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Ignoring the haters - this is obviously a high risk high reward investment - anything less that £3 on first deal and given the low free float would be v.frustrating ...time will tell...I continue to buy here!
That's a good analogy. Certainly, my view has always been that this will basically do nothing and then one day we wake up to a deal, it suspends for a bit while they finish it and they raise.
Any debt capacity I would imagine has been prearranged to a large degree, so it's only the equity component that would wiggle around valuation wise.
If you look at RRE, they raised at 150p for their first deal having IPOed at 50p, so I think we'll probably see something similar here. The institutions in at 100p here at LBE are unlikely to want to dilute themselves, so I think the bar is (for my sensible worst case scenario) set for an equity raise at 100p.
In reality, I think the BOD's option have to place this over 200p and then gain more than that again to get their full options due to vest, so I think the likely real price of a raise would be ~250p minimum.
Thanks Rovers - it’s always useful to get the input of somebody in the exact work arena. It corroborates what I was thinking but you make a valid point about how the industry & workspace has changed since the start of Covid. A lot of teams have been downsized & recruitment put on hold (including at Suncor U.K. & Suncor Norge), so they may be able to hire people quicker (and possibly cheaper) than usual. I still think it’s unlikely they would take on 3 permanent senior salaries though if they didn’t have a deal lined up.
icemax I hate to give advice on here and as you know most people who post here are invested so are likely to be bullish. I agree with Whirlaw though, it’s a good management team and I like the fact that they have been patient - as frustrating as it has been! I’m pretty hopeful they will get something over the line and it all depends on the quality of that first deal. Their incentive structure kicks in at £2 so you’d think they would want to minimise dilution at lower prices and might have a target of something in the region of £3-5. I obviously hope for even higher(!) but nothing is guaranteed. Good luck.
icemax, when asking about what the home run will look like, I am in a similar thought process. I've decided to continue adding rather than waiting for any placing, as it's almost certain that any placing is going to be at a premium to the IPO price. I think you can do worse than remembering a post from last month by Rovers66 (recopied below). I think he hits the nail on the head in terms of how you should view this kind of investment. I also have similar size holding to rovers and will be holding long term for similar anticipated ROI.
Sure, this share has has been swinging around between 70p - £1 plus over the last year but in the long run I think we will look back in a couple of years time at this period as a great giveaway opportunity to get in at a bargain price.
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13.03.21
"It's a weird hold this one but let's look at the evidence. Top tier management team come back together with clearly "unfinished business" as for many - Faroe taken out for much less than it was perhaps worth. Same with RRE. But that was in choppy times in the O&G E&P space.
So why the rush to get "any" deal over the line? Understandabke but O&G investors need 5-10yrs timescales in my humble opinion so considering the time lost due to COVID (where the M&A space froze for 6-9 months) we are realistically probably 6-9 months into LBE lifespan in normal times. And we've likely got 2 or 3 deals in a 5yr timescale.
I just feel strongly - anyone investing here has to be super pragmatic & accept the unusual situation of these investment companies. Huge periods of inactivity then boom. Action. Its like an elevator that only stops at floor 12, 62 and 120 in a high-rise building. Whereas a producer like GKP /BP stops at every floor.
So fine - take the mickey out of HH. He honestly won't care. He will deliver. Guaranteed. I'm in here for £1m ROI from 1.2% at the moment."
I should perhaps have said, good and not so good, as I can't imagine financing ar less than the initial issue price.
I'm expecting that by mid-Summer there will be a strongly positive update here. I have quite a bit invested, but the question for me is, what will the home run look like and should I be thinking about loading up even more. I'd be grateful to hear of possible scenarios, good and bad.
Paul,
I've worked in the executive & tech recruitment sector within O&G /Process Eng & you are quite correct; anyone worth their salt would want to know specifically what they are working on & are v unlikely to join a "shell" company with no firm assets. Coupled with the fact the talent they are recruiting isn't cheap & will burn through their (relatively) meagre cash resources pretty quickly.
So this points to the likelihood a deal has been agreed and the DD & financial structure is being worked on.
Having said that - the O&G space had been decimated in the last 12-15 months so their is a large talent pool who are either available or certainly concerned for their job security. Structural changes have/are happening as a result of COVID that are above and beyond simple cyclical events common in the industry.
Is there a facility online to view historic trades? Rather than just the previous day or whatever shows on here?
As you say it could well be more than one person/party but it would be interesting to know how many have gone through in recent weeks.
I must be bored!!
Certainly, it's very nice to see this sustained buying in the market. I wonder who it is, or even if it is a few different bodies, because you'd only need 12 25k buys to get to the 3% threshold.
The free float here is sparse. Somebody is loading up with decent volume.
Why, because they know our train is ready to leave the station.
What I don't like about Primary Bid is that it doesn't favour existing shareholders, it's open to anybody. I would prefer an Open Offer if anything although I realise it takes longer and is probably more costly.
Daveri will not respond for a few days until your comments drift away, then come back with another insightful view of things.
paul yeah I've noticed the patient 25k accumulator over the last few days and weeks. Must be holding a decent % now, and more than happy to hoover up the shares relinquished by the impatient.
Interesting to see that KIST have opened up their placing to PIs on Primary Bid. AA has given the impression from his Rockrose days, and continuing into Kistos, that he moves with the times, listens to and respects the retail investors. I dearly hope HH and the Longboat board will show a similar amount of respect and consideration.
Questions - who will be retaining some firepower to take part in any placing if we do get the chance? Kind of interesting that with Primary Bid it seems like you are essentially bidding blind.
Fair point re: share price movement Whirlaw and I suspect you’re probably right.
Meanwhile (intriguingly) there does seem to be somebody willing to patiently pick up 25k chunks at above the ask. 2 more went through today but it’s been happening sporadically for a few weeks now.
pauldrayton - I'll be inclined to agree with that. Pretty confident they'll go for licenses however as you say they wouldn't be taking on permanent members of staff if they didn't have something more substantial lined up.
Re sp movement - I think most investors who are here for the acquisition are here. The other money coming in and out is probably mostly gamblers trying time their buys perfectly and losing patience v quickly.
Oh and please all stop indulging the overblown ego that is 'daveri'. He knows nothing about LBE that's not in the public domain and also contributes nothing remotely insightful or helpful to this board, unfortunately.
Maybe Whirlaw, but aren’t we back to question of whether they would need to hire 3 senior members of staff in order to analyse & bid on licenses?
That would seem a bit premature to me, and they could use contractors until they’ve secured something. Not only would they be adding significant cost to their monthly cash burn, but there would be no guarantee of success either.
And as somebody else pointed out, which senior geologist/geoscientist/reservoir engineer would want to join a shell with no assets? They could be out of a job in no time for a start.
My guess is they’ve agreed a deal but are now getting the legal and financial work done behind the scenes and are recruiting in preparation for that deal (or deals) being done.
The job application deadline is 21st April and I think they will want to explain their exact plans to applicants (if they want to secure good ones). That’s why I think we should see news next week or the week after, but I have to admit there is nothing happening in the market to back up that view. Very little appetite to buy shares for a number of days now, so I could be wrong but only time will tell.
Wonder if daveri has a theory on why there was no RNS on Tuesday...
I'm moving towards thinking that the hires are to do with, at least in part, bidding for the upcoming licensing round for the NCS. They are likely to bid for license in "Awards In Predefined Areas (APA)", although could the new hires suggest they are also considering going for Numbered Licensing Rounds? See: https://www.norskpetroleum.no/en/exploration/exploration-policy/
Whichever way they go (and it may be both) it's worth remembering that there is a 78% refund for the exploration costs on the Norwegian shelf.
I don't think that they are looking at exploration instead of production, but alongside the producing assets for which as we know they have their eye on and are currently in talks to acquire.
The latest March 2021 Presentation clearly states (page 7) that the company's growth model includes participating in licensing rounds, so I fully expect they will take part in the next round. The hires may be to do with progressing this process, and not directly related to ongoing acquisition discussions (which may come with staff) depending on the size of the deal.
Any senior jobs will likely have a 3 month notice period once they are successful as an applicant so the process could take a while. In terms of the below I hire HR coordinators and they do admin support.