once sufficient equity gas and third party gas production has been accumulated to provide for economic operations. “

Well I guess it did not need to wait long for that certificate. Perhaps it needed to announce something upbeat on Kansas yesterday to soften the blow of yet another Nomad resigning on it ( see here)? Or perhaps it wanted to essentially announce the same thing twice in order to show it had “the big mo” – this is all about news management.

More critically it seems as if revenues from LAGGS are slipping again. Back on October 9th I got the distinct and clear impression from chairman Jim Ellerton that we might see cash in during January 2013 – see here

It was on that basis that I forecast that Sefton would not run out of cash until February. But based on today’s news we will not see gas flow ( if indeed discussions with producers lead to anything at all) until Q1 which means cash for the use of pipeline will not arrive until very late in Q1 or Q2.

That is critical if you think Sefton might go bust – see here

What is really happening here is that Ellerton and his IR gopher Doctor Green are announcing whatever they can in order to create trading volumes. The greater the trading volumes the more they can use their SEDA “Death Spiral” to raise cash by pumping out shares to Darwin Capital. Yes that will be a rolling short. Yes investors ( already down 98%) will be diluted to hell but it will bring in some cash which will postpone the day the Sefton coffers are empty.

But it is a mere postponement. A company that needs $18 million of capex to generate $5 million of operating profit ( and where output is after all that investment) now at record lows and falling and which has heavy debts can only postpone the inevitable grim end. It cannot put it off forever.

My target price remains 0.01p ( and that is generous). At 1.525p this remains a stonking short.

Libertarian investment writer Tom Winnifrith writes extensively for a number of US and UK financial websites. All of that material appears on his own blog, which also carries his extensive original non financial material, at TomWinnifrith.com – for alerts on all Tom’s writings follow him on twitter at @tomwinnifrith

Tom’s premium share website The Nifty Fifty was launched on October 28th 2012. Having created and run the t1ps website for 12 year his average gain per tip there was 42.7% (over 241 tips) with an average holding period of 36 months. His new website promises more of the same.

A new Growth stock investment idea with cash and which is profitable will go live today on the Nifty Fifty. To access that idea plus all the other content at once click here

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Comments

  1. Pedro says:

    LOL

    Like a Rottweiler with a dog pull.

    Quality.

  2. George says:

    Pedro lol

    Sadly,several months too late.The shares had already fallen 98%!!!

  3. George says:

    Latest share price forecast by Tom not much comfort for those that followd this tip by a t1pscom company whilst Tom was in charge:http://sharecrazy.com/beta/Tips/6798/sefton-resources-inc-speculative-buy-at-33p-with-a-63p-target-price

  4. holder says:

    What a disgrace you are!

    Clueless.

  5. Trevor says:

    Interesting George

    So basically Sefton (SER) paid Tom Winnifrith’s t1ps com to write bullish articles on the company encouraging private investors to buy the stock and they are now losing heavily. Tom must be very proud telling people to now sell.

  6. George says:

    more Islam or Islam, depending on what name you use, are you paid by advfn/TW to post here?

  7. company extension says:

    Quite good.Interesting, easy to understand, thorough, but no so long as to lose the interest of the attention-challenged.

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