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Hi GB, I'm still laughing at that experience, especially smoking near a broken gas main!!! - as painful as it was. GL As the Bb states, good to the the Egypt acquisition completed, great news.
Whitehat - completely agree. CNE should go for UK, USA type regions instead of another expansion in the MENA region. Although, the recent reports of CNE bidding for Tamar field share wouldn't be too bad. A part purchase from Delek for Tamar or Leviathan field could be great for cash flows. CNE seem to have bid $1.1bn for the Tamar field according to those news reports. Strangely Delek is trying to diversify away from that region with purchases in the North Sea via Ithaca Energy. CNE could have teamed up with Delek for swap of assets?
Re Egypt cash flows - CNE have made it clear that EGPC pays in arrears for the purchases of Shell/CNE production entitlements and in the circular seem to have mentioned that the overdue amount net to Shell was $80mn so I guess $40mn net to CNE still to receive from Egypt? Hence, why I disliked this acquisition irrespective of the numbers, reserves,etc. Genl, gkp krg experience shows how much market hates irregularities in cash flows. The next acquisition hopefully would be better than this EGY one?
Also, CNE has made it clear that this EGY acquisition is only the first step - so my guess is there might be two more acquisitions I.e. Step 2 & Step 3? Let's hope EGY acquisition is the worst CNE could do in terms of political risk of assets. USA seems to have a lot of disposals going on although not sure if they might be low cost large reserves that CNE is after.
34a - Catcher and Kraken sale has not completed- due for Q4 completion, and there will be a shareholder vote on the sale of these assets so still to go through that as well. Current cash flows will be retained adjusted against the consideration.
Would be interesting to see how many shareholders vote for the sale of these North Sea assets vs Egypt acquisition vote.
I think they are and it will be even more unliked as market won’t give fair value for assets in that region.
You would have thought the initial capital adjustments would be known by now if the deal is complete?
Big guns for a relatively small operation in Egypt:
"Cairn has appointed Dr Eleanor Rowley as Managing Director, Egypt. Dr Rowley joins Cairn from TotalEnergies where she was Vice-President Exploration for the Middle East, Caspian, North Africa and Southern Europe."
I really hope CNE is not considering expanding operations too much in that part of the world, at least not directly in Egypt. Eastern Med maybe, if the Turks, Greeks, Israelis and Egyptians can ever agree on who actually own it.
??? They've sold Catcher & Kraken and there's a working capital adjustment in favour of the purchaser.
CNE production now is 35kboepd(Egypt) + 18kbopd(Catcher +Kraken) = 53kboepd
Would be interesting to see what would be the cash flow contribution of Egypt assets for Q4 of this year to CNEs cash position.
HBR seems to be planning Catcher infill drilling next year. Plus Kraken for next year. Nice exposure to upside without any capex outlay for CNE next year.
I had that butter when working on a holiday park. The JCB driver walked into reception, smoking a cigarette, proclaiming that he had just gone through the gas main. Once fixed, he moved on and sliced through the mains power cable plunging the site into darkness. That was enough for one day. The next day he went on to go through the water main and bring the telephone pole down. Suffice to say he did not come back.
I had that butter when working on a holiday park. The JCB driver walked into reception, smoking a cigarette, proclaiming that he had just gone through the gas main. Once fixed, he moved on and sliced through the mains power cable plunging the site into darkness. That was enough for one day. The next day he went on to go through the water main and bring the telephone pole down. Suffice to say he did not come back
I'm confused - just read another article on China contagion - Isn't that where a monkey eats a bat with Dustin Hoffman & a nuke?
Still construction - by far the worst industry I have ever worked in, all you need on site is a nutter with a JCB cutting through electric gas & water mains. China's property sector looks fecked with ever increasing pressure from Xi, they certainly are having radical reforms, Dot.com, Crypto - construction - anybody would swear their Communist FFS. GLA
China is on a crusade so whether they can bail everyone out may not matter. What they are doing more broadly is so disruptive I think it will drastically reduce their growth. Housing is going to take a big hit just through uncertainty, and will drive a negative wealth effect and general slowdown.
No worries about CNE - might get marked down, but could be a great opportunity for them to buy some cheap assets, and also make buy backs more effective long term.
Crypto leading the way down today after another crackdown in China.
At least cairn is up lol
Any market correction imo would hit CNE hard because the market sells off everything including its good shares to cover bad bets and loans on the really bad stuff. As it happens I do not believe China will let their problems start a global correction because they have the power to bailout Evergrand and execute the execs. Likewise The Fed threatens to taper QE but it is an open secret that they cannot because a rise in interest rates would see them default on debt.
China a bit off topic, re CNE I would like to see the money from India in our clutches by Christmas and a special divi for the shareholders
Very keen to stress the Significant exploration potential mentioned numerous times. Pretty much straight into a big drilling campaign let’s hope they are right and we are not seeing the whole picture unlike the board.
Fri, 24th Sep 2021 07:00
RNS Number : 8339M
Cairn Energy PLC
24 September 2021
FOR IMMEDIATE RELEASE 24 September 2021
CAIRN ENERGY PLC ("Cairn")
Completion of acquisition of Western Desert Assets, Egypt
Cairn, together with its consortium partner Cheiron Petroleum Corporation (Cheiron), is pleased to announce completion of the acquisition of a portfolio of upstream oil and gas production, development and exploration interests from Shell Egypt NV and Shell Austria GmbH (Shell) (the "Assets") in the Western Desert, onshore The Arab Republic of Egypt.
Capricorn Egypt, a wholly owned subsidiary of Cairn, acquired 50% of the Assets, with the remaining 50% acquired by Cheiron subsidiaries. The acquisition value, which is subject to completion adjustments, is US$323 million net to Cairn, with additional contingent consideration of up to a maximum of US$140 million over four years net to Cairn if certain requirements are met.
The gas-weighted portfolio, in a region with strong demand growth, offers low cost production, near-term development, owned infrastructure and significant exploration potential.
Cairn has appointed Dr Eleanor Rowley as Managing Director, Egypt. Dr Rowley joins Cairn from TotalEnergies where she was Vice-President Exploration for the Middle East, Caspian, North Africa and Southern Europe.
Simon Thomson, Chief Executive of Cairn said:
"The addition of the Western Desert assets to our portfolio is an important first step in expanding and diversifying our producing asset base, alongside offering significant exploration potential.
We look forward to working alongside our partners to deliver the attractive growth opportunities the assets provide.
I would like to thank the Government of Egypt and the Minister of Petroleum and Mineral Resources for their approval of the transaction."
I'm replying to say that post does not deserve one IMHO!
- Are you feeling alright?
Good FT article - China are demolishing surplus flats and need a different (Not property lead growth Model) so Global growth slows as the transition takes effect (They have surplus EMPTY PROPERTY TO HOUSE +90M ACCORDING TO THE FT & THEIR COMMIE!!!! Speculation rife cuts thru their ideology FFS. This correction - when played out - (Means Feck all when we $1bn form India )- US politics - who are now looking favourite to benefit from China's real structural growth problems (They will always need O&G baby) - wait for 'Uncle Sam to tuck everybody up and enjoy China squirm & thn & adjust to slower world growth - except Green energy. . GLA
Same here. Only holding European oil and gas companies long but even they could be hit.
I think earnings will be the trigger.
I'm nervous holding any Non Short position - Fed Tapering, bringing rate hikes forward to 2022, US & China growth fading, supply constraints, inflation, stagflation, COVID Delta Gas shortage - - Evergrande collapse could trigger contagion as it add 1-2% to China GDP, Commodities price collapse (Not so much Oil) - US Tech vulnerable to rate hikes and yet US market climbs, even when bond buying will be reduced. I'm nervous and reducing GLA- can't wait for this to get cleared and then march on. GLA
Quote -Neptune has been considering a potential IPO that could value the business at more than $5 billion, people familiar with the matter said in May. The pitch for a share sale could be hampered by growing concerns from investors about how oil companies will adapt to the energy transition. Next day HBR shares fell 4.2% . IMO DYOR - A merger of PE firms or VC's usually ends up in a blood bath, both Neptune & HBR have large debt and are Carbon Unfriendly - the double transition cost Crazy. CNE would be the cure to either and get both to the FTSE 100, its greener and cash rich. IMO I would expect a bidding war between the two. HBR After being through one merger is unlikely to go for a second with a Clumsy awkward BIGGER RIVAL that would dictate and lose control of the mothership. On the opposite side a takeover on CNE by Neptune would work - until HBR blocks it- Neptune can't issue shares, its not quoted - they'd have to pay cash plus debt and make HBR work at it, if they're going to lose out - HBR favourite right size - they'd issue 500m sahes only 1/3 dilution - very sellable to investors IMO . HNY GLA If you've worked for any company stricken by debt, dampening expectations, control and limiting any business plan. The route out is PRICELESS to regain control and not be subservient to debt - properly, enjoy the freedom to grab the massive oppos of majors unloading assets . My GUT & its large says soon, either way. FREEDOM. Just after a 10% market correction after Evergrande collapses next week in China .... get into CNE & HBR cheap next 2 weeks. GLA
Has apparently moved from 210p to 235p - can anyone confirm?
Decent post that Seav.
Have you bought back in, Seav?;)
HBR might be looking for a merger with Neptune in the North Sea according to Bloomberg. At least it's not a competitor for CNEs hunt for acquisitions.
CNE can use, say, $300mn post dividend/buyback cash and lever it up with $600mn-$900mn debt to get a decent sized($1bn +) acquisition of a producing portfolio, with sizeable op. cash flows of at least $500mn?
After acquisitions if CNE can generate, at least $500mn annual operating cash flow with let's say $300mn annual capex - that potential $200mn annual free cash flow would need to be valued by the market a lot higher than what the market is valuing residual CNE currently (minus India proceeds).
According to the Egypt acquisition circular, CNE is already going to generate $150mn operating cash flow from Egypt acquisition with an annual capex of c.$80mn. If we assume that post ramp up the annual operating cash flow goes up to $200mn and capex at these assets is $100mn then Egypt acquisition will generate $100mn in free cash flow year in-year out sustainably for CNEs net interest.
And if another acquisition is done on similar metrics as Egypt, then we can extrapolate EGY cash flows 3x to get $300mn free cash flow. This $300mn free cash flow would mean Cne having gross debt of $600mn-$700mn. Of course its just rough numbers but you can see the opportunities CNE can access with that much cash and debt capacity. Also must remember that CNEs debt for Egypt acquisition has very low interest costs. The interest rate on the $180mn debt for Egypt acquisition is priced at Libor + some margin. So such a low cost debt can create huge value for equity holders imo.
Not much going on volume wise, today. All awaiting news on several fronts - India, farm out of Mexico, North Sea Sale and Egypt completion.