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I agree, Seaton.
News of a reasonable offer would at least shut many people up.
Potential bidders know that if no-one makes an acceptable bid, SOU will have to raise money and go it alone.
Just one successful drill would then set things in motion.
And they know that they would need just one successful drill to make their purchase worthwhile.
'Strictly speaking no GSA means the project is not bankable. That’s not to say TE-5 gas field is worthless, but its current value is reduced without a GSA.'
Exploration- I'm afraid that's not reality. Look at Rovuma and Zohr in terms of GSA agreement. Plenty of projects don't have GSAs settled until many years after they change hands. We also have a GSA offer, so the point is moot quite frankly.
JTF and K2F agree with both of you. Need some news as this board is boring atm with all the 'its worth more than 25p...no it isn't' ping pong
I was surprised when JP said no news would be communicated until there is a SPA agreed (at last FSC) I'm nt sure of the rationale but assume it is so that full details can be communicated to SH prior to vote?
I would imagine JP would be confident of SH agreement if he recommends an offer.....besides most posters on here seem to think it's worthless so anything above 10p is a great deal to them. (personally still confident of 50p+)
GLA
Seaton,
Just hope we get to hear something soon. This silence is very fast becoming boring.
seaton - would a prospective buyer go to the time and expense of an SPA before having some commitment of their offer?
seems to me that they would want indicative terms accepted first.
you know as well as I do that the gsa offer could be accepoted at any time.
the fact that they haven't implies that they hope for even better.
a buyer will look at the offer officially made by the government and see that as a fllor on valuation of TE5
to suggest otherwise is either naive or disingenuous.
JTF I don't think we will get an update in early August (assuming marketing finishes 31 July) . If we do then I fear it would be to tell us that no acceptable offers have been received.
JP was clear that the first update would be a recommended offer and that would be after the SPA had been agreed. I think it will take at least 4 weeks for offers to be evaluated and SPA agreed.
Hope I'm wrong and its sooner but can't see it myself.
GLA
Sounding off
There is no GSA yet. I presume Sound delayed its completion to avoid being committed to undertake the development of TE-5 as required by the petroleum code and associated agreements. That would have needed serious money and a big team.
Strictly speaking no GSA means the project is not bankable. That’s not to say TE-5 gas field is worthless, but its current value is reduced without a GSA.
Trellis,
What type of wine are you sampling today? Red I suspect?
I will carry on reserving my final judgement on JP based on the outcome of the LE. If he believes that "deal making is in his DNA" then he can hopefully conclude this agonising wait successfully for himself and perhaps more importantly us, who are yet to have our slice of the bacon. I consider myself a fair chap and the BOD paying themselves the sort of money they have been and that will be paid to them on exiting SOU better make for a decent LE or else there is going to be a lot of very angry investors looking for serious answers. A lot of decent people on here have a lot of their hard earned money invested here based on what JP has told us and his hyping of the share. His hyping never really sat comfortably with me because I was always brought-up not to count my chickens until they hatch. The sorts of figures that were bandied around in the manor they were was too much of a gamble IMHO. I always said, find the gas first and THEN and only then do the celebrating. It's no coincidence that the man has hunkered down in his bunker for what has now been weeks and weeks. He can't hide for much longer. The Chuckles are running out of patience very fast and come early August if we haven't heard anything from JP or if there is no RNS giving us all an update, then we are going to fear the worse. 2 weeks and counting basically...……………………….
JTF
Agreed KTF. It really does boil down to the risk a potential buyer would want to apply to the inventory.
Scarf- I've tried to calculate the figures below with reference to O&G methodology. As to how value will play out, I have my own views with reference to what I've calculated. That's the best any of us can do and only the Sound team, Rothschild and potential suitors know any more.
'SO- you are suggesting that we take the valuation of a survey commissioned and paid for by Sound ( nothing like a independent CPR by the way) which stated Te5 was worth between 22 and 27p per share(the actual figures released) and because even the top end of that estimate doesn't seem high enough to support your incessant ramping we should start adding random extra value to it?
back to the bloody wine'
trellis- This is getting tedious. We've already discussed the NPV calculations previously. These are industry standard assessments. Sound have (or at least had) a full time modeler on the team. If you think they're just going to make up these relatively simple calculations (for them) then you are more alcohol addled than I thought.
My view is these figures are now 'light' because of changes to the Horst productivity. If you understand anything about the NPV calculations, you will understand why I make this point.
Rather than resorting to insults, I would spend the time on some basic skills applicable to the industry you are invested in.
Any conclusion in your view soundingoff?
thanks Soundingoff.
interesting to attempt to put the various components of Sou's assets into the various catregories on P14.
do that and add in something for Te5 with gsa/feed/bot etc and I personally come up with something much more attractive to share holders than 25 or 50p
$100m/year to sound from TE5 alone .....
If anyone is interested in the valuation methods, this presentation has some information to help understand the methodology used in O&G:
(Yes the link it ok to download...)
https://higherlogicdownload.s3.amazonaws.com/SPE/5fc0079d-67a5-4dd9-a56f-190534ef5d3d/UploadedImages/oct%204%20presentation.pdf
Page 14 and 15 are interesting. Well, at least they are to me...
IMHO if we don't get at least £1 per share come LE then Parsons would have failed to deliver. He needs to understand that if he's to do one thing right, then deliver we investors a decent LE. What we have is valuable and many are still underestimating the true value of our assets. I still maintain we are worth at least £1 per share and let's be honest, £1 per share a year ago would have been laughed at - especially by SG with his wonky abacus.
We don't want to go long. Nobody really has the appetite for more drilling despite there being a chance of success with Te-11. I just hope this radio silence doesn't mean that we don't have a decent enough bid or any bid at all. Dragging this all out for another several months will be painful IMHO. I just want this to end so I can take my money and move on to another faster moving investment.
Jez
I've seen the reference to 19p some way back, so I don't think it's the Edison Report.
Broker notes broadly use the same methodology, so I believe the report would show a NAV significantly higher that where we currently stand. From my research, I would calculate a NAV of at least £1 based on the basin study, drill prospects and advised TAGI risk of 20-30% COS. Without knowing the inventory, it's hard to go any further. Maybe they didn't release it because there is no guarantee that NAV translates into sale price.
It's actually odd that JJ even referred to the 19p valuation - I can't find any research notes that value TE-5 at around 250-260m USD. Maybe it was the Edison note that never appeared....
We can, although from my own calculations and the ones I've seen from others, only the higher end is representative. It was quite a nice surprise (given the recent disappointments) that TE7 is 3 time+ more productive than originally modeled.
Thanks Soudingoff. Obviously the risk applied by the buyer to TE-5 is the unknown part and there are still some moving parts - GSA, flow rates (Sound's own downside case is 30mmscf/d), development costs. But at 10% discount we can at least put a range of 17-24p on it.
Thanks.
The big question is what is everything else worth?
I mean the seismic.
$360m per the Progressive report Longwait, which equates to around that. I find that figure quite conservative. Even our gone (but not forgotten) Fellrunner valued the Horst above that.
Maldini- The NPV10 calculation is unrisked. It provides a return on investment of 10% over the expected period of the investment. As noted below, a small discount may be relevant given the circumstances. Although I have reviewed sales where they have sold at or above NPV10 at an earlier stage of development than our Horst. However all these calculations are based on industry estimates and other parties may agree or disagree with these estimates. Given the latest updates on TE7 it would appear (IMO) our valuation is conservative to meet the requirements of the concession of 60mmscf:
https://www.lse.co.uk/rns/SOU/sound-energy-plc-eastern-morocco-award-of-production-concession-67llwz58ttikj31.html
Ha...glad to see that both Soundingoff and Lonwait have already responded with a more balanced view.
Could you clarify what the NPV10 value of TE-5 is, S/O?
Is that about 27p per share?