The next focusIR Investor Webinar takes places on 14th May with guest speakers from WS Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register 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.
I agree Whimax. I don't know if these buys/sells by Covalis are guesses or if they are known. But if Covalis wants to stay in Char and has both shares and options, while the share is dropping they have to fund the options which, is cheaper to do by selling the shares than cashing in the options. It allows them to profit more when the sp rises. Maybe they are not able find funding elsewhere to keep the options open?
We still have some large buyers/sellers active in this stock judging by some of the trades going through today.
BDC
“then why are they opting to sell shares which cost them nothing to hold over the CFD that have a high cost to hold?”
Shares cost nothing to hold, but they cost the full value to purchase and therefore free up the most cash when sold (as you say). If you have a large (Long) leveraged CFD that’s continually falling you have to keep adding to your leverage in order to prevent the provider closing it out for you at a loss. If it’s under water, you are still liable for the debt/loss after it’s closed.
You appear to be flip flopping between Covalis being Long or Short on a CFD to suite whatever argument you are trying to counter at any given time.
BDC - Out of interest, how do you propose the broker facilitating a CFD for 3+% of the companies issued share capital, manages their risk for accepting the CFD trade? What is your understanding of how the market works to facilitate a long (or short) CFD position? It's not exactly a £5 punt on a 20-1 at Haydock.
Whimax,
The purpose of taking out CFDs is to get leverage (up to 30 times) on price (either appreciation or decline).
Covalis recently sold 45% stock but only 6.5% of their CFDs.
CFDs are expensive, high contract fees need to be paid to keep them open. If Covalis are the distressed seller, as you suggest they are, then why are they opting to sell shares which cost them nothing to hold over the CFD that have a high cost to hold? If they were leveraged long the price of CHAR (via CFD) as well as being distressed financially like you say, then one needs to ask; why are they opting to maintain a heavily underwater leveraged position that's costing them high fees to keep open, whilst selling the no-cost non-leveraged option?
I'm not excluding the possibility that Covalis are just really poor traders who don't know what they're doing, however, if one were to assume that, as a hedge fund, they know how to hedge, having a leveraged CFD open at a lower price than what they hold stock at, then they would be making money.
SDX sell their gas for between $10 and $12/mcf.
https://www.sdxenergygroup.com/operations/morocco/
Their market cap is £7.47 million. In 2023 they produced 17mmscf/d and 459bbls/d.
https://wp-sdxenergy-2020.s3.eu-west-2.amazonaws.com/media/2023/09/WEB_SDX-Energy_2023_Interim-Report_FINAL.pdf
Duncan Wallace reported 46Bcf low-risk gas play supported by 3D seismic at Loukos to which he ascribes $3-5 million/ Bcf NPV. He suggested the existing 3D seismic could lead to an upside of 100+Bcf. The area covered by 3D seismic is just 10% of the Loukos licence area. This dwarfs SDX. Listen to the podcast from 8 minutes in for a summary of what is just over the horizon.
https://stream.brrmedia.co.uk/broadcast/65e5b17993d52e4c8596272c/65e98318565ed4317f019604
Unfortunately we’re at the mercy of SDX and their drill.
On the plus side, the timeline is “squeezed” now between the start of our on Shore drilling (now early May hopefully) and AE possibly in July. The next 3 or 4 months will certainly be busy and interesting.
Disappointed that we were told around the end of Q1 for the onshore drilling. We are now well into Q2. Looks like mid to late Q2 would have been more accurate...
Presumably, they wouldn’t be “selling” their CFD if it was a Short Position, they’d be Buying it.
How does this fit with your theory that they were “selling shares” to enhance their “Short CFD”?
There's a reason Covalis chose to sell CHAR stock rather than their CFDs, which remained largely unchanged at last disclosure.
We can't be sure what that reason is, although there can't be that many explainations either...
SDX spud BMK-2 on 3rd April and was expected to drill to 1490m. Their previous well, KSR-21 took 24 days to drill 1950m. We should be due news on the rig any time.
CFDs
Correct Covalis only held 1.68%.
Make that 3.23
How do you interpret the ~3.9% in financial instruments..
Holding was 1.68% that day not 4.91%.
I originally thought that Whimax, but on 21.3.24 they were sat on 4.91%. I am not sure how to read the constituent parts of their 4.91% though...
If the market cap was say c. £90m, it would mean about £4.5m. Askar picked up c. 1%,m which we know from the RNS that dates back to the transactions on the day of the Energean transaction completing. There were also some significant trades beyond the ~£1m that Askar will have picked up.. and these followed in the next 1-2 days. I am not certain they are entirely out though.. It's probably close but not impossible that they still have £1-2m that they are gradually clearing down..
IMHO
None imo, Surety.
Askar (and probably some others) bought them all a few weeks ago.
I was just looking at Covalis's last RNS. How much do we think they have left...
Probably the seller trying to keep the price up for their big sells
When will SDX be done with this rig?
What in the "12111" is going on today with the trades🤷♂️
If we hit 1TCF of recoverable onshore gas then 50p will be actually a fraction of the number it should be ! ….
50p is too high to be honest unless we hit a jackpot at onshore drills e.g. 1 trillion cubic feet recoverable gas
*holding most..
30-50p seems a bit lowball to me.
Nobody going to make a bid till after Onshore & AE are drilled, by which time Chariot will be most, if not all the aces imo.