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Thanks greenlanteren64. This just doesn't make sense any longer. I have been holding this position since 2011. I get partnering with Origin - that obviously needed to be done. When they announced the resource estimate on Feb 15 2017, I did a very rough back of the envelope valuation. Even with oil & gas prices as low as they are, the potential resource value is enormous, and the 2017 estimate is not for the whole acreage owned.
I get regulatory delays, the difficulty of the remote drilling operations, one delay after the other. Lots of unexpected roadblocks. But something about how this is playing out doesn't make sense to me any longer. Giving up complete control to Origin at this point - sure seems setup to me so that Origin will eventually own 100% without the need to "buy" Falcon. I hope this is just another unfortunate event but the trend is not in our favor.
FOG certainly is about patience. Also, do not buy your position all at once, as very rarely do not get additional chances to add; in this case ad nauseum!
POODS
POODS
I think the deal he's pulled off is superb for FOG. Yes, it's cost FOG another 7.5% but it confirms Origin's faith in the assets at Beetaloo
I had to sell mine here and did so with a heavy heart. I'm not wealthy so had no choice but I have added a few back this week. Once the excitement starts to build again, which it will, I'll have a lot more to come back in here over the next 6 months or so
gla
Origin789 etal-
I do appreciate the feedbacks statements with regards to my observation this morning. The reality is POQ could have listened to the proposal on the phone if he did not. The reason is the Origin deal is the best affirmation we have of the perceived value and for POQ to try to go on a roadshow to sell another round of shares and express what he thinks versus what we got, would in my opinion resulted in 2-3x the dilution we received in Origin's fair deal. Let's hope we can see the results in our lifetime or certainly for a certain salary necessitates additional dilution. Where is our board?
Fair comments there Poods, i agree with your thoughts, and not a bad deal by POQ considering we have our back to the wall. I'll be very relieved when we actually reach the finale!
Yeah Poods - I agree 100% - whatever the percentage at least it confirms Falcon/ Origin have faith in the area - so any percentage of something etc etc GLA Keep Safe
Well put Poods. . . Stay well
All-
As is clear the turn of events has been difficult for all including the over-compensated POQ. Under the latest circumstances and given the missed opportunities to help ourselves and with our back to the wall, POQ has pulled off a decent deal, which if nothing else shows us Origin believes Beetaloo to be a winner. So, POQ will pat himself on the back and keep his salary for awhile, never thinking he should chop his salary as a show of faith to his shareholders and equally important, realize he overpaid. If his options workout he will be fairly compensated.
Well obviously a very loyal shareholder base here, as took my trade 2 hours to fill at the ask 6.7 always done ok here, with a bit of patience gla
Tell some of these people to put money on the line. Not opinions. They always pump but never back up their claims. Show me I'm wrong with purchase of this great opportunity.
Look, we got this deal because of BLOWN BUDGETS and TIMELINES. We should have had flow rates to base a negotiation on. Ignoring the clown bus that Origin has driven into the Beetaloo is cheerleading with eyes wide shut. No way you can put lipstick on their incompetence.
Worn out, dead on the money, death by a thousand cuts. They can, at will, down the line either demand cash for ongoing exploration or take more of a percentage and there is nothing stopping them from doing this.
We're all amateurs here, let's not kid ourselves - that said, a lot of us care deeply about this investment and still provide excellent views. In this Internet, hide behind your handle and do nothing but **** off era, too many do more that than add value. Is what it is. We got into this however we did. Except for the handful who appear to have traded it on and off over the years, most of us have been long holders without a penny to show for it. Poods 10 + years, me 7 + , and on it goes. That said, this present deal probably did not actually place a value as we were looking at it earlier and it may be closer to how Nanodarcy does. . . . Maybe. . . Whatever, I'll put Cenkos' McCormack's credentials and analysis against anyone who has posted on this board, so back to my earlier post - he gives it a "fantastic" deal and affirms the Buy, and O & G journalists are endorsing that view. Maybe it's not exactly fantastic but it must deserve a good or very good, and at present, with all that is going on in the world and certainly the O & G space, this has got to be a net positive and still bode well for much upside, as POQ puts it, always understated. So maybe Origin ends up getting an insider, sweetheart deal, MAYBE, but it still has to stand up to market based appraisal standards. POQ came over as a finance guy which fundamentally is what he has had to do and he's done pretty darn well with the others and this deal, at this time, further supporting that, though he may be getting paid to much, fair point. . . Enough BS and speculation - we need to get back to work, STAY HEALTHY, get to H2 this year, see what happens in the Kyalla, and with some good execution and luck, we have another commercial level discovery. Then in 2021 we're gonna know more fully what the deal is in the massive Velkerri. Then, where's the share price, what's the true value of the Beetaloo and Falcon. That's it folks. Unfortunately the mantra has not changed, it's all about a bit more waiting and anticipating, and with it, execution and results! . . . Stay healthy and well. . . KMJ
Hey Newtofo,
I agree. It would of been more or less impossible for a jr oil and gas company to raise money in the current environment. POQ has done what is necessary to keep Falcon in the game for the short to mid term which is not easy given the current state of the capital markets. Origin likely received a good deal acting as lender of last resort; however, with the carry increase and drop in WI falcon should be able to relax and watch the results come in until past stage 3.
For all those that are bashing POQ I don’t think he did much wrong on this transaction. It looks like a transaction of necessity. I’m sure he would have preferred the timing to be different and in different market conditions but some things are out of your control and ultimately this may prove to be a prudent move for his shareholders.
You would assume that with the new gross carry that Falcon gets to sit back and relax and enjoy the show now. Not the worst place to be.
The Origin announcement states a A$25m uplift in the cost ceiling before Falcon contributes. The Falcon RNS states a A$150m increase. Can anyone explain this discrepancy. The AS25m can't be right as it is less than the current market cap. of Falcon?
Haha Oh the Schadenfreude.
Dprussky- clearly you don’t know the difference between the net and gross carry. I’ll try to break it down for you. Origin just acquired a 25% stake of falcon for A$25m. This equates to roughly 10 cents a share Australian or 8.6 cent a share Canadian. However, since this is not a cash payment but a carry that Origin through amendments to the JOA can more or less spend whenever they see fit it. This reduces the value even further on a per share basis even further as its not an upfront payment as the time value of money will erode further value as origin pushes out spend. So unfortunately for you not a 0.6$/share valuation hahah
So while Cenkos are proclaiming a great deal for Falcon (it should alleviate further funding needs to get through to the end of stage 3) the other institutions are saying well done Origin. Furthermore, given that it looks like Origin has stacked the JOA in their favour it may be difficult to ultimately sell out to anyone but Origin as most buying parties don’t like entering into a JV with a stacked JOA.
I don't see it that way. Origin did not buy equity of FOG, they basically extorted opex and took total control of the project, meaning they can delay and keep coming back to the trough and milk us dry. Only 3 more times to own it all. And nothing we can do to stop it. Genius on their part.
Dprussky -- that was a good calculation and makes this deal a lot more palatable. If POQ had to raise $25 million to cover cost overruns -- it would most likely have diluted the overall share structure by much more than 250 million shares in this current market. Any big buyer would demand a huge discount to the current 12 cent CDN share price point -- given the current state of the markets and Covid-19. The added capital committed by Origin should easily cover all costs for both phase 2 and phase 3.
A couple of added thoughts that helps a bit going forward. The flexibility in any future farm-down scenario within the Permit areas most likely refers to the overall size of the Beetaloo project. It will be in both Origin's and Falcon's interest to cooperate if they decide to farm out a piece of the Beetaloo -- (much like has been done with any of the early E&P companies into the Bakken, Marcellus, or Permian Basins) -- if Falcon hasn't sold it's interest at that point in time. I have also done some checking on publicly listed companies on the TSX Venture exchange. Falcon can sell off either the company or it's interest in the Beetaloo at any time -- without Origin interfering if it ever came to that, as that is part of the rules of a listed public company. However, any deal that POQ would enter into would, for all intents purposes, be negotiated with direct input and advice from Origin -- as the buyer would be committing to a long term relationship with Origin to develop the Beetaloo over a 20 year time span.
research..tree
https://*********************/companies/uk/oil-gas-e-ps/falcon-oil-gas/research/cenkos-securities/cenkos-falcon-oil-gas-ltd-sailing-through-the-seas-of-uncertainty/39_2020040702090022161
This isn't difficult to understand. FOG has limited capital. It must dilute to proceed through to the monetisation of its remaining stake. It's as simple as that
Yes, and so it's not US .6 it's .4, still higher than Cenkos value in May '19 and now full commitment from Origin and resources to prove up the permits - knowing the Velkerri B is that monster already. Worse case scenario in 2021 we see at least 2 more stellar well in that fairway that sends that .4 into the $1 - 2 range. Right?! Gotta get thur COVID 19, open up the Beetaloo in H2 and get back to biz. This cuts positive all things - and I mean all things - considered.
After getting over the initial shock of seeing $25 million for 7.5% interest I'm of the opinion that this was a reasonable deal that should carry Falcon thru to the finish line. As has been mentioned, Falcon got about $150 million of carry for it's 7.5% interest. Initially Falcon got about a $200 million carry for 70% of their consession. The cost overruns of the Beetaloo have been pretty excessive. That along with the likely lower near term commodity pricing makes for pretty a tough environment for future raises. This keeps Falcon in the game through stage3 which is the ultimate goal. It is a little bit of a bitter pill to swallow but IMO something that was necessary.
Here is what I am thinking Origin already has the plan to purchase Falcon and I am thinking (POQ and board already aware) so now it is matter of money, so Origin need to make sure the Capex expense does not sting to much there for they need to move some of the money from Opex to Capex by supporting Falcon operation cost.
I think Origin is moving in to get Falcon purchased