Sefton fesses up “we did mislead investors ahead of placing”

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Sefton Resources (LSE:SER), the tin pot oil company that its suing me for libel because I pointed out how on a serial basis it has misled investors ( down 99.9% since IPO) over the years admitted after hours (5.44 PM) yesterday that it misled investors 24 hours ahead of a placing last month – as I flagged at the weekend. It now wants us to move on and yet again promises a brighter future.

© Image copyright akudrin

I find it hard to see how this admission, dragged out of it by myself and Brokerman Dan will add to its credibility in the forthcoming trial and I cannot see how AIM can let this go unpunished. So what is the guilty confession from Sefton? I reprint the statement in full.

Oil production figures for California reported to the California Division of Oil, Gas & Geothermal Resources (“DOGGR”) for March 2013 are 3,208 barrels of oil which equates to 103 barrels of oil per day (BOPD), compared with February’s actual production of 2,918 barrels of oil which equates to 104 BOPD.  

A revised figure of 2,918 barrels of oil was reported to the DOGGR for February 2013, once a production calculation error was realised. The error arose from tank levels being carried over from January spreadsheets that were not re-adjusted when the Company’s various tanks were evacuated, cleaned and tested during the DOGGR AB1960 testing program.

Commenting today, Jim Ellerton, Chairman of the board said:

“We regret the initial over estimate of production for February, which included non-saleable fluids in error. We have reviewed and revised our processes to avoid this happening again. Oil production at Tapia is now beginning to improve following a period of mandatory tank repairs in the first few months of the year. Cyclic steaming is continuing to increase production levels. The portable steam generator has now moved to the Hartje lease where it will be steaming some of the biggest producing wells in the field which our operating team believe could show an excellent response to heat stimulation.”

Ends.

Er… so you will note a number of matters.

  1. Output has now declined for 3 months on the trot. From December through to March the monthly bopd was 133, 111, and 104,103. So far in H1 2013 we have seen 111, 104, 103 – all of which are below the H1 2012 average of 120 bopd and the H2 2012 average of 112.4 bopd. Yet once again Jim Ellerton says that things are getting better. You will note his statement of 5th March (the day before Sefton’s most recent £650,000 bailout placing) “Sefton is progressing its operations in both California and Kansas to allow for substantially higher oil production in the coming years.” It is the same baloney all over again with no output data to verify this claim.
  2. Jim has fessed up that the February output data issued 24 hours before a placing which indicated a reversal of the output downtrend was misleading. I am not sure what “The error arose from tank levels being carried over from January spreadsheets that were not re-adjusted when the Company’s various tanks were evacuated, cleaned and tested during the DOGGR AB1960 testing program” means in plain English but I think that it means that Jim (who boasts 30 years’ experience) just cocked his sums up and issued the wrong figure.  He appears to be admitting to incompetence rather than intent which I am happy to accept as being fair on this occasion but it makes no difference, he is admitting that SEFTON ISSUED A STATEMENT THAT MIISLED INVESTORS AND THEN ISSUED SHARES ON THE BASIS OF THAT STATEMENT.
  3. Jim wishes us to move on but surely the authorities must deal with this. Is AIM so totally useless that it accepts that companies can mislead investors, issue shares, and then just say “oops we boobed” and carry on as before. If so, AIM is a joke market. There are no rules. Citing the Jim Ellerton precedent any company can say what it wants to get a funding away and then just turn around and say “we pressed the multiply key on our calculator not the add key and so published a wrong number. Sorry.” A market which allows that sort of behaviour is a joke market. It is a casino as investors can only guess at fundamentals since information in an RNS does not have to be true anymore. I cannot believe that AIM wants to set such a precedent and thus one suspects that although Jim Bob wants us to move on and forget, that will not be happening.
  4. Even now, Sefton’s Nomad Allenby is allowing Jim to make statements that seem risqué to say the least ( wakey the AIM regulation team) and so yesterday’s RNS contains the classic:

    Oil production at Tapia is now beginning to improve following a period of mandatory tank repairs in the first few months of the year. Cyclic steaming is continuing to increase production levels

So steaming is continuing to increase production levels? In what sense do you justify the use of the word “continuing”? Output had fallen for three months on the trot and in March was the second lowest monthly level since 2011. Allenby – please can you explain how you allowed the use of the word “continuing” in this RNS?

Now we turn to the production “beginning to improve” phrase which, of course, is a direct contradiction to the continuing phrase that follows. One can only speculate that Jim Bob is referring to data garnered so far in April – allowing for reporting lags we can only be talking about 5-7 days. And he regards that as a trend? For fuck’s sake.

We have been here before. On July 11 2012 Jimbob talked about “average production of 170 bopd” and a “rising trend.” As we all now know ( thanks to my writing which Jim wants to ban) that referred to just 3-5 days output and that trend reversed sharply almost immediately leading to July, August and September output of 116, 96, 103 bopd respectively. Of course Jimbob was still blathering on about increasing output in his September 11th 2012 RNS because he was happy to mislead investors – an honest man who followed AIM rules  would have fessed up in mid-July that the rising trend had reversed big time. But this is Jim bob we are talking about.

My point is that Sefton has form in pointing to a few days data and saying that this changes the world. It does not. Just look back at daily output data from Tapia over the years to see what I mean.

And so where does this leave Sefton? I has fessed up that it misled investors to raise the cash needed to keeping the show on the road. But it is far from out of the regulatory woods on that count. Perhaps of more concern is its cash position. My calculations suggest that by June its net cash minus trade payables position (I ignore its not insignificant bank debt because I am a nice guy) will be less than zero. In other words it will be insolvent.

I may be a few weeks out either way. There are variables. Will Sefton be flying Jim Ellerton to and from his multi-million dollar Hawaii mansion first class or Business class?  How big are the bills submitted by uber-expensive bully boy City lawyers Pinsent Masons to Sefton for its pointless and unwinnable libel case against myself and Dan Levi?

I remind you that Sefton says that I libelled it by accusing it of misleading investors – Sefton has now formally admitted that it has misled investors. And so can Pinsent Masons please explain why it is in shareholders’ interests to pursue a libel case that you cannot now possibly win? Sefton’s admission of yesterday that it has misled investors is now a core part of my cast iron defence.

Part of Pinsent’s bully boy tactics is that it wants to sue me for libel but (and it has not disclosed this but I do so now in light of recent events) also to injunct myself (and Dan) from writing about Sefton. Had it actually achieved that goal by last week then it is quite possible that Sefton would have got away with its action of misleading investors 24 hours ahead of a placing. My defence on the injunction is – in part – that it is in the public interest that I be allowed to expose this sort of nonsense. Can Pinsent Masons please explain how it is doing a service to humanity by trying to stop me writing given the events of the past 72 hours?  This is a big law firm acting in a heavy handed way that shames its profession. To Helen Skinner (Sefton’s lawyer at Pinsent Masons) I ask you to reflect upon this point. Do you have a conscience?  Had you bullied me into silence how would the world have benefitted? Would your client have ‘fessed up of its own volition? (It did not do so in the past, i.e. July/August 2012)

But maybe Helen operates on a different ethical basis. I note that the Pinsent’s website states:

Our biased view is that legal services at all times should underpin the clients’ needs and business objectives. We are dedicated to tipping the scales in your favour. Making sure you win – whether that’s in Court or in your marketplace.

You said it guys.

But your client, now a self-confessed misleader, will not win.  And I suspect that the trial will not happen much though I want my day in Court. The issue now for Sefton is cash. Or lack of it. Tick Tock Tick Tock.

Tom Winnifrith writes no holds barred articles for 10 US and UK websites and you can get links to all of his work by following him on twitter @tomwinnifrith or via his personal blog www.TomWinnifrith.com

 

 

 

 

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Comments

  1. Bill Tyne says:

    Mr Winnifrith, you will not be required to attend the case because Sefton should effectively be insolvent by then (having no money to pay their lawyers to fight the case). Anyway, by that time, Sefton should be as bust as CPP, Jessops, Commet and HMV put together. If I were you I wouldn’t waste your time and effort on these Sefton scammers, and instead of being a vigilante just be at peace with those nearest and dearest to you.

  2. Duck and Dive says:

    Congratulations on forcing Sefton to come clean. Please don’t take your foot off their throat and please do continue your campaign for effective AIM oversight as their shortcomings hurt us all. Issuers, advisers and market makers are robbing investors blind.

  3. The Abyss says:

    Tom,
    You have nothing to lose sleep about. The blocks to gather more detailed information about Sefton imposed by Pinsent Masons on you are designed as a scare /frustration tactic. It does look like Sefton have many things to hide hence they resort to PM to chose those tactics, and I would expect closer to the case – dirtier tactics from Sefton and PM to ensue. For example, I would expect a rushed over exaggerated Dr Ali report to be published before the court case – as their trump card and advantage over you to.
    Nonetheless, it’s a game of cat and mouse now, and whether or not you are intimidated, and have the mental strength to endure now. Sefton don’t have didley squat on you (unless you have been shorting)and you have just have to stick to the facts in all of ellerton’s RNSs to work against him. The most vital factors are Onat and Dr Ali, they should be flown in on the stand to get the whole truth of this charade.

  4. Just to reassure you – I have never held a position long or short in Sefton. I am very relaxed about this

    thanks for kind words

    T

  5. Alan

    I am not loaded but thanks for support. I shall win & you are correct this case matters.

    t

  6. Anon

    I shall indeed share details in due course. Helen is only obeying orders.

    T

  7. D&D

    Thank you for kind post. I shall continue to report SER objectively. But there are other companies that also merit some of my tender love. I need a bit of a break walking in Greece but shall be back in May with my second SER type campaign ready to go…

    T

  8. Bill

    I am at peace & Sefton’s desperate bullying does not disrupt my sleep. Thanks for best wishes

    T

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