If you would like to ask our webinar guest speakers from WS Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund a question please submit them here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Hindsight eh Crude, just like JP's at the deep dive when he informed everyone he was selling his shares.
Surely at this point when JP realised that the risks to himself were so high he should have perhaps thought that the risks for the business were also too high and adopted a different strategy or raised extra contingency funds then, no?
Sorry partridge I give up.
It’s like speaking to Donald trump
Read the RNS.
" the Consortium will finalise plans to secure access to some US$184 million of development capital that will be required to fund the Project".
" a target internal rate of return for the Consortium and to a 'not to exceed' fee of US$45 million per annum".
" the Consortium will be responsible for the construction of the Project and for its operation for a period of 15 years".
$675 million. Yes.
Capes = capex
I would rather go down the direct fund route. Our carry for the 250million is part of the deal this covers all of the capes to first gas
Pipeline
Processing facilities
Several wells
And potential some funds left over for an exploration drill or 2
Everything paid for to get to that first gas continuous payment of approximately $30 million a year.
And this is in addition to the first tranche.
I can wait
Thanks all for your responses. On balance it looks like “fully funded by the purchaser” is in pole position but there’s still a possibility that the BOOT will prevail. Not so clean cut yet then. We’ll have to wait and see which of the possible finance routes wins out.
“ The 45M Eric is a 100% number, so we only pay our share of this (47.5%).
James
On 15 Jun 2018, at 17:19, Ericcom> wrote:
Hi James
I guess you are busy! But as you are getting the answer to the initial question, I have another on that you may be able to answer.
Concerning the FEED award, the RNS states that the company will be paying an annual fee of no more than $45 million per annum. Is the $45 million the total paided to the consortium or is it just Sound Energy’s share of a larger maximum annual fee (approx. $100 million). I only ask the term “Company” is defined in the RNS as “Sound energy”. If this is the case then $100 million dollar annual fee for the BOOT seems high, maybe we are in the wrong business.
Partridge ask the Company I did.
The cost of the infrastructure is approximately $250M
The fee is $45M a year for 10 years = 450million
Therefore $200million is for the BOOT supplier for putting up the money and profit. Not bad really.
Are you seriously suggesting they should get $650 million for putting up the money and running the pipeline. I will dig out the email. And post it. If you send me you email address I am happy to forward you all of this information.
Thanks for clarifying Crude. Since the HOT RNS I got the distinct impression that some people had formed the opinion that the consortium approach for the pipeline was being replaced by the JV arrangement. That’s not how I read it, but I was beginning to question whether I’d misinterpreted the detail.
Naughty partridge.
2 things wrong with that post.
Looks like we are not using the BOOT.
If it is used the $45 million is the maximum for the whole BOOT therefore sounds share is approx $10 million.
Maldini
The carrier portion is for all of the infrastructure.
“ Eric – the carry should (in a mid case) completely cover our capital cost for the development if that is your question. It is however a cap in the case of overspends. Our new interest would be 23.3% so the net US$58.5M means the gross capital estimate is US$251M. So basically going forward if this deal happens we don’t pay any further capex.
James”
The BOOT can charge up to $45 million/ year so would probably wipe out 50% of income from the horst when it is up and running.
After further comms. It appeared to me that the purchaser will not waste money paying interest payments on the BOOT model. It looks like that have deep pockets and are paying upfront for the infrastructure costs.
I said this last week. The purchaser is forking out over $160 million to get Eastern Morocco to first gas.
Email from Sound after the deal was announced
“ Eric. I doubt the new owner will want the BOOT but we have not yet contractually cancelled that yet. The details will all need to be worked out before we sign.
James”
Maldini, the two are very different: The BOOT & FEED are proposed to be financed by the Spanish consortium & all those costs to be repaid from a very lucrative deal that should see the consortium handsomely rewarded - & rightly so. But if we continued with our 47.5% equity our share of the drilling costs would be prohibitive & raising cash on the open market at our diminished value would not have been possible. We maybe should have farmed down much earlier - post TE8? But its the same old story...keep going whilst your star is riding high. Maybe we should have learned from the old maxim of repairing the roof whilst the sun shines...raising money when your value is high - but you will always get arguments against & this is pure hindsight...if it wasn't we would all be AIM millionaires!!!!
Do people believe that it’s de facto or an assumption that the proposed JV partners will be fully responsible for raising all the funds needed to build the required 120k pipeline?
We know that along with the pipeline, a central processing facility and a number of wells will be required to deliver the expected production volumes at the Horst. However, anticipating that a concerted drilling campaign is the thing that could really put us back on our feet, is it feasible that the BOOT concept for the pipeline may still have a part to play in the “deal” to ensure that (i) the JV has enough capital for its concession commitments and (ii) is also properly funded for a serious exploration campaign?