... the royalty must have been a hedge against GDC getting to market too quick and RSM getting too high a long term % from less development capital. Makes sense. The flipside is that the more capital needed to develop out the market to (the point we are at now) then the less valuable the royalty will be (with less term).
Snowy, those terms seem absolutely absurd to me. And circuitous. And circumvents the industry philosophy contained in the likes of the fallow initiative. To sign a royalty agreement for a fixed 20 term which only commences as and when the licensee (or whatever term they have) need to start paying royalties is daft. There is no incentive to develop out. It is anti-competiive. yada yada yada. It must have started in 2009. the longer the 'licencee' takes the more capital it has spent trying to get into the revenue from which it can take its %. The longer the time the less it can make.
Bigsmoke , it was signed in 2009 I believe but 20 years may not start until first royalties are due. Note 32 of the 2015 accounts would be a good place to start any investigating with a view to placing a value on the royalty stream. However, I suspect that a lack of detailed information about the agreement, the royalties already paid and the likely level of future royalties will make that difficult. In this connection, I note that in other circumstanous the company use a DCF of 7%. That seems a reasonable figure.
Thanks for the point of information, snowball44. Sounds like we are at least 25% way through the 20 year deal now!!! (being 5 years on). When was the deal signed? 2011 or before (like, 2009 - as in, did we jump on a moving train). Which all means the future value of the royalty is less (25%) than it would have been had VOG got the finger our developed out sooner. One silver-lining of the slow and steady approach.
Bigsmoke, RNS 11 August 2011 tells us VOG acquired one - third of a 20 year royalty agreement for outlay of 6M. It is the remaining 66% which we would be purchasing if funds were available. However, things have moved on since that purchase and in my view the price will have increased.
absolutely, keith1. here's what a mate got back from LR on 12.05.16
"Dear [edited] We have had quite a high frequency of News recently with the quarterly update containing much that was positive in terms of both supply and expansion. We will of course be announcing our 'Short, year annual report soon and of course updates on bonaberi and the rig. Kind regards Laurence Sent from my iPhone"
Total guff. Most news is recycled and/or is pure corporate (change of accoutning date etc. blah blah blah). As for "soon", two weeks is not "soon" in market speak.
The problem with sorting out the royalty deal is that it will cost money. Money which the company needs for development at the present time. What price would the royalty deal have? I do not have the time to do any calculations just now but I think we would be looking at somewhere upwards of 35M US for the remaining 60% +. . Happy to be corrected. Whatever the figure is it would have to be funded and that brings on the possibility of increased borrowings or dilution..
just an opinion re dragging feet the bod mastered ,sorry have had a master degree in dragging feet since before i bought and the next example,just an opinion of course will be our awaited rns as normaly its what is left out that affects the sp,no transparancy due as always too the poorest pr imaginable but lets see what happens next week
if I wasn't a cynic I would think someone is buying a chunk of these up on the cheap daily here and there ! perhaps there just isn't enough liquidity in the stock like days of old and its a very long waiting game. Its time the BOD removed the shackles and sorted out this royalty issue as imho it is holding off any II action. Vog has played the investment show card a few times but am yet to see any real action. Even on news this only appears to mainly have PI's buying and selling. Something is holding this great share back and the royalty is the only concern of mine. We have been out of favour with the market as far as I can remember so high time the BOD stop dragging their feet and got the SP to resemble the show on the ground. Atvb all and good luck.
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.