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Going back to the original point of this thread for a minute.
As per the OM, average asset level FCF 2022-2030, projected at $279mn.
Acquisition assets expected to deliver average of $137mn, 2022-2030.
Therefore, Nigerian assets expected to deliver average FCF, asset level, of $142mn, 2022-2030.
Market valued SAVE's equity (1bn shares FD) at $250mn at suspension , a good approximation for the existing business at the time of suspension given macro price trends and operating improvements. FCF multiple of 1.8 times.
Applying a same 1.8X FCF multiple to the combined new SAVE, with 1.4bn shares FD, equals a MC of $502mn, or 27p/share.
Mr Market has it right, on a purely static perspective.
We (and prospective new investors) need to establish what will allow the MC to grow out of this stasis of being one of the cheapest, mid- to large-cap O&G companies (Petrobras is on the same level, a company I'm buying for growth + large future dividends).
1. Working the Chad assets more intensively
2. Niger asset development underway, not next year or the year after...
3. Get those Accugas new customers signed up, in volume
4. Evidence of debt paydown on plan
5. More evidence globally that the POO has found a new base at $75/bl, with upside dynamics thanks to "Woke" Western governments.
Oh, and government approvals in place for the transaction, and deal completion, June 2022.
Any more to add? How doable, starting this year?
If AK is going to make more acquisitions, and I expect he will do at least one or two meaningful more, then I hope he completes - note the word complete instead of effect btw - them very quickly indeed - eg in 2022 - and then offers that he is now looking to a significant period of non acquisition towards instead complete focus on optimising the businesses that 'now' make up save.l and absolutely delivering the bottom line financials he said he would for these businesses.
The markets default is to be cautious as a rule when a business is in an ongoing flux of acquistion atop of acquisition and debt grow out as part of that journey - even extremely manageable debt grow out as is seemingly the case here granted - especially for an O&G assets in Africa business.
Generally, there are always going to be plenty, rightly or wrongly , that feel for eg 1 that planned periods of 'large' debt pay down significantly curbs dividend potential... and/or for eg 2 that re sale values of traditional O&G assets are going lower again and again year on year as a rule as we transition more and more to green economy.. and/or for eg 3 that we need to wait and see for a period that he delivers what he says he will for every new acquisition he makes before we'd consider buying this share.. and, cumulativily, that's a lot of potential investment money not ready to buy save.l shares 'yet'
PS: In case of any confusion, on a three year forward view I really - really - like this share
FinnCap have used $60/b oil in their assumptions and i've compared it to see how it could be improved over AKs so called base case/rubbish scenario .
F/Cap based on the current assets -
Net debt this yr/end = $569m. End next year $378m. End 2024 = $134m.
Refinancing of the Accugas facility this half would increase FCF by $27m/yr.
Every 5% increase in Chad production or 1100 bopd approx could add $7m/yr so even 3k of a production hike could add $20m/yr. (Drilling new wells every month from their own rig end of this year).
At $75/b oil compared to the base case, would add another $30m/yr approx.
If those 3 factors happen that's approx $77m/yr so it's possible by end 2024 Save would be in a net cash position a year earlier and effectively debt free ie F/cap 85p target valuation + 30p debt removed/net cash position = 115p.
FinnCaps analysis has included $10m div paid next year and $11m the following year.
If they can continue to ramp up Chad oil production further than just 3k, the expected debottlenecking of S.Creek next year and even some quality gas customers to come on stream, the above figures could be improved on at $75/b oil (never mind $85/b or better). There's also potential from other operators increased pipeline throughput.
As for new acquisitions i expect these will continue but the above shows how the existing debt for the current assets is rapidly paid down on those F/Cap assumptions into a net cash position.
FinnCap estimate they will have $150m cash on hand at the end of this year and they have $100m remaining from the current facility. Based on the above, i can't see them not being able to go for the likes of something 2-3 times as big in terms of the Chad production & reserves assets.
Usual MM tactics drop the bid really low on opening to pick up some cheap shares I suspect. Just MMs doing there day job. Not happy to see a below 26p bid
Usual MM tactics drop the bid really low on opening to pick up some cheap shares I suspect. Just MMs doing there day job. Not happy to see a below 26p bid
Looks like it was just the effect of the dilution not a sale of shares
Yes, could well be PF, and always best to treat with caution anyone who doesn't substantiate their posts, though there is a steady amount of sells at the moment which is limiting the sp progression. Maybe AK can shed some light on things on Monday, though he's usually reluctant to discuss individual II's.
Can the question be asked at the GM. If it is true why did AK state he expects the sp to increase over the coming weeks and moths,?
Komakino- I suspect the post was an assumption based on a misunderstanding that the recent VR Global Notification of Holdings RNS was due to the passing of a threshold by disposal rather than dilution.
One of the posters on ADVFN is asserting that VR Global are in the process of selling their 50m holding. There's no evidence provided to back that up, but if true, would explain the sp holding pattern at the moment and would likely mean we are not going to be seeing any big jumps in the sp till they sell up or stop, which could be a while to churn through that amount.
It feels like the SP is in a ‘holding pattern’ over a major airport, waiting for the next instruction / purchase / results before it alters course.
I just hope it doesn’t run out of fuel.
I’ll get my coat :)
I thought it was worth reminding ourselves that at current oil prices, SAVE is trading at about 1.5 times free cash flow (next nine years projections) based on Andrew Knott’s 31 December presentation. Oh, by the way, he described the production forecasts as the “rubbish” scenario (if I heard him correctly).
This time next year, Rodney...