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TOTAL VALUE/SPECIAL DIVIDEND ETC
Crikey MEM.
Do your calculations assume any special dividends received are reinvested by buying more shares?
Hi cmcc,
The little guys are no threat. They just want to be oilfield engineers and usually have no desire or ability to raise moeny and move to the next level. They usually have no desire or idea how to raise capital, negotiate contracts, handle (and pay!) lawyers.
That is what PG has done so well. He raised capital, got a listing - and achieved, in execution terms, a very great deal with that capital (very little capital, actually - so he deployed it to incredible effect).
For the big boys and the little boys, it is always cheaper to just get a copy of the formula and follow the process than trying to do it on your own.
One may think about making sandwich "how difficult can it be?", yet Pret a Manger made the ting work as a business - because it was also about sites, leases, etc.
Most the oil majors have tried CCS/EOR and, as far as I know, and I have a good network in that space, in no case has it been for them anything other that a massively expensive mess and they are little further forward now than they were a few years ago.
PRD has been an apex operator of note - a "brains trust" if you will and, as they plays out, I think it may be a case of "you ain't seen nothing yet".
And I remain a buyer, despite averaging up. The averaging up is inconsequential in the context of what I see the summit as being.
I said in a previous post that I valued CCS/EOR 12 months ago at 200p. I think that may be significantly to the low side but, even if it is low, I see anything in the SP below 20p as being extremely attractive on the time-delta curve.
DYOR x 1000, all that stuff - but it is very important. There are no guarantees in life and, as someone who has seen some stocks really crater in my time, it can be a distinctly unpleasant experience.
I would not be still buying if I thought there was a high likelihood of this baby stalling.
That’s helpful and interesting, thanks Sefton. I suppose the contracted CO2 arrangement with Massy also helps to provide “stickiness” and prevent contractors who build up the “secret sauce” expertise working for us striking off on their own. Although more pragmatically it sounds like there may be more opportunities coming up in T&T than we could foreseeable manage anyway..
Holding as much PRD into the drill as I can manage whilst also stilll being able to sleep through the night atm, and then a bit more. And I still have the urge to add! GLA all.
Hi ccmcc,
i do not know what PG's strtagey actually is but I suspect (and would hope) that it is to remain an apex operator (very low central costs and contract out as much as you can.
In the oil fields services sector, there has been massive over-capacity for quite some time and that has damaged the big players (Schlumberger, Halliburton,Wood Group) - because there are lots of very qualified, highly experienced guys basically operating freelance. And they can massively undercut the rates of the big guys.
And they operate freelance, so one has variable, not fixed costs with them. So, it is relatively easy to find "boots on the ground" as and when required.
My guess (and hope) is that PG would be going something along the lines of a franchise/licensing model, whereby PRD would give operators who already have sunk infrastructure costs and/or big balance sheets, the "magic sauce" to make the whole thing work (I am very well aware that the majors do not have that "magic sauce", despite having thrown gazillions at the problem - and they know that very well; an unusual degree of humility has crept into them on that score).
So, my belief and hope is that PRD basically goes to a royalty fee basis ($x per barrel) in return for the "magic sauce".
It has been said many times before on here that PRD does not seem to have patentable IP. It does not matter. That 2magic sauce" may not be patentable - but it is bloody difficult to replicate.
And, therein lies the value of PRD's CCS/EOR. Footsoldiers are available all over the place to do the slogging in the trenches.
I’d been starting to think along the same lines as you, MEM, that, rather than look for a definitive sale of PRD’s businesses as they reach (relative) maturity, PG might have in mind a successor who could run the day-to-day operations whilst he, himself, would move to, say, the role of non-exec Chair. This would allow him to retire from the daily grind but to still keep oversight of the company and be there to add his expertise whenever needed. I’m sure this situation would also keep potential longer-term JV partners happy as I’d expect they’d want PG to still be involved in some way, at least for the next few years.
Specifically re Morocco, I’d always assumed that PG would sell the whole of Guercif licence once proving up the next few drills (and CP seems like a good potential buyer) but, as you say, this would leave a huge area of the licence unexplored and so difficult to value. However, I noticed this section in the Annual Report (p21), re the fiscal terms of Guercif:
“Significantly each individual gas field can be fiscally ring-fenced under the terms of an application for an Exploitation Concession”
So I’m now wondering if this would allow PG to just sell individual (or small groups of) producing gas fields as he proves them up, whilst keeping the remaining Guercif licence for PRD in order to retain exploration upside? Going forward, it’d then be very feasible for him to have a COO running the day-to-day operations on the ground in Morocco whilst PG himself provides oversight and strategic decisions as to drill-targets / asset sales etc.
Either way, I remember PG saying (again, I think to Malcy) that whenever he comes to sell the separate businesses, he will always look for a ‘decent’ price (rather than a high and perhaps unrealistic one) and is happy to leave some on the table for the next guy, which I think is an excellent and very pragmatic way of approaching asset sales.
In the meantime, I shall enjoy spending my day mulling over a share price of 27 quid ;-) !! FWIW, I don’t think you’re being totally unrealistic – yes, we’d need a lot to go right but, as of now, all aspects of the business are looking on track to achieve great things, IMO.
Morning all. One thing I noticed in the Annual Report was that PRD has no employees, only service providers (ie consultants/contractors I assume). I understand that there are all sorts of reasons for this approach and also that the value creation in the identification, scoping and initial advancement of oil and gas projects like in Morocco and Ireland can be undertake by a limited team of skilled and experienced management along with expert third party consultants, however in respect to building up the T&T EOR business for eventual sale, won’t Predator need to establish a significant boots on the ground operation, given that it will largely be practical expertise and delivery (as well as the contractual rights to CO2 etc) where the value lies, rather than (for instance) a derisked / appraised licence area as in Morocco? Does anyone know how many “service providers” we have in T&T, I couldn’t find this in the report? Maybe some of the placing cash will go to hiring and building up the operation in Trinidad? Sefton or others with deeper EOR knowledge please correct me on this if I’ve misunderstood where the value lies in T&T.
Ps Like others i was pleasantly surprised with the quality and thoroughness of the AR. Perhaps, as some have mused in respect to certain RNSs, the excellent level of detail was aimed at potential acquirers of the various projects more than PIs…
To save people working it out, an M/Cap of £6.7 bn
I know most people will see this as madness, but then most people a year ago thought CCS/EOR was just a pipe dream :)
Hi Billy,
Thanks for your reply. I think PG will steer us to a VERY successful outcome, as we have seen, it never pays to underestimate Paul !! He might have a successor lined up, someone he can Mentor and 'control' after he steps down, we have no real idea how he personally views PRD, his baby, or child that can be adopted, under the correct framework of PG's 'Rules'
I have held off publishing my upgraded SP valuation (lots of assumptions in the valuation, some of which may not all happen)
My future real Value (waiting for the replies of negativity) calculates to £27.12 or 2712p
I know it sounds outrageous, however look at the Assets, the story behind each asset, the full potential of each area of operation (as an example I have assumed, in time we sell our Morocco Licence to CP, after finding Gas in the 3 initial drills, however with only less than 1% of our Licence area surveyed, there will be scope to assume some future value to the other 7,400 sq km)
I make no apology for my assumptions, BUT I have halved my initial valuation to reach 2712p, to appear conservative, and leave plenty for the next Man (Woman)
I shall leave you to mull over 2712p :)
Have a great day.
DYOR GLA
MEM
ps do not listen to me, please DYOR and reach your own conclusions. PLEASE.
Razorman, good purchase on Friday! I wish I’d had your patience to wait until Friday but couldn’t resist and just kept adding each day as the price drifted (at prices from 16.23 to 17.79), though I only had funds for about half your top-up value unfortunately. Of course, if all goes to plan with PRD, we probably won’t be having to wait 25 years to retire...!
Morning MEM
The timescales question is an interesting one. It always appeared that PG’s plan was to execute all 3 aspects of PRD’s business model within a quick (few years) timescale, sell up and then enjoy a well-earned retirement.
I think PG mentioned recently to Malcy that he hoped Morocco would be ready for sale by mid- 2022 and, should all go well with the drill bit (and, as PG mentioned to Malcy, he’s “very, very, very confident… of finding gas”) that sounds very achievable.
T&T and ROI I’m finding more difficult to estimate a timetable to sale for tbh. T&T CCS EOR simply because I’m not sure how established the business needs to be before full value can be confidently calculated (although I suspect PG already has views on this); and ROI simply because there are political decisions to be made which always adds a high degree of uncertainty. But I reckon your stated timeframes of within 30 months sound very achievable.
But in addition to these core businesses, recent RNSs are hinting that there are lots of other business opportunities opening up that PG is seriously considering adding to PRD' portfolio, for example:
4/6/21 Placing RNS:
“Proceeds raised in the Placing are being assigned to evaluating and potentially acquiring rights to the new business opportunities that the Company has recently identified…”
24/5/21 Operational Update re FSRU Morocco:
“The FSRU project is envisaged to be a much longer term project...”
12/03/21:
“Arising out of the success of the Pilot CO2 EOR Project in Trinidad, opportunities are becoming available in the general field of greener energy solutions and CO2 sequestration. The Company will explore these opportunities further and may invest in third party companies whose businesses could add value to the Company's existing projects.”
So, these potential additional and presumably more longer-term ventures raise the question as to whether PG ever intends to retire at all! My feeling is that the opportunities that are presenting themselves, due to both his foresight to align PRD within the energy transition sphere and what is clearly his fantastic standing and connections within the energy business community, are just too good for him and RP to pass up… so maybe they just can’t resist delaying their retirement plans for a bit longer? I also get the impression that PG just loves the work so, in a way, he’s maybe happy to keep going when the work is so challenging, stimulating, strategically important… and potentially so lucrative!
I’m sure GRH will add greatly with this thoughts on timeframes later today and look forward to that.
As for a 100+ bagger from here, I’d definitely take that! A while back, I plugged GRH’s valuation of Moroccan gas (£3.88M/Bcf) into the high figure for gas volumes in Guercif and laughed to myself when the number came out at over £100 per share (and that’s excluding T&T and ROI)! So maybe, in fact, your 100+ bagger is actually a bit light…?!!! ;-)
Agreed. I think we are in for a great 12 months. On Friday I bought another £20k in my pension. I have about 25 years until I retire so I’m excited to see what it will be at maturity!
Evening Billy RV,
Yes the SP has quadrupled in 6 months, however I have pencilled in a 100 bagger+ from here, in fact quite a bit more than a 100 bagger.
The question is over what timescale, I think given PG's age, and he has stated this is his last Company, before retirement. PG will want to maximise his personal SH, to enable a fantastic retirement, ditto for the other Directors. In addition we can all see he is building something very special, he will want to leave a Legacy.
Therefore to achieve maximum value to enable his planned retirement, I would respectfully suggest a timescale of 18 - 30 months. So from approx Dec 2022 to Dec 2023.
There is always the chance of everything coming together quicker, Ireland aligns to our goal, Morocco finds huge amounts of gas and we do a great deal with C.P. plus T&T makes great strides, all before Xmas this year.
DYOR
MEM
... from Ian Cassel, liked this one and, IMO, very relevant for PRD:
https://twitter.com/iancassel/status/1402682320667168771?s=20
"Few things feel as good as averaging up into a position/business/management that is executing. They earned it."
I averaged-up with 4 more tranches of PRD this last week (PRD's now 93% of my portfolio :-)) as, IMO, PG and his team are definitely exucting their plan brilliantly. As has been said on this board previously, PRD's share price has more than quadrupled year-to-date yet, due to the quality of the news flow over the last few months (including the superb annual report), the risk / reward is likely better now than it was when it was sub 4p (IMO).