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A question often asked is, how much will the BPC share price be prior to the spud results announcement? A few pointers are discussed below in the wider picture as of today’s date 28/6/20.
1. As a base line, firstly refer to various opinions and analysis at https://www.proactiveinvestors.co.uk/LON:BPC/Bahamas-Petroleum-Company-PLC/timeline/all presented until March 2020. At the time, 2.1b BPC shares were in play and of lesser importance PoO was around $50/b. In February, Shore Capital predicted the possibility of 8p. Today there are now just under 2.5b shares.
2. If the merger doesn’t happen, can BPC do a JV without substantially issuing more shares? Ie, could it be on farm-in terms, where the JV’s ROI could be huge based on a percentage of the oil found? [If yes, pre-spud SP will be a lot!]
3. If the merger doesn’t happen and massive CLNs need to be executed, this will dilute the SP. The CLN holder is a financial institution and not a frontier oil prospecting company and will want to liquidate a substantial chunk of the CLN in case the drill result is inconclusive. Especially if the BGov has secretly guaranteed the loan! However, when the CLN holder has no more shares to sell and demand outstrips supply, the SP will increase substantially. .
4. If the merger DOES happen, Bonds can be issued (refer to my post Sunday morning) This will have a very positive effect on pre-spud SP despite an extra 800m ex-CERP shareholders.
All said and done, everything above will be based on investors’ risk appetite at the time, which I believe will be substantial and be influenced by two additional MASSIVE upside opportunity factors:
5. If Persv-1 is shown to potentially hold 770m -1.44bboe in just ONE structure a few weeks after Spud, experts have predicted a market cap of approx. $1/barrel. This is without potentially c1bboe more from the same structure next door.
6. A few MONTHS after spud, the quality of the oil will have been independently analysed and confirmation of the type and volume with 90% accuracy. The market cap at that point will reflect these results, taking into account ZERO Bahamas/IOM corporation tax, 25% royalties to the BGov and xx% to the JV farm-in partner (if applicable). If positive, we are looking at SUBSTANTIALLY more than $1 market cap per 1/barrel and a possible farm-out to a major. However this will be dependent on PoO. Even if PoO is at $40-45/b at the time, the majors and our BoD know full well that mother nature will store this wealth for us safely and free of charge without having to pay punitive daily contango storage.
Bottom line: A key factor which will drive the price up pre-spud whether 6p, 7p, 8p or 9p is there are relatively few shares based on market cap with a massive jackpot as described in points 5 and 6. I believe SP will be a ‘lot more’ than 3p, however only you can decide.
Starchild xxx