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Starchild, excellent post which makes perfect sense. Thanks for sharing this excellent research and conclusions. There is speculation that failure to reach a deal with previous cash strapped rig provider was that BPC had to pay significant amounts upfront. Clearly the new deal with Stena is much better and provides additional opportunities for cooperation that go way beyond drilling a well. Thanks for sharing.
Statement on further Stenna developments soon?
"SP at a DISCOUNTED 3.2p....TODAY!"
Good post Starchild
Stena Drilling is a wholly subsidiary of the family owned Swedish conglomerate Stena AB. The conglomerate of three major Stena holding companies is known as the 'Stena Sphere.' (See wiki). They are private companies owned by one family, the Group has made a profit every year since 1939 and has grown to include the largest ferry company in the world. another subsidiary is a Stena financing arm.
1. I checked their financial statements and they are VERY cash rich. This explains why BPC gave Stena options to subscribe up to $10m to offset drilling fees. This could not have been done with Seadrill who appeared almost broke even before Covid-19 and POO price correction.
2. Stena have fingers in various pies including energy and tankers. It appears to be a possible partnership made in heaven.
3. Based on the 10% $10m Stena share option using simple maths and assuming (a) no further share dilution other than an increase to the current 2,327,572,616 BPC shares in play by 10% to execute this option (new total 2.56b shares)....and....(b) conservative exchange rate of £1=$1.20 USD, this values the market cap at £83m. Divide this by 2.56b shares, gives us 3.2p TODAY including a 10% share dilution for Stena. $10m for Stena is petty cash, based on the return they can get!
4. I don't think its dawned on the markets as yet, that today BPC and Stena executed a potential mini farm-in option which values the SP at a DISCOUNTED 3.2p for Stena based on the price prediction being a lot higher than that before any oil is even found.
My opinions are:
1. The SP is very undervalued. If it wasn't for (a) Covid-19 uncertainty, (b) POO, to a lesser extent, as any oil found is for 3-4 years time), and (c) slightly nervous investors who lost money in the current stock markets' price correction although risk appetite is increasing daily , the SP would likely be in the 5p range today.
2. A Stena deal can be a win win and a dream partnership made in heaven.
3. I have full confidence in the Board to optimize its many funding options with Stena being one of them.
4. They may even leverage a 2nd well, if the 1st one is dry. This will increase the industry odds for a BPC oil strike from 1/3 to 2/3.
Bottom line: at 2p...STRONG BUY