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“ hard to see struggling oil producers part way with big profit margins” - surely as a ‘struggling oil producer’ gaining a percentage share of something you never had (increased production) is better than the alternative of doing nothing and taking only the profits from lower production rates?
You’re obviously well informed CLT but you ain’t half trying to talk down PRD prospects at every opportunity...
20th Jan 2021 RNS states - "The successful development of the CO2 EOR business in Trinidad allows the business to be valued on the basis of its assets, invested project costs, existing contracts, goodwill and CO2 EOR operational experience."
Strangely this doesn't seem to mention any specific valuation metrics but a range. Service fee and profit sharing seems to be the model but hard to see struggling oil producers part way with big profit margins. Things might clear up if we see the details of a contract.
All IMO and could be wrong so always dyor
Surely the expectation must be that the T&T business ends up with Massy or a Massy/Heritage combine. Not only do they control the supply of CO2 but install and operate the delivery systems. The exclusivity of supply to PRD is relatively short and seems to operate on a 12 month extension deal making the whole business, in my mind, less attractive to any outside company when the most vital component is not owned outright by the seller.
Agree with stub equity likelihood.
Exclusivity of Trinidad CO2 supply
Morning all
Joey...totally nailed it!
I am expecting contracts...sale of business but with stub equity going forward
It is a well recognised way to conduct sales...
I have done several such
Some folk on here coming out with totally incorrect comparisons...
I suspect for ulterior motives
BTW...anyone still see soundreason posts?
This game is red in tooth and claw...
Some of the tactics used could almost be called subtle...almost
ATB
PG has stated with regard CO2/EOR the PRD model in Trinidad is to get a percentage of profit on the oil recovered. You seem to be intimating it is a flat fee per field. That is not what has been stated in interviews and presentations. He has already agreed terms with Trinidad and has not suggested terms have changed in recent negotiations.
Agree, it's hard to value co2 EOR segment but my view changed recently in terms of how much value to be attributed to the segment in terms of the market cap. Hard to find any co2 EOR business M&A but found one which is not same but roughly gives a ball park value to co2 EOR fields of $12 mn. Of course it's not exactly like for like but gives a rough idea of EOR projects /fields value commanded in market. Obviously need to adjust the price for individual project and offering of surface facilities etc.
My guess is, even if in a worse case scenario Morocco and IE value turns out nil/negligible, the co2 EOR sale might get a sale value of £8- £10 mn giving a 100% return on PGs invested capital hypothetically. Of course it's just estimates and can be completely wrong but simplistically basing it off the below deal.
"Denbury to Acquire Wyoming CO2 Enhanced Oil Recovery (EOR) Fields"
"The purchase price includes associated surface facilities and the 46-mile CO2 transportation pipeline to the acquired fields."
https://www.globenewswire.com/news-release/2020/12/29/2151223/0/en/Denbury-to-Acquire-Wyoming-CO2-Enhanced-Oil-Recovery-EOR-Fields.html
All IMO and could be wrong so always dyor
Clueless, steady on - with the pessimism on CO2 business unit people will think we’re one and the same... I was quite vocal on the fact I didn’t see the service model expanding outside the region (not because it couldn’t be done but because it wasn’t the right thing for PRD to focus on), but I am bullish about the opportunities in T&T and Caribbean region. Whilst I agree with you that it is hard to value, I concur with Jonmo - there must be something in it, PG doesn’t mess about. I look forward to finding out what the structure of the first deals looks like...
P.s. Imo Value for PG from his holding might be quite different because PRD was originally listed at c. £3 mn market cap back in May 2018. And Jan 2019 presentation shows PG having a 44% shareholding at a market cap of £6.6 mn. While his current share holding is c.20% guess because of capital raises along the way.
So PGs current stake of 20% shareholding will be worth a lot more than back in 2019 when it was at 44%, even at a £20 mn market cap level imo.
Simple math 44% of £6.6 mn market cap = £ 2.9 mn
20% of £20 mn market cap = £4 mn
Of course PRD has progressed a lot more with Morocco etc. Thats reflected in higher market cap than back then imo. But does give an idea about entry values for PG and evolution of market cap since then.
All IMO and could be wrong so always dyor
There is definitely value but imo it's mostly in scaling up with a lot of contracts as it's a service fee model. And we are yet to see our first contract but assuming we get enough pricing details of the first service contract it might give a good indication of the value revision to my estimates. Hard to imagine an oil producer /operator giving much of their EOR revenues /margins off to a service provider with ever volatile oil prices. There is always a possibility that they could take just a yearly contract with PRD and replicate it in house once a framework is setup on their end, as we don't seem to have a unique IP for EOR. Of course value will be dependent on if we sell the segment to a producer directly or go via a service route. Imo majority of value in PRD is in proving up Morocco via the drill results.
All IMO and could be wrong so always dyor
Selling of each segment is definitely sensible but I had to downgrade my valuation estimates of trin co2 EOR segment given it's a service model with service fee, etc. per contract and value of the project on balance sheet doesn't seem significant and hard to gauge additional insight into other intangible value around it. Couldn't find any read across sales of such co2 EOR service businesses to estimate a value on our co2 EOR segment. Not sure if the old proposed Fram transaction of $1.7 mn was of any help to estimate the wider segments value. So my estimate for Co2 EOR segments disposable value currently, absent any news, is pretty low vs market cap. Morocco obviously is dependent on drill results. And I don't have much disposable value attributed to IE segment unless significant progress made, as value can only be determined by what someone might be willing to pay in an ideal world.
All IMO and could be wrong so always dyor
Huge buys there
Agree. Big Twitter buyers already getting nervous and no one knows when or if they will bail out if they see profits eroding daily given their entries from 5-6p levels. Big profit booking on low volume days in micro caps can produce big swings, along with spreads eating into. If wider market is weak then there's more downside pressure. Hope placing price of 10.5p doesn't turn into an anchor level unless 3p-4p average holders decide to take all profits off the table pre drill. Hope it turns for us remaining holders as its hard to see profits evaporate daily and thinking, should have taken the 15-16p quote few days ago, especially before the possible market wide low volume period kicks in May pre drill.
All IMO and could be wrong so always dyor
was finding support and bounced from the break out.
i was to early, failed next day
MEM- What II are you referring to? IMO it was all placed with PIs as there has been no new TR1s or big II shareholder on the sh register lately.
I still think it was ISA related MM shuffling that caused big rise on no news recently. This also reminds of OMIs recent round trip after everyone was convinced it was the next GGP until the actual drill results reality set in.
We need real value creating news to sustain and build on rises rather than just our projections and chart targets. 10.5p was something PG seemed as a good level to take money off the table and it's been painful to see it drop back on no news just as it rose on news. As we've got big holders who have 3p-4p averages, not sure how many have already booked profits or are yet to? Any idea if Twitter buyers are still in? This profit evaporation is not great especially with wider market being down as well.
All IMO and could be wrong so always dyor
Daft question, is it possible to get a rough idea of how many might be left?
Agree, get them out of the way, all 17 million of them.
MEM, don't agree, get them out of the way.
They don't deserve big profits and have given us mere mortals an opportunity to top up..
added again today at 12p
Ive added from 11p up to 16p
It’s a shame PG did not force the II to a tie-in date prior to being allowed to sell, provide far more stability.
Lock in for a year, by then, who knows just how high the SP would have climbed, PG would be doing them a favour !!
Added for the third time today
£240k sell just dropped...they could be done
Agreed....keep your eye on the 3 month chart, buy on the dips, and relax for three months. If any of
the prospects here materialise the price will really fly, and justifiably. The potential rewards far
outweigh the risks which is quite a rarity on AIM. Also listen to GRH when you can.
MEM if the 100000 sells are the placing shares, then the closer to 10.5p the SP gets the less likely we are to see those sells.
I don't like placings for this very reason, as I don't like large institutional investors either, if they decide to unload it can cause a sometimes rapid and sustained drop in the SP.
To quote PG if the money is on the table then take it, it might not be there in the future.