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I mean the excitement is building here so they may as well start now haha
Anyone still waiting for presentation to start?
Sr123 indeed. I will try and dial in to listen. FCF is key here but also if we get a chance, to query about his planned M&A post Tulip..
Appreciate you guys who are attending, passing the info on here. I will be working at that time. Cheers
Well it's good to note they are doing a Q&A on Friday. This is the chance to get the answers on net debt and cashflow expectations.
chaps, I am not looking for a quarrel, just to share amongst us investors, all of whom wants to make money (and I hope we all do, in huge amounts).
On debt, i only have a very cursory view, but lets take a very dirty draft look below:
1. £31.75MM (?) initial equity (~EUR 36.5)??? - this is from my fickle memory - i didnt check this... but its moot.
2. recent equity raise for EUR 55 MM
transaction: The acquisition from Tulip Oil Holding BV was previously announced on 21 March 2021, with €60 million paid in cash and the issue to Tulip Oil Holding BV of shares representing a monetary value of €15.75 million. As part of the acquisition, Tulip Oil Netherlands will issue €60 million of bonds to Tulip Oil Holdings, while the rest of the deal will be paid through the refinancing of existing bonds to the value of €87 million.
so total consideration is 222.75 EUR
cash : EUR 60 MM (from raise and initial capital)
share: EUR 15.75 MM worth
bonds - new and refinancing : EUR 147MM
depending on terms, perhaps 5 years maturation (maybe longer? 7?), assuming a 5% coupon, this gives EUR7.35MM annual payment. I don't know where the coupon would land but 5% seems sensible to assume.
capital payment of EUR 147MM will be due at the end of term, which means AA will be free to use the CF from production for growth investment or more acquisition. At the end of term, the bonds could be refinanced, or settled.
therefore, KIST will have more free CF than RR (comparing the same company period) allowing it to grow faster with less encumbrance on its financial.
of course, please DYOR.
decommissioning is always a headache but lets see if I can help here a bit. generally, the earliest decomm calculation are done at concept select phase (non compulsory) and the first regulatory requirement for decomm estimate is when the FDP is submitted. The point of contract between licensee and govt occurs at the point of a decomm security agreement being put in place - this generally is put in place prior to security needing posting so parties are aware of the upcoming security posting required.
now onto more focused subject on Tulips acquisition- i refer to this document: https://d1ssu070pg2v9i.cloudfront.net/pex/kistos/2021/04/20224201/c117755CCL.pdf
there are 79 mentions of decomm.
1. Donkerbroek (main), Donkerbroek (west) and Akkrum (page 61, main decomm discussion in the document) - the bulk of decomm cost is covered by Vermillion (facilities) with the licensee required to complete P&A on the wells only - in fact, its fully funded already and not even from future cash flow - see except. "The decommissioning activities consist of plugging and abandoning the three closed in wells, at an estimated cost of EUR 1.05 million gross. Thereafter the remaining facilities, namely a single production location and two well sites, will be restored at a total cost estimated at EUR 0.45 million (gross; 60% net to TON). Therefore, the total decommissioning cost is estimated at EUR 1.5 million gross (EUR 0.9 million net cost to TON) and will be funded by the outstanding payment from Vermillion of EUR 3.3 million gross (EUR 1.98 million net to TON)."
Of course there are also risks, like any acquisition particularly into new geographies (outwith UK). - see page 66. I think investors should be aware of this but nevertheless, i see this as normal for any transaction particularly for listed companies to list every single risks they can think of
predictability - the biggest issue in the absence of a DSA (UK) or DSMA (Netherland) is the uncertainty of what decomm liability presents over time. Page 108 confirms DSMA is present therefore there will be predictability in future posting, allowing CF management to be better addressed.
remember, Q10 just went into production in 2019, unlike the GBA fields with RR which was produced in the late 80s. there is much life and growth with Kistos whereas RR is kneeling on its last breathe and squeezing every last barrel.
I remind again the growth remaining - a. The Q10-A field straddles licence blocks Q07 and Q10a, has 2P reserves of 19.95 mmboe and generated total net production of 5.47 mboe/d in 2020. The remaining gas field discoveries, the Q11-B, Q10-B, M10a and M11 fields, in aggregate comprise 312 Bcf of gas, equating to 56.2 mmboe of unrisked contingent resources, providing material growth opportunities for Kistos going forward. In addition, the Q10-A Vlieland oil discovery is estimated to hold net contingent resources of 42.9 mmboe, resulting in an overall 2P reserves and 2C resources position
Duster - how have my posts been blown out of the water? This is a serious conversation about how this progresses ahead NOT randomly picking out share targets out of the air. KIST is taking on a lot of debt and it will be in a net debt position. The task for the company is to get down that leverage down whilst setting aside decoms and spending the required sums to grow the business. I am keen to see further assets come into the group but not until we see a rapid reduction in the debt.
Cash flow will be very good debt. decom ECT low .
SP your the mouse and your motives clear Deep blue post was spot on your points blown out thevwster lol lol
Deep blue - the net debt will be significant , How are you deducing otherwise ? As for the decoms, they have already been disclosed so these, debt and capex (positively for growth not just maintenance) will be what eats up cashflows the most.
Very good post that and one more deal is realistic time to buy is now and a divi forecast to come 2.50 this H1 before next SA soecial
when to post decomm is clear under govt guidelines which anyone can read on hence RRE's situation. Tulip's asset has life and substantial future revenue remaining, far greater than decomm costs therefore cashflow is unlikely encumbered. if any cash waterfall required, it likely would be minor.
And comparing decomm on GBA for RRE - very large, old, manned infrastructure, vs. a small unmanned platform (Tulip's) in very shallow water is like comparing an elephant and a mouse.
there is nothing to capture CO2 wise as its all renewables for power gen. Its storage that people must be mulling about. A heads up, 20km might be ok from a technical point depending on the geology, but the proximity to shore might cause unease to residence onshore - its sentiment that may be an issue but might not (the local resident will decide that, not us). i think unlikely seeing the historical worries highlighted by Groningen, its not the same but humans are fickle.
However, there are plenty of options of what to do with the platform later including reuse or H2 generation (blue or green doesn't really matter). or in fact, a hub to tie in adjacent discoveries, if any.
on gas price, if you look at last year's profile, yes, no one would buy a gas field or develop them but last year was exceptional. Gas forward strip is looking very healthy. debt? depends who he goes with and it wont be big. if its bonds then its only interest until term and have unrestricted use.
my bet is we see more deals this side of Christmas. and £5 sp on a bow tie just in time to celebrate new year.
Duster - I am holding this because of what Andrew Austin delivered at Rockrose. Whilst I’m a fan and a holder it doesn’t mean i can’t air my honest views as I go . This isn’t a cult unless you’re trying to start one :)
yep not that it will matter at all
Disinter is a whopper!
That prediction was before any deal.
If your not a fan sell up stop boring. cloging up with repeating same old if I did not lime it I would sell .
But you have imho
X2 OVERSUBSCRIBED BY BIG HITTERS FUNDIES thanks that will do for me
Duster - you continue to get personal for some reason which isn't called for. I own a decent line of stock which i have already stated and i'm perfectly entitled to share my views. I am holding the stock because of what Andrew achieved at Rockrose but on current knowns, i'm not a massive fan of this first deal. For me, he has taken on too much debt when i feel he could have opted for something smaller to begin with which would resulted in less shares being issued and far less leverage.
As i said, you were telling us all for a considerable time it was going to 125p and no doubt you will be telling us all it's going there again when you have made your profit.
That is exactly what AA did when he first bought RRE assets extended improved 100%
But some have blinkers on or lack of research.
If your that way inclined Sp sell up lol
But I think you have already by the sounds of it.
You can find bad anywhere if you look hard enough.
Look at the backers here big names funds and they want 3 bags minimum AA is the man to deliver.
The debt Decom conversation is boring now if you don't like it do one.
re: de-commissioning. A gas field 20km offshore from Amsterdam is surely prime candidate for carbon capture ? reading between lines I believe that Tulip / AA have a rabbit under their hat to add value (increase resources / extend field life / carbon capture).
The fact that Tulip remain one of the largest share holders, as opposed to selling out, is positive.
Duster - not sure how you can say that. Have you seen the decommissions on this for starters? You wouldn't expect them to be comparable in size as Kistos isn't the size of Rockrose. It's all relative to cashflows.
Rockrose was in an awesome spot and increasing net cash, Kistos is going to be about reducing net debt.
Does anyone know when Andrew's interview is lined up for?
Decom here is nothing like RRE had at all not even worth comparing.
Glad it's gas as well and green tech to boot will easy be £3 before next deal this year
I agree that hearing Andrew on the detail is very important.
The decommissions are always pushed out but will move from the cash from ops line to restricted cash. Rockrose didn't have any debt so all cashflows increased the cash pile whilst also being used for maintenance and growth capex. Kistos have taken on a lot of debt so cash from ops has to be directed though on top of other capex. Anyone that thinks that the cash pile is going to balloon like it did at Rockrose is going to be disappointed as this is gas, and for above reasons. What's key is that Andrew can demonstrate that the capex spent on future growth is going to deliver a strong ROI before loading the balance sheet again with more debt.