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Well first they will have to execute the phase 1. Once that starts to get closer then the gap between the NAV and share price on a producing asset should close. If it doesn't then the company will be at risk itself of a takeover. That move up towards production is what I suspect the LOG administrators will sell into either to someone buying the company or II wanting a business generating cash at low risk - they can't keep the administration running on and on and will have some degree of time after which they have to close it out.
Personally I have a target price I'd like to see and which I think is achieveable. I'd probably derisk holding at anything around 30p (maybe 50%) and leave the rest to run. I won't have my full holding in 10 years time for sure. But that would be driven more by life circumstances than anything IOG do.
Dividends here would take a bit of time would expect them to pay down the euro loan in early years or invest back into business.
So I'd be disappointed if this time next year we were not well on the way or over 30p.
Mole,
When do you expect me, you or LOGs administrators to see cash from IOG our IOG shares?
How much do you think we will receive?
How do you think we will realise these returns, dividends, selling on our shares?
Major - what I think is irrelevant. I think I've been clear I did not invest here for exploration risk. Equally I'd be surprised if the LOG administrators with 30% would want to see the share price of IOG hammered by a deal at 3p+ transferring too much of the company to DELT investors and making their job of explaining the increased risk and possible lower payout to creditors - who are where they are because they thought guaranteed £ notes were easy to grow. What risk profile is appropriate for an administrator? DELT as of today is trading even more below is asset value than at the start and falling back. Recommending an inflated offer while DELT remains weak will require some confidence that the drilling will deliver results. LOG admin stayed for Harvey - do they want more drilling risk or a reliable return?
Its what LOG admin and Lombard and CalE think that matters on the IOG side.
In a weak market no one in their right mind should overpay when you have companies like Premier teetering on the brink cash is king and IOG are funded to production and have a working partnership with CalE.
I've put my numbers in a model and anything over 2.5p would be too much in my opinion and I'm obviously happier more towards 2p than 3p. I would be astounded if IOG paid 3p+ - CalE might its pocket money for them mind but for IOG using paper on its own its a bigger risk. Maybe there is a carve up of the DELT portfolio some assets into IOG with IOG paper and cash for the bits that CalE take or put the exploration assets into some co-owned subsidiary.
Either way I don't think the broader market will look better - so IOG can wait and let the current market apply some gravity to DELT share price and expectations.
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
....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.
Moleinahole
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.
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?