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And do we know how this will pan out.
00.59 Good find Olderwiser. I don't fully understand why "it is unknown what GB are owed" (presumably this means the sum total of their tax credits) but then again, the whole system appears to be a joke. I think if a government behaved this way in the uk they would be lambasted and forced to correct their illegal activity within months. Heads would roll. Why the US let these things happen is a complete mystery. Pure politics and blame avoidance I assume, to the detriment of small explorers, willing to take a chance on working in minus 50C temperatures.
If the incentives had not been there in the first place, nobody would have drilled a damn well. The state would have no hope. No future revenue. And all investors would have kept their dosh in their pockets. The whole tax credit system is a sham. Disgraceful by the mighty US of A.
Just my opinion. I'll probably be refused entry next time I head across the pond. Haha.
GS
00.59 - it’ll be a lot. GB went balls deep with applicable works under the scheme
Answers a few questions
https://www.alaskajournal.com/2021-06-22/88-energy-makes-deal-sell-191m-tax-credits
Pantheon leaders in late May announced an oil discovery near the Dalton Highway that they believe is greater than 1 billion recoverable barrels. They said in a corporate statement responding to questions about the tax credits that Pantheon did not purchase Great Bear’s credits or the associated debt, noting that Pantheon’s work has been done after the program ended.
However, Great Bear and its lender are large shareholders of Pantheon and the company’s ability to raise money for ongoing work is “significantly compromised by the debt that remains outstanding due to the failure of the state to repurchase the eligible tax credits,” according to the Pantheon statement.
It’s unknown how much Great Bear is owed.
Hi Croxie - the easiest way for you to to find out the answer to your question is to read the GB/PANR merger documents and to read the PANR Annual Reports. In the Annual Report head to the section in the accounts which describes the balance sheet. I trust that helps.
http://tax.alaska.gov/programs/programs/reports/index.aspx?60650
Might be useful if someone wants to research Great Bear tax credits.
GS
11.57 I can't fault your logic Scot126. Tax credit situation might be moving price today based on what 88e pulled out of the bag. Got to be worth something as it was a kind of deadlock situation for them. And now it's not.
We must not forget that the full dawning and reporting of the Talitha well with final test results will also be potentially market mover as will any deal making announcements.
I just have a feeling that end of June may be significant. Just hunch but frequently my hunches buy lunches. Anyone hungry?
Fingers crossed.
GS
Tax credits stay with the entity to which the credits relate too i believe. I guess it depends which part of GB PANR acquired. did they acquire top co or a subsid?
Mollaka and Farmer Cringe sing - you're both right. Following the merger, PANR was debt free and owned the GB leases outright. Farallon received PANR shares at the time of the merger and retained all legal and economic rights to the Exploration Tax Credit receivables.
Mollaka is also correct that PANR management do not have any control of these tax credits. However, the original GB & Riverstone guys may work to facilitate the encashment of the tax credits which, if successful, will in turn affect the intra-party obligations which currently sees Farallon selling (via CHONS) millions of GB/Riverstone shares. The knock on effect of 88E's tax credit transaction could be profound for PANR, and will indirectly assist 88E in all likelihood also.
How so? Scenario: Farallon is no longer required to sell PANR shares => SP rises closer to a fair value underpinned by genuine fundamental progress since Farallon first started selling in early 2021 => higher SP injects a degree of tension into the farm out process and allows the BoD to point to the jeopardy (for potential farminees) of PANR moving to Option B, which is to self-fund the next round of drilling at Alkaid and Talitha.
Benefit to 88E? Brings it closer to the time 88E can claim with any degree of certainty that the SMD/Kuparuk/SFS geological overlap from Talitha/Alkaid into the Central Blocks because PANR will be drilling => secondary effect of positively impacting fundamentals of 88E.
10.36 - perfect illustration of my point. I think you’d have to be in or very close to the business to understand who has the rights…and that’s before you consider whoever that is still needs to want and be able to negotiate a deal…too many unknowns to attribute value from 88e’s deal
Tax Credits presumably must have sat on the Great Bear balance sheet as it was meant to be a good as money, but it says in the PANR RNS re the take-over than PANR bought GB as a financial distressed business. My vastly uninformed guess is that the tax credits did not go to PANR, assuming there were any left. Somebody might decide to do a bit of forensics into this at some point.
Farallon is a different and more complex arrangement that 88E and FCS. Not saying a similar deal couldn't be struct...I'm saying I don't know if PANR have as much control over their own destination. I don't even know who owns the tax credits after the GB rescue.
Great Bear Tax Credits 2016 appear to have been $140m
https://www.petroleumnews.com/pntruncate/352025505.shtml
yes good points and apologies i got the purchaser wrong, as you correctly identify. the report i read stated 'The purchaser is a large oil and gas company in the US with multiple exploration and production assets and has capacity to fund transactions of this nature.'
Yes, it seems a strange deal for the purchaser who must be able to use the credits immediately. I do wonder if it’s perhaps part of a wider agreement (e.g. data sharing), however unsure if that would need to be announced. Also would have thought 88e would have made that known just for the PR.
Yes it is an interesting development, and at such a low discount. I have 88e only losing 2.1c in the dollar.(18.7/19.1) It does beg the question, why did the large US oil and gas company offer such good terms ? Cant see them losing money on it, so they must have a means to monetise quickly or profitable, before the finance cost eats the 2.1% margin.
From there the consequence to Farallon is next, can they do a similar deal with their X Great bear tax credits, and will it change their rights or attitude to GB shares.
Just speculation from here as we don't know the deal structure. Presuming Farallon took GB tax credits and an interest in GB shares, in exchange for repaying GB debt. I would expect there to be an annual repayment schedule, met by either payout of tax credits by the Alaskan State and or share sales.
If so, sale of Alaskan tax credits in volume, negates the need for share sales to meet the annual repayment target to Farallon.
I stress again pure speculation, but possible.
remarkable news yesterday on 88e forward selling their SoA tax credits for $18.7m. suggesting perhaps that Anchorage has signalled its intentions to recommence payment sufficiently for at least one secondary market credit fund to buy at 90c /$. does this herald interesting developments for our own Farallon situation? one poster on the Advfn board today thinks so: 'Just watch this space and be confident that if Anchorage has truly restarted - or is seriously considering it and a couple of credit funds are trying to get ahead of the decision - making tax credit arrears payments to legacy operators like Great Bear/Farallon, it's the first bit of genuinely good news for Pantheon's share price in a good while.'
looks like, today at least, the market agreed...