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I agree with the valuations based on the oil price and the oil that HE produces but I think we can do a bit of Tesla rise or atleast 20% inflated valuation based on market sentiment and pulls the investors when you consider the oil forecast of $100 and it is this sentiment that led to the rise above 30p and if oil continue to rise then we could easily see 40p and above soon.
April 1st it does look like those billion shares will flood in and agree with Steve about the volatility that can happen when creditors like ARCM sell millions of shares or they may not sell if they too believe that oil is going to stay above $65 for next few years!
Debate and challenge is always good as groupthink is highly dangerous. I very much welcome any different perspectives and, as Soders notes, there are no certainties of future performance or share price . However it is a useful platform to understand the core cash flows and earnings of a business which, particularly in Oil, is the way the market values oil producers . We are not Tesla or some digital space rocket which defies fundamental for a period, but as eggs is eggs, you can’t defy gravity for ever.
What I have said (and Soders) is that the logical share valuation at about End of Q3 this year should be around 40p with Oil’s future curve at €55-60pb. However the cash flows and valuation are very sensitive to oil/gas price movements if they are sustainable and Soders is providing indicative valuations at various Oil and Gas scenarios for 2022.
The world feels very bullish on oil and the moment and equally it was quite negative only a few weeks ago. This just highlights the fickle nature of the commodity markets. However I believe we are going to see a long term sustainable rise to $75 pb by end of 2022 and a very profitable period for Oil producers though to 2030s. The lack of investment is going to come home to bite.
I am certainly betting on Oil and more generally a commodity supercycle over next 5-10 years as governments invest in infrastructure to create jobs and stimulate post Covid economies. Might be wrong - have been before and will be again.
Thanks soder, please continue to share your valuations with us.
Ditto Bladesman.
Well put Bladesman
Soder, let it wash over you. Your posts are well argued and insightful and appreciated by most on here I'm sure. You ought not to be criticised for contributing massively to this board. It's ok to disagree with your figures, but folk should not get personal. Thanks
I still don’t have a clue what any share price will be. I am not a fortune teller. I can, however, tell you my views on the fundamental value of the company based on future assessment of its operating environment. In this case, oil and gas prices and production at various points in time. It’s not rocket science and it’s also not static. Oil and gas prices move as I am sure you have seen and every move (up or down) impacts pmo cashflows. Given the value of a company (and hence its share price) is just the discounted value of these cashflows i am sure you can appreciate that valuation is not a door number. It will move to reef or the rapidly changing environment.
Also my valuation above is for 2022 production and possible scenarios for 2022 in case you can’t read. It’s not meant to be gospel. It’s just a scenario. You get that, right? The scenario assumptions are all set out and l have been so I’m not too sure why you are attempting to belittle me smalltrader?
Soder and Steve, just few weeks back, you both said SP wouldn't go higher than 30p and that 40p is a dream this year
and now you are coming up with wild predictions for SP. You both don't have a clue to what the SP would be.
Short positions get unwound via the issue of new shares in harbour when deal closes. They will not be unwound via secondary mkt trades in pmo.
There’s got to be an unwinding of the short positions sometime soon as oil prices rise. Good for pmo
Nice bit of analysis there Soder, thanks for sharing. Always good to back up thoughts with a few scenarios. Hoping top end figures materialise, refuse to sell at any loss.
On the rise!
If I reduce opex bbl to $12 then you get ebitda of
$3bn at $65 oil and 44p therm gas
$3.4bn at $68 oil and 50p therm gas
That gives sp target up to 74p and still with conservative assumptions on oil at 68.
So, based on following assumptions for 2022...
Gbp usd fx 1.38
Daily production 235k bbl per day
Average realised oil px $65 bbl
Average realised gas px 44p a therm = $35 boe
Oil/gas production split 50/50
Opex per bbl $15
Fixed costs $182m per year (excludes any synergies)
Cash build up in biz in 2021 (post dividend)reduces net debt to $3bn
= ebitda of approx $2.8bn
Implied share price at following valuation multiples (ev ebitda)
5.5x: 48p. 46% current upside
6.0x: 54p. 62% current upside
6.5x: 59p. 79% current upside
However, if I use oil at $68 and gas at 50p a therm you get ebitda of $3.1bn. Which gives implied share price at 5.5x/6x/6.6x of 55p/62p/68p so upside from today’s 33p of 68%/86%/105%
Conclusion: keep buying
And after soder had done his homework, we will be updated with revised forecasts to add to those of steveo who are the dream team analysts powering pmo/ he to the galaxy and beyond !
Whilst the progress since the low of 11p has been excellent, this still has legs to go much higher. Still long until first trading update end of June which will be a game changer, I believe. Summer time, and the living is easy ! All to look forward to.
Bladesman:
A yard of Lambrini after todays sp performance. No more home-made Pot Noodles either. atb
Yes indeed SK its Bob marleys ghost! . Ps, did you buy the 800k trade after hours. ? Thats confidence for you. All good.
3bn EBITDA is a fairy tale sum compared to old pmo. I hope therefore this fairy tale comes true. Patience may very well turn out to be a virtue. I'll get the lambrini on ice.
Soder
Production forecast to reduce from 235k bpd in 2020 to 210-220k in 2021, due to major refurb on forties pipeline which will result in a number of our fields closed for 5 weeks. Production to return to 235k bpd range in 2022. Maybe slightly higher. Operating costs per barrel to rise in fy21 to $15 pb due to lower volumes and then returning to $12 pb in 2022.
Look forward to the rework of numbers. My back of the fag packet calculation takes us to EBITDA of $3b in 2021 at $65 pb oil.
Thanks Soder, very helpful. Cheers
https://www.theice.com/products/910/UK-Natural-Gas-Futures/data?marketId=5101973&span=2
Winter 21 and Q1 2022 gas prices are above 50p a therm so hopefully they are getting some hedges on still.
Does anyone have a view or have the company communicated what 2022 daily production could be?
I will re run my model at a few difference gas and oil prices tomorrow and importantly a higher valuation multiple for 2022. Given the cashflows this sector is making I would assume the entire oil and gas space has to mean revert and can’t stay at 5x ev ebitda. We look cheap at just under 6x so will run out at 6.5x.
Given the move in long end US rates I would also expect the dollar to strengthen as inflation feeds in which will benefit our gbp stock price.
Will report back tomorrow.
Yes, it is what it is.
It's a pity that PMO shareholders have lost out.
It isn't that long ago that the share price was 146p.
But at least we should be able to put the constant moaning about shorting, PMO being a trader's share, and the regular scares about not being able to pay off debt, behind us.
HEF
My projection is 40p with oil at $60 and each rise of $10pb is worth 14p per share to harbour as long as it is a sustainable rise. I am expecting oil to stabilise around $75pb once Covid is fully behind us which should translate to a share price around 60p level in the long term - say by Mid year 2022. 50p is possible by end of year if oil rally holds and following announcement of dividends, FTSE100 entry and first set of results published.
I think we need to detach old PMO share price with new Harbour share price. PMO has given away huge shareholder value to PMO creditors and Harbour shareholder. Not that they had a choice once they had backed themselves into a corner.