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It has to be at least 2p I would say
Given the synergies I think thay DELT will be realistic. I just don't think the IOG bid will be realistic enough.
Time will tell. Can't be long now.
Major. Delt will need to be realistic to current market conditions and future prospects with merged group. Iog are taking far too long here
I don't know Oil. The DELT board have always been clear they are an exploration company with no interest in taking their assets through to production. The major holders have obviously taken there positions in DELT on that basis.
I really do hope the takeover / merger goes ahead, IOG with DELTs exploration pipeline could become a major player in SNS gas.
Hi major. I think the Delt board will be open minded on the wider benefits of joining forces and accept a good premium to today’s price. The current sp does not suggest a 150% premium is going to be offered.
Oil, I personally think an offer of atleast 3p would be required for DELT to accept.
The way this is playing out I cannot see IOG making such an offer. If that is how it plays out, IMO it will be very short sighted of the IOG board.
It's clear, IOG need a catylist to increase their value and IMO the DELT resources and their potential impact on phase 2 production and revenues could be just that.
Short term dilution may not be what any IOG holders want but I think it would soon be forgoten if it has the impact I would expect.
Mole you have to realise IOG is illiquid and attracts little interesting in the market with current operations. The production profile will throw off cash for a few years but the decline rates are significant in production. Iog have a very small reserve base. How will they replenish these reserves? Where is the growth? The market is generally unimpressed with the current composition of IOG. Delt can wait but there will need to be an offer of 2p to have a chance of happening
I think most investors have found this year to be brutal enough mole! But agree with a lot of your warning points, and the absence of an appetite for any sort of risk investment viz. AIM is the biggest factor for me. Certainly there should be no fancy prices when an offer for DELT is eventually made. Strangely quiet on both boards at this juncture, and not even a sign of the see-saw effect on relative SPs that one normally gets in these takeover intentions periods. Relieved to see that a Buy for 50k shares was recorded this morning after a long run of Sells.
....and today the price is hovering just over 1p - so its lost 4/5ths of its value. Consider that. What would happen to DELT if Shell defer drilling or drill a duster and then stop? Consider that. Spike was obviously the right word for DELT shareprice in Feb 2018. Today its sept 2020 and 2 months off a likely disastrous Brexit and in the middle of a global pandemic where commodity prices are uncertain. You then have whatever Trump cooks up with China and Iran to factor in.
There is no way in my opinion either LOG admin or Lombard would contemplate over paying for DELT at this time. The attraction of IOG is that its already fully funded and under way to be operational in a year. It matters not what DELT supporters think its worth - its about balancing risk. At the right price its attractive enough - the current DELT shareprice drifting back reinforces that view that paying a silly price is not what is going to happen. If its too high - they should just walk away. As an IOG shareholder I'm happy with that - the next year could be brutal in the markets.
When Cluff now DEALT announced a farm in with Shell back in February 2018 the price spiked at around 5p. Consider that.
Yes - I maintain my view that any offer has to be at a low (realistic) price. I think the current instability should help focus the mind on the DELT side. The point I'm making is that if you thought a high price was going through you would buy DELT paper to exchange into IOG shares. That does not seem to be happening. The danger to IOG and in my opinion the LOG administrators is that the wrong priced deal drops the value of their equity in short and possibly medium term and we don't know how long they were planning on staying. I would think they were looking at selling to someone at first gas - possibly CalE have indicated they would take them. And as you say with 30% of the equity they have a large say on price as does Lombard with a large foot in IOG and smaller one in DELT.
Nothing wrong with your peepers gold - looks like a facsimile to me. Just to be sure that we realise the size of the holdings of LOG and LOM with 54% of the company between them. Wonder what the "offeror" will finally come up with by Oct. 9?
Is it my poor eyesight or are the two RNS's released this morning identical?
Mole - no doubt that there is a background of uncertainty to every investment and corporate move at present, especially those associated with the price volatility of base commodities. Add in the eternal guessing game that goes along with exploration and the estimation of resources and their worth. I gather that you are veering towards the preservation of the status quo rather than the indulgence of an offer of any magnitude?
Peak the problem as an IOG holder is Deltic weak shareprice. If there is a deal at a premium you probably can buy Deltic shares to try and get IOG paper at a discount - at 3p on a 1 for 4 you would be getting IOG 14p shares for 12p having already got a nice bump from 1p to 3p! Until that is settled we will at best tread water given the large amount of shares in tight hands here. But Deltic will be volatile and swing about depending on whether they start to lose ope of a deal at a high premium.
The problem Deltic will have to ponder whatever people may say about IOG and its 10 year production run the next 18 months could be brutal in the markets with covid and brexit. I'd prefer to be in IOG position with it all tidy going into such a storm than an exploration play. IOG will be exposed possibly to weak gas prices but that works both ways - poor oil and gas prices is more likely to further suppress investment and may hasten a few who have commitments to drop them.
DELT seems to have quite a lot of PI investors - so as the share price retreats they may come under a bit more pressure as well. IOG can sit and watch for a bit - they don't need to jump in with both feet.
on both sites seem to agree that the prospect of a deal/merger would herald a very positive future for both companies. so - we get a downtrace of prices on the delt board and only sells on the iog site. does this imply that no offer will be made after all - or a limited one at best?
Deltic Energy (DELT), which Independent Oil & Gas (IOG) is interested in acquiring, announced further details of its new North Sea licences. These, they say, “are a key part of the Company’s exploration focussed strategy which is based upon a steady ‘conveyor belt’ of licences which can be matured and feed a long-term programme of exploration wells with any discoveries supporting
I hope you and your family are ok, and apologise for naming you and disturbing you
I am sure I am not alone amongst long term regulars on here in wanting to know your thoughts on Deltic and indeed which way IOG should go in the medium term
A well considered post trellis, and a timely reminder of known facts ref IOG as a counterpoint to speculation over bid levels. You are right that no element of desperation will drive the figures arrived at - if and when an offer for DELT is made. CalE will almost certainly be involved in the determination of the detail, and given a level that reflects the known quality and volume of the DELT resources, I would say that it is a case of opportunity knocks for both companies at a pivotal moment in their development.
Ta - its a very civil and quiet board here and always a good place for a proper debate on matters of substance rather than prices to trade! We have so few trades and so little free float we couldn't cope with volume.
The dynamic here is clearly how IOG major stakeholders will view this. I suspect the LOG administrators in particular with 30% will be having kittens with this. The higher risk profile I think means they could not proceed at too high a price - RRE offered them 20p - they are here for 1 year at most not I feel beyond that and more shares in the market allocated with a discount premium mean harder to shift their own paper. Hence CalE come into play I feel. I do wonder if they could yet come in from the side with an offer and cut IOG in using IOG as the vehicle or even take the LOG holdings.
IOG share price is remarkably stable and Deltic has drifted back this week - so no sign of anything sudden.
Mole, it's always good to discuss. You say 2.5p I say 3.5p. In the end I expect as you say it will come in somewhere in the middle. Hopefully bot long to find out either way.
I'm sure IOG and DELT will have a prosperous future together or apart. I trust I will profit from both in time.
Mole - i think you are correctly observing that the risks ( ie uncertainties) surrounding DELT are relatively higher than IOG. The range of outcomes for IOG is narrower and does not include any downsides due to inability to develop/monetise assets as IOG has mitigated all of these in getting to where it is. On the other hand, DELT may have upside asset value scenarios, but it also has much larger downside risks. The coarse broker NAVs don't really capture these fully as analysts don't generally use Monte Carlo models to look at the full range of possible outcomes - they use rule of thumb $/bbloe as a proxy. This can also be misleading when trying to value a company (with associated balance sheet constraints and tax issues) as opposed to valuing a group of assets.
Ok just in between work tasks. Plug some of your numbers into my model (reduce IOG value and inflate DELT) and you get 1 for 4 swap - premium of £38m above current share price. 3.45p a share. 46.25% Delt and 53.75% IOG of new market capital.
That's way too high in my opinion in the risky environment we are now in - the puzzle remains if its so good at DELT why is it trading so far below value. 85% below the risk NAV and thats after the bump increase of the offer.
Even at that price £56 m - CalE could just buy the lot anyway.
We probably won't agree - I see this at nearer 2.5p - you think 3.5p. That's why its a market and why I have a model to test the sensitivity here. A middle would be 3p.
MajorT- - you make some very valid points. However, you fail to take into account some also I believe valid points, even if some is going over old ground:
1) IOG own the Thames pipeline and the required reception facility at bacton. Not only does this significantly reduce our costs to market, but also gives the opportunity to sell excess capacity to other players in the area increasing revenue. It reduces future development costs too, as infrastructure costs are reduced as well. It is also an asset that can be overlooked when working out any NAV based solely on gas in the ground'
2) IOG had a very bad year (RRE,LOG and the subsequent massive dilution) BUT the BoD brought LOG Administrators with them, brought CalE on board and raised finance via Bonds at extremely advantageous terms; this has resulted in us being fully funded through to production of PROVEN AND READY TO DRILL GAS VIA OUR OWN PIPELINE TO OUR OWN RECEPTION FACIIITY. That will happen regardless of other ventures, and does not depend on exploration
3) the 10 year reserves currently is correct, and of course IOG will be looking to increase that; that does not mean that they need to pick up the first/any company that happens to appeal- we can walk away if the price is too high and seek other targets. 10 years may seem a short time, but gives scope to wait and research- if that is Deltic then I will trust the BoD ( and the hoops they will have to go through with CalE and Administrators) to have made the right decision and either to get the right price or walk away.
I would still prefer to get to production and earnings before looking for acquisitions, but in these uncertain times perhaps fortune favors the brave, perhaps the BoD are under external pressure to move more quickly, perhaps potential assets are cheaper to buy- in any case I will still trust this BoD. One fly in the ointment is Lombard Odier who are totally unscrupulous and purely short(ish) term profit seekers, although cash rich; they have the ability to screw up any long term plans unless CalE flex some muscles
Appologies, that could be misleading to people who read without knowing IOGs reserves and resource profile.
To clarify my point IOG have around aroun210bcf reserves and resources. 2P reserves of 156 Bcf, 2C resources of 55 Bcf.
The context to the comment is in the future. The failure of Harvey has left us with no near term resources to mature and replace. production never mind increase.
The production profile of the core profile is not good. CalE do not have not invested in the infastructure for only 210bcf. Further rources are required to ensure a suitable development pipeline.