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I imagine the institutions are also miffed at this performance as basically they are sat on very big paper losses over the last 5 years indeed nearly 50% over last 2 years and ultimately it is AK's job to show a return on investment at some point II money needs to work for them or they will move it on !!!
After months of watching I have now taken a position with most of this year's ISA. I agree with all the posts about the undervaluation, but I think I now understand why (although at some point it will cease to be a problem and the real value will be unlocked).
The Accugas business generates lots of cash (albeit paid late and even then only in Naira) which is what the stated FCF number is based on. But the local banks that provided the expensive legacy debt for Accugas have the first call on that cash, and so the revenue generated from gas sales does reduce debt (which is good) but does not flow out of Nigeria (which is bad - for dividends , buy-backs or money for further Niger investment). So I don't believe that the FCF is genuinely 'free' at the Plc level and that's whats capping enthusiasm.
But with a good cash-flow and debt service history from solid GSAs it will surely be possible to re-finance the Accugas debt at a better rate, over a longer term and with fewer restrictions on distribution. That will free up cash for everything else. So at these current valuations I am a strong buyer, but with the expectation that revaluation will only follow when the debt is renegotiated, and that requires discipline in the meantime.
Imo management need to come out more and promote the assets in more detail. Accugas has seen most of that focus and Niger lacking.
We know the 5 well campaign delivered 33 mmbo 2c. Other than SJ saying Amdigh might be the biggest field to date in Niger, that was about it. Instead of giviving more detail as to why, a lot of it was left for PIs to dig into for more info. Why is there not a lot more detail in the presentations about Amdigh explaining why it might be the biggest field todate plus the yet to drill deeper targets in 3 of those discoveries. No graphs - nothing, yet there could be as much as an additional 80 mmbls on top of the existing 33 mmbo 2C before drilling deeper in 3 of those wells for an even further 75 mmbls high side (why are they now drill targets ?, what made them see additional potential post drill first time around?
Those existing discovery wells, instead of 33 mmbo 2c so far could yield over 180 mmbls but none of this is clearly laid out for investors in any easy to read presentation but practically buried away in the CPR and one reference line in a broker note that many may not have seen. Like i said, it's only recently they rejigged the website and gave investors a proper easy to understand graph showing the minimum major long term revenue stream of $4.3 billion from the Accugas 3 TOP contracts before any new gas contracts.
AK has numerous times said we are woefully undervalued and far from any sense of a proper valuation. I agree but then go and promote/sell this story in a much better fashion than has been done to date.
Recon has shown how their similar sized story to our Agadem basin has been promoted/managed and even then got $36m away after the share price 50 bagged. Again this is equivalent to 100p/share for Save and shows how much company making potential we are sitting on and why i've always banged on about expecting a minimum 100p for Niger and that's only for a fraction of that potential. Instead Save modestly say our assets offer significant potential returns but the average PI won't see that and most certainly doesn't like hanging around 2-3 years on limited activity as demonstrated in the past.
I've no intention of selling but that doesn't mean im happy with the rate of progress. There's 20 holders holding 79% of all stock and the 8 institutions among them are in a long time with the institutional placings averaging about 36-39p. Hopefully they see the size of the opportunity before them too and is the reason they hold in such size among so few. This is one of the greatest opportunities to present itself imo as i see it so not remotely prepared to give up on it for anything else. I can't argure against their belief to acquire half the basin rights and turn out a 100% success rate. This has proved their judgement correct imo about everything they've said regarding its potential to deliver hundred of millions of bls in discoveries and a lot of it very low risk so i have faith in management choosing good assets. Progress is another thing though.
There's a hell of a lot more than just a 100p for a Niger target price. (Recon shows that). If we notched up a similar 1b bls to CNPC from the plethora of targets and many of these are beleived to be a lot bigger in size as we are only on 1-2 play types, there's potentially a few multiples to that. Again Recon shows that by 50 bagging to a £billion in under 24 months where our opportunity has been either badly promoted or poorly explained by comparrison.
The next 11 prospects here out of 146 have a high side of 3.3 billion bls in place alone with up to 1.1 billion bls recoverable on the unrisked/high side - this shows the extent of the expected oil generation and is as great if not greater opportunity than Recon backed up by $200m+ revenue from Accugas that should grow significantly and i expect 100p from.
16-17p current share price and if we were to mirror Recon alone just on the Niger asset, we too should be at the 100p level for actual discoveries made/near term production/low exploration risk and some priced in hope value. The scale of the opportunity is huge but while they focussed on Accugas they've lost sight imo of properly promoting the Niger asset.
Hopefully this will change so sitting tight to results for way forward, then agm.
Very interesting regarding Recon Zengas.
Their share price performance over the last year has been staggering! It just highlights how grossly undervalued SAVE currently is. There is now no excuse whatsoever for SAVE to be lagging at a £165 m/cap, especially with oil trading above $60.
My main gripe with this company, and AK in particular is the complete lack of shareholder growth. So far AK has generated sweet FA in terms of returns. Horrific share price performance, no dividends paid (yet), no share buybacks.
At 35p we were told the Seven deal was going to be value enhancing. We are currently more than 50% below that price, and 18 months into completing the deal.
This surely has to be one of the most undervalued companies anywhere in any sector.
If AK cannot generate returns for shareholders here, maybe he should do the right thing and step aside. With the right leadership this could easily be a multi billion pound company. The Recon story just goes to show whats possible, and they are not even generating any income. A pure exploration play.
We have a large revenue stream via ACUGAS, plus huge exploration opportunities in Niger. AK needs to get the story out there!
16/17p is a joke.
No mutiny Older, but does no harm to show up some of their failings and how some long term investors see things.
AK and SJ need to shake themselves a bit more and deliver on which is a fantastic company making opportunity from Niger. If they're not envious of Recon raising such a wad at $9.50/share they should be embarrassed at their appalling progress to date never mind reminding us of 5 out of 5 successes. For gods sake capitalise on it !.
In light of Recons performance and as i have always argued, 100p for Niger is the tip of the iceberg here. Absolutely no reason why it couldn't be a few multiples of that but it will mean AK/SJ getting their Niger act together and no more excuses post results/come agm !
The Niger opportunity is of the same scale as ReconAfrica in Namibia/Botswana.
Recon at the moment have been drilling to establish if their basin has a working petroleum system which the first well has confirmed and now drilling their 2nd well.
They have achieved a valuation of £1 BILLION in under 2 years.
They raised $3.4m in a pvt placement on 30th Aug 2019 at 20c which has recently 50 bagged and has 35 bagged in the last 12 months from 28.9 cents. Last weeks placing of $36m was at $9.50/share.
For the 100% 'oil' case assumptions, the unrisked recoverable estimate is 1.348 - 2.36 billion bls mid to high case. (Yes UNRISKED). You can get this from the Sproule CPR and Recons own docs on Sedar dated 30/4/21. COS is put at 8.8% and a 37% chance of development. Of course its virgin and early days and these assumptions could go out the window good or bad.
Much has been said by Recon of the assumed generation of 100 billion bls+ in place and Save/CGG have similarly quoted huge oil generation figures but Save hide their light under a bushell. Its only very, very recently AK has put a detailed presentation up showing the fantastic long term revenue stream for Accugas when he equally should be showcasing and highlighting the enormous company making potential from Niger. It won't sell itself if people don't know the kind of value it could make nor if plans to continue exploration are delayed.
By comparrison to Recon, the Agadem basin has an overall 80% success rate on all wells drilled so a working petroleum system well established and verified. Save has continued this trend with 100% discovery success which is fantastic in its own right.
Compared to Recons unrisked oil mid-high case numbers (1.348 -2.36 b), Saves 100% unrisked recoverable oil case is 6.8 - 9.98 billion bls which is at least 3 times greater for Save and has a much higher COS.
Recons broker recently had a discovery of 500 mmbls worth around £1.3b to Recon and Recon have already reached £1b of that from the results of the 1st well. That £1b valuation would be the equivalent for 100p to Save.
Saves broker Finncap in the Feb 2021 note gave 17.6p/share for every 76 mmbls using a lowly $3/b at a $50/b oil price assumption. 500mmbls to Save would be 115p with up to 10 bl bls unrisked to play for. We have not factored in anything for the discoveries never mind any hope value despite an up to expected 80% success rate for the Sokor Alternances alone.
Save could learn a lesson in monentum and in keeping things moving. Recon have moved from 20c to over $10 in less than 2 years. Save have an asset with equally if not greater potential but have done nothing in terms of really getting the story moving this last 3 years never mind slow progress since 2014. Recon have stolen a march, 50 bagged in under 24 months, achieved a £1b valuation and to cap it all raised $36m on minimal dilution at the top of the range at $9.50/share last week.
Zengas, I see you're leading a mini-mutiny against AK/SJ over on the other place. Most "un-Zengas-like". Anyway, I hope they are reading your posts, because how else is the proverbial kick up the backside ever going to change their speed of delivery here?
‘make it all up to me’
Thank you Zengas, just what I need to hear. Please Mr CEO news next week. We’re so bored. I’m working this weekend please make it all to me first thing Monday,
£1 Billion Valuation reached by Recon.
Surely time that Save by comparrison got the finger out and cracking on with delivering the potential from these world class assets that would equally be worth multiples to its current value.
From Saves presentation - every 20 mmbls tied to the development point worth $100m. (Pro-rata $1.5b valuation requires 300 mmbls from an unrisked 6-10 billion bls mid-high side recoverable to 2.6 - 4 billion bls risked mid-high side recoverable)
Latest as of today from Recon now acheived a £1b valuation (raised $36m today) on a virgin basin that they are drilling with an expected 100 billion bls generated (not recoverable of course) and an expectation of over 1 billion bls recoverable potential. Similar to Saves acerage, but Save acerage already proven and with similar oil quantity generated. Saves unrisked high side recovery could be as much as 10 billion bls.
156.1m shares (178.7m shares fully diluted).
Share price $10.40cdn/610p = M/cap £952m (£1.1 billion fully diluted).
First well established that there is a working petroleum system from cuttings etc
April 15, 2021 pleased to announce preliminary analysis of the data from the 6-2well, the first of at hree well drilling program, provides clear evidence of a working conventional petroleum system in the Kavango Basin.
Here's an interesting comparison and why i see the screaming and unrecognised value lag in Save.
Anyone seeing the mention of 100 billion bls generated in the report below might be thinking 'wow' at first glance but infact should see this is exactly no different to Save opportunity in scale and size and Save much further poven in terms of their basin acerage as Recons value is built entirely for now on hope value and an unproved/untested basin.
Recon Africa are a Canadian junior currently drilling what is deemed as the last of the great undrilled deep onshore basins in Africa and hoping to 'prove' a petroleum system (Namibia & Botswana).
They have currently 109m shares in issue and the price is cdn$4 some 5 days after the latest stock coverage. They have cdn$17m cash, no production, no reserves. Puts them at a m/cap value of $436m cdn or £250m and far in excess of SAVE.
A find of 500 mmbls is estimated to be worth $2.6b cdn or $2b US or £1.3 billion. They are using circa US$4 per barrel. Saves analsyts were being conservative in the lower oil price envirnonment and used $3.20/b. The risked recoverable for Save is 2.695 - 3.868 billion bls mid-high case or $8-$12 billion (£5.5b - £8.5b).
RECO trades at 0.49x our heavily risked NAV of $4.00/share with an unrisked upside ~$24/share at a modest field discovery of 500 mmbbls.
An early 2020 assessment from Sproule underlined the potential with 1,044 mmbbls and 44.9 Tcf of working interest best estimate prospective resource. More recently, noted source rock expert Dan Jarvie has estimated that the basin is capable of generating 100 Billion+ barrels of oil."
We continue to see RECO as a special situational stock that is positioned to deliver on a high-impact exploration program over the first half of 2021 that will substantially de-risk a material resource and drive significant share price appreciation on positive results. We recommend building a position in the name ahead ofexploration resultson all three wells expected in late spring ".
What's also interesting is the size of our basin (see following post pt 2), but the very big difference is that we have a very substantial and proven working petroleum system.
From Save/CGG CPR-
'The Agadem Rift Basin is a part of the wider Central African Rift System.
The Agadem Rift Basin contains a sedimentary fill of more than 5km.
Shales at Cretaceous level have entered the oil window across much of the basin.
Consequently, the basin offers source and reservoir potential in multiple stratigraphic intervals, including at levels that to date have received few well penetrations. The fault blocks created by late Cenozoic faulting formed the traps targeted by almost all exploration drilling to date, whereas the structures formed by Santonian-Campanian tectonics are essentially unexplored.
The source systems in the Agadem Rift Basin started generating oil relatively recently: The modelled volumes of oil expelled are very large, at up to: 60 mmbbl/km2 (Donga), 80
mmbbl/km2 (Lower Yogou), 97 mmbbl/km2 (Top Yogou), 50 mmbbl/km2 (Base Sokor), 30 mmbbl/km2. These volume estimates suggest that the basin has generated far more oil than is required to fill the traps to spill'. (Dyor)
From the above figures you can see the sheer amount of oil volume generated inside our 13,655 km2 imo in excess of or similar to the 100 billion bls that Don Jarvie talks about for Reco. This is why SAVE have an unrisked recoverable of 6.8 billion - 9.98 billion mid-high case while risked recoverable is 2.69 billion - 3.86 billion bls.
Infact Reco are using a report from the highly respected Wood McKenzie of Nov 2020 (which states "Whilst the current geological understanding across the Kavango Basin is immature, there are preliminary indicators that, should the presence of a working petroleum system be proved, it could provide abundant opportunities for further exploration and appraisal"). They also use the Central African Rift basin has one of three basins to compare to Recos untested/unproven Kavango basin.
Saves m/cap £135m. Reco £250m.
CNPC proved over 1 billion bls from their acreage portion and mostly just from 1 play type - the Sokor Alternannces.
Save 5 out of 5 discoveries recording 33 mmbls 2C so far though Amdigh may lift this depending on pressure communication and other adjacent segments to over 100 mmbls - while not counting the deeper potential in 3 of these discoveries that will be drilled down to.
100p for Niger is the tip of the iceberg in terms of the overall potential and when compared to whats being promoted at Reco and their share price/valuation.