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Could we be targeting a Listing on the main market now considering the size of the acquisition and to attract the right pool of investors it might be time we moved to the main market on the back of the Petronas South Sudan deal ?
Moho, they can not close out suspended shares however you margin come tuesday will be affected, when we start trading that is when it will be affected, read my earlier post. i hold stock and spread bet. ig are covering bases on several suspended stocks. if you have other stock positions open in profit close them and take the money out lesson your exposure, i assume you are not a professional trader ? Gla thanks Zen, TL and RR
TiL - obviously we can never be sure of the exact detail / sequence of events. But my understanding is that this deal needs the SS Governments explicit agreement and signature before AD is issued. Like I say we can’t be certain of this but I think when AD is issued it will have full Government approval (assuming we get it) and then the only thing after the AD issue will be shareholder approval which they aim to get in 2.5 / 3 weeks after the big RNS.
As an aside, one of my main concerns back in April when the fighting started was that our debt finance provider may have pulled their offer. As we’ve heard nothing about that after 3 months I think all is still good. And I would not be surprised if it’s coming from Petronas and linked heavily to future production so that we share the risk.
One things for sure, should we successfully see the AD it’s going to be one hell of a heavy read. 500 pages plus???
And then bang - another big deal to follow swiftly.
Who know for all we know Andrew could have been in South Sudan this week crossing the t&c over the weekend.
Rockyride - did you mention we are only going to publish an admission document and re-list on ministerial approval of the deal ? Is that are choice or a requirement for this particular deal do you know ? My question is could we release and admission document and delist with approval forthcoming I know it wouldn’t be ideal but just want to know what room savannah have to manoeuvre ? For all we know South Sudan could drag its feet for a few more months ……………. Would be good to get clarity on this
Great stuff as usual zengas really look forward to your peer comparisons and they serve as a great benchmark of what to potentially expect in a success case scenario.
TL. I have been trying to get some info from IG as I have a fairly hefty SB and not really any other IG positions to close. The person I spoke to was fairly clueless and 5 or 6 times had to defer to someone else - who seemed equally clueless. An attempt to clarify by email yielded the following "we can inform you that in general terms, if you have a long position you can provide us with written confirmation to close the position at 0". - My interpretation of this is that you close it at nil pence - which is exactly the same as covering the 100% margin so no idea why you would do this - even if you didn't have the funds to cover. I'm assuming as you say it's some automated process for shares suspended for a certain period, and not something that has taken any forethought, and only likely to p**s customers off. I am still waiting for clarification, and if get any sense will feed back.
Excellent Z & TY. To be fair, although my first purchases were not at 56p IPO and were in low 40’s, I’ve always had back up to and beyond as a huge milestone SP for the company. With a current average of 15p (yes I bought a lot on the painful decline from 28p to single digits), personally I’d be ecstatic to see 56p as a return starting point. But I think a lot on here are looking for more than that and certainly something over £1. Let’s get this SS deal over the line and hope that our return price is not discounted too much for the Doba Nationalisation issue along with potential attacks to the pipeline in Sudan.
No price target on relist from me RR but this is what i see as reasonable parity post closure.
Tullows July 12th trading statement showed they certainly struggled in H1 2023 with production averaging 53,000 bopd (down from 61k 2022 ) with their net debt at $1.9b.
Their estimate average for all of 2023 is for circa 58-64k boepd and todays announcement reinforces that guidance after the 2nd phase of Jubilee start-up..
1.448b shares and back up from the low 20s to 31p today so a market cap of £450m + £1.49b debt = £1.94b They had fallen from 55p less than 9 months ago presumably with the large fall in half 1 '23 production now to be corrected and with Jeffries downgrading them in April from 40 to 25p.
Peel Hunts price target went up to 80p in May based on executing todays news and there was a fair amount of some recent director buying. Cannacords target back in March was reiterated at 54p. Davys target May 100p.
Save some 55,000 bopd from S.Sudan. Add Accugas, Niger and with the existing debt should be in a range of $1-$1.2b some $7-$900m lower than TLW.
If you use the current metric on todays TLW valuation at £1.94b and deduct Saves expected net debt of £785 - £940m - leaves £1b - £1.15b for Save across it's 1.4b shares fully diluted.
So I get 71p - 82p (And If you extrapolate to the Cannacord/Peel Hunt/Davy targets then Saves target compared to the lowest 54p TLW target alone should be worth another 23p to Save - ie 100p range. So i wouldn't be surprised to see our coverage beginning at 90p risked again as when it reflected Chad alone on the same number of shares.
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As for Kosmos on todays joint Jubilee news and late 23 early 24 first Tortue gas which should take them from the current circa 58,800 bopd in Q1 to 90k+ boepd in the next 6-9 months.
460m shares at todays £5.08 price = £2.34b + £1.65b net debt = £3.99b.
100p Target for Save on the same KOS production levels as of now = £1.4b + net debt range of £785m - £940m = valuation just shy of almost half of KOS and again KOS b/targets are much greater than its share price of today.
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So i can't see any broker for Save, given the previous guidance on Chad revenue/FCF/Production etc, being much less than above compared to what i have given.
I fully expect Save on the back of S.Sudan to lift them into parity with the revenues of KOS/TLW - given our other income streams.
In addition to keep pace with TLW/KOS over the next 6-9 months targets - we have Niger start-up and a further - at least one hydrocarbon acquisition. I would say if our net debt stands still as the above estimate we could theoretically add up to 10k bopd from revenue/FCF alone.
Worst case if there was 10% share dilution for any raise - then roughly you could cut 7-10% of the share price target in the short term.
At the same time nothing for the renewables, the delayed Niger exploration and the possible upside that could come from S.Suda
Brokers will be notified of an Aim listed company being re-admitted to trading at least 10 business days before the expected date of re-admission. The notification will come from the company's nominated adviser. So if we are to be re-admitted on Friday 28th July than today would probably be the last day to serve the notice to brokers.
Zengas - I do agree with you here I do believe that the headline price is contingent upon the oil flowing uninterrupted through the export pipeline at agreed rates, preferably at the rates which the SPA was struck, and contingent payments would make a whole lot of more sense considering the jurisdiction we are acquiring these assets, protects the buyer of the assets and doesn't limit the seller if all is operational as expected, a win win for both.
Another reason why i do believe you could be right here is because they have explicitly stated that they are after another acquisition or at least one more shortly, so they must be pretty confident in terms of the the final price of these assets which has almost confidently allowed them to pursue another. I know we have said that they have plenty of legroom in terms of debt or potentially headroom up to $2.5bn but i can't imagine any company that would want to aggressively pursue acquisitions upon acquisition if the the acquisition that is in motion is not coming in at a reasonable price on closing. if you were to take chad as an example savannah strategy has always been to purchase and asset but by the time the acquisition close the price on closing is 50 - 60% of the headline price when the effective economic interest date is factored in, so i would imagine the same with this if that's the case, and the also the same with the next acquisition. The time it takes to close the acquisition fully effectively drops the final price of the asset, which is a damn good way to operate if you can strike deals effectively and also close them towards government sign off. We hit road blocks with chad but all it takes is for one to be completed successfully and than the appetite amongst the shareholders will increase for more after a successful one, but as ever Andrew needs to bring one home or people to buy into this strategy.
Nevermined / longshorttrade - Thanks for clarifying I am sure some on here would benefit that clarification. for the record i don't have any on margin, but suspect a few may have some in margin the very least. I was more intrigued for knowledge to be honest as i do trade other shares on margin and wondered how that would work in theory if i was unable to cover by selling or toping up and the share was suspended so i couldn't unwind my position. But sounds like what you are guys are saying the position will only be liquidated once trading commences as the price cannot be determined and they simply cant take the suspended price as the closing price.
TL
I didn't ask IG that question so I don't know. But IG should hedge their position with the spread bet by buying SAVE shares in the market. As they can't sell SAVE shares they can't unwind their hedge so what benefit or risk reduction would they get?
I don't know. More likely I think they would suspend any further dealing in Spread bets with that client until he made good the margin amount and maybe charge them a punitive interest rate charge on the margin owed. Just my speculation though.
Nothing will happen with ig until the share starts trading again then it will be 100% for a very short while when normal service will be resumed. if you do have other positions i suggest you sell them and pull the cash out pre tuesday.
Never mind - I was under the impression that they would closeout at the last suspended price in this instance but i could be wrong to be honest
Nevermind - Only works if you have other positions to close out though..........................................
I have a spread bet position with IG along with shares in my dealing account. They contacted me to give advance warning. I do not think it is anything sinister about SAVE per se. I believe after a set period of a company being suspended, they automatically increase the margin required to 100%. I suspect that most companies whose shares are suspended for this length of time usually don't come back. I can't imagine that they would sell SAVE shares in the event that you cannot cover the margin as there is not a recognised price. More likely they would ask you to find additional cash or close out other spread bet positions so the margin allocated to these could be used to cover your increased margin position in SAVE
Agadem / Rockyide - Appreciate the update and do keep us posted if you hear anything between now 28th July from Camarco.
My take on the wording has always been Q3 as 28th July or prior admission document, with a GM notice 3 to 4 weeks after to approve the deal in August. Which is probably why Q3 is referenced as the deal closing. A deal is only formal and closed post GM approval so I believe it could just mean loose wording, to cover all phases of the deal timeline.
Regardless it would still be nice to get some news in the next 2 weeks even if it's providing an update on Nigeria operations, potential new gas customer, niger etc and also a formal update on chad/cameroon cotco would be helpful too if there has been any changes or progress there. Shame to have a baron first 2 weeks of July considering lots to keep the company busy, lets hope the last 2 weeks are not as baron and more fruity news is released to the market.
K - in a funny sort of way I am really enjoying the journey here - I just hope I get to like the destination…
Thanks Rocky.
So an interpretation of that pretty clear msg is - investors should ‘stand down’ any expectations of 28 July /immediate relisting and wait for Q3, as advised by the CEO most recently.
This makes total sense now. Thanks for sharing.
DYOR
The RNS which states the 28th July is the official date from the company so they'll definitely have to update us by then whatever the outcome. They really should have referred to that date rather than the ambiguous 'Q3' at the AGM, though it could just be a lazy way of saying the 28th.
Spooky - Just got a reply from IR and not Camarco. Adding to the reply below, I did not hear the 28th July mentioned one single time at the AGM but I did hear Q3 mentioned a few times. Looks like they are sticking to Q3 but that does not necessarily mean it will go past 28th July. However, if it does pass that date I wonder if they will be obliged to issue another RNS as they have definitely published the date of 28th July in other correspondence. Wish they would stick to one set of timeline guidance and use the same words in all correspondence to us.
“As per Andrew’s letter to shareholders in the 2022 Annual Report, page 19, we are guiding that the transaction is expected to complete in the third quarter of 2023, alongside the publication of a new Admission Document.”
TiL - I’m trying to get an update on 28th July but not sure I’ll get far with that one. Like you say we could se and RNS anytime now but personally, I think that if we need a further extension before the AD is issued we will not se an update until 28th July.
As a bit of idle fun while we all wait with great anticipation, what do we think the high and low re-entry SP price range could be with the following-
27kboepd in Nigeria
1 - 1.50kboepd in Niger + 35m 2P
SS closing with 50kboepd and 150m - 200m 2P
Group net debt $1bn to $1.2bn
Very difficult to work it out with the current mess in Chad and the War in Sudan but let’s see that folk think. I daren’t start the bidding but I still feel confident that the number I used to use a lot will be hit at some point within the next 18 months.
Fire away guys and gals…
I could be wrong but i hope we are looking at the $1.25b headline price in a slightly incorrect 'immediate cost context'. The use of the term 'UP TO' or similar by Save is shown in the Afentra, Panoro and Saves Exxon Chad acquisitions (There was no 'UP TO' in the Petronas Chad SPA when announced).
We will no doubt be discounted by the effective transaction date (if it is 1/1/22) but also the use of the wording "UP TO" $1.25b consideration - could there be cost contingency built in to that $1.25b figure used. You can see how this works in a number of other deals recently. Not a given but i think the actual starting price could be less say $1 billion and then $250m for contingencies as seen in the other deal examples. From that starting point of say $1B then deduct just over 1.5 years of contributions.
Saves 3 acquisitions
Exxon Chad for the sum of US$360 million (with a further oil-price contingent payment of up to US$50 million), subject to other adjustments ie $410m.
Petronas Chad for the sum of US$266 million, subject to working capital and customary adjustments
Petronas South Sudan for a *total* cash consideration of *up to* US$1.25 billion, subject to certain completion adjustments.
There remains a possibility that perhaps as much as 20% of that headline price could be inclusive of contingencies - ie for certain production levels being met as well as the oil price for x years.
Panoro Feb 2021
Equatorial Guinea and Gabon oil producing assets $180m - for an initial US$ 140 million and aggregate contingent consideration of up to US$ 40 million, based on an effective date of 1 July 2020.
The EG Contingent Consideration is up to US$ 16 million in aggregate payable only in years where the average annual net production of the acquired interests is in excess of 5,500 bopd. Once this initial net production threshold has been reached, in that year, and for the four consecutive subsequent annual periods, annual contingent consideration of US$ 5.5 million will be payable to Tullow provided that the production threshold is met in such annual period and the average daily Dated Brent oil prices in respect of the annual period is in excess of US$ 60/bbl, subject to the aforementioned cap of US$ 16 million.
The consideration for the Dussafu Acquisition consists of an initial cash consideration of US$ 46 million (to be adjusted at completion for working capital and other customary adjustments) and a contingent consideration of up to US$ 24 million (the “Dussafu Contingent Consideration”).
Afentra April 2022
Sonagol transaction $80.5m upfront with a $50m contingency (up to $130m) (Contingency is $5m annually for 10 years subject to above $65/b oil price and being over 15k bopd gross production).
INA transaction $12m cash upfront plus $21m contingency (Contingency is $10m licence extension, plus $2m/yr x 3 yrs on 30% of the revenue upside if oil price above $65/b. Further $5m if any new discovery subject
Here is the snippet from the June results on 8th June saying the admission document will be released by 28th July. Considering they updated us 3 week early and they had till 30th June so they could have left it out of the results. I am wondering whether this means that things are on track for the admission document to be released to the market in short order........... perhaps as early as next week. Reason for my thinking is Savannah would generally have to submit an admission document to london stock exchange for approval a few weeks in advance already in order to secure a return to market date. They haven't yet released an update citing a delay so they must have some inclination as to the current status.
As reference they gave an update a week before to let the market know that the 31st December date was nailed on. So hopefully should expect the same this the round as I am sure the procedures followed would be similar. Could see an update as early as next week to confirm whether the 28th July date is going ahead or not
https://www.lse.co.uk/rns/SAVE/update-on-restoration-of-trading-p4fjdwuow7i5r8a.html
Further to the Company's 13 April 2023 Q1 2023 financial and operational update, the Company continues to advance the various workstreams required to complete the reverse takeover of PETRONAS International Corporation Limited's ("PETRONAS") entire oil and gas business in South Sudan and intends to publish an AIM Admission Document by 28 July 2023, following which point the Company would seek restoration to trading on AIM of its ordinary shares. Further updates will be provided as and when appropriate.
Yes I think in the 30's without any of the Exxon/petronas shenanigans would be plausible. The good thing is we have a solid business in Nigeria and a lot of potential in Niger to keep us at a decent sp level, though I suspect most of us are here for mulitples of where we are currently. Maybe this month is the next stepping stone if we close out SS.