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Hi! DP,
I must admit that I have simply not considered that Deltic would intend to remain an exploration only company. Particularly with the prospect of a consistent revenue flow coming in to sight. I just can't see any reason why they would not want to step up from being an exploration vehicle, to the next level, which is exploration/production. Otherwise what would they develop into - a bigger exploration company, a well capitalised exploration company or one with excess capital to distribute every so often!
I just see Deltic as pursuing the relative security of vertical integration, with a runway of significant projects building the company, with the necessity of farming out/borrowing, becoming less and less. They have the licences, expertise, and so far the luck to enable them to transform the company and step up. Why would an ambitious company like Deltic not grasp the opportunity.
Partial funding secure (need additional placing): 20p
Fully carried both drill (funding secured): 35p
No funds (placing): 15p
Also why would they put out the rns last thing on a Friday?
Does anyone have any thoughts on why they reduced their holdings by approximately 50% and what effect it might have?
End of week update. Apologies in advance for any ommissions or mistakes...
(all in pence)
Glide 40/5
InsideLeft 104/6
SouthEast18 60/18
No.2 105/12
Butcher-boy 120/19
Titmnttm 90/12
MarineConsult 55/10
Purdey1 80/15
Dr Patience 71/13
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The simple question was: what happens, on close, to the Delt share price on the day of a confirmed funding deal (the expected outcome) or a message saying funding attempts through monetisation/ farm down have failed (ie placing process must be initiated)? Prize: the honour and glory!😀
Just reply and add, if you want in!
DrP, thanks for sharing wise thoughts. I agree with all and seems like this has real chances of us all looking back and hopefully breaking even or better. 🤞i think my break even is around the 65p mark but would need to check to be sure.
On funding this feels like an easy buyout from shell as this is small change for them so feels very possible for them to take 10% for covering all costs, same kind of deal for Selene. With several interested parties though it can easily increase the value which is a good sign. I'm happy waiting for the outcome as most are but very tempted to drip feed in a few £'000 as feels up side very high. Totally understand everyone been through this before and been let down, I also subscribed to the rights issue at 70p and expected the sp to increase when oil was found. Just made no sense we were prospecting and found oil and then company value fell.....mad
With regards to our CEO, the latest presentation reads as follows...
'Graham joined Deltic as Chief Financial Officer in 2013 and became Chief
Executive in 2018. He previously worked in corporate finance and M&A,
specialising in advising mid and small-cap public companies. Before joining
Deltic, he was a Director in Corporate Finance at Ernst & Young. Previously, he
was a Director in Corporate Finance at Arbuthnot Securities where he gained
significant natural resources experience acting as nominated adviser and
broker. He qualified as a Chartered Accountant in Scotland working for BDO
and subsequently PwC.'
Seems a pretty decent CV as far as negotiating a good/sensible deal is concerned. Let's hope he can pull it off.
Received an email from Graham confirming that and i quote "We are continuing to engage with a number of different counterparties in relation to a range of potential transactions on both of these assets"
GLALTH and have a great weekend
No 2, I am the same, I always stay well clear of AIM actually. However, I feel this one is different, notwithstanding the sp seems to live in its own sphere detached from what I feel is a good portfolio of assets (and getting better/ more derisked). The main issues of fear right now: green lobby, politicians, windfall taxes, oil&gas companies pulling out if the NS and funding. I feel the usual risks around geological chance of succes are almost not there for Selene and Pensacola. The only one with any real substance is the funding. Without funding we cannot drill twice in 2024, as simple as that.
Thin trade of this share suggests to me that most are holding (and most probably paid a lot more that the going rate), including the large shareholders.
As for the valuation by the brokers with input from the CPR. The CPR actually only values Pensacola by the way. Don't forget Selene...on top of the CPR valuation. The latest Allenby valuation (on success/fully derisked) is 465p/share for both assets. That value is pie in the sky, but even a third or a half of that would be very nice.
The NPV10 is based on a successful drill and that funds can be raised, not only for the drill in 2024, but also the whole investment in the future infrastructure. There is a good chance of this happening with Shell as the operator. One should also add operational risk, risk of war etc, but that's generally low if there is a decision to actually start producing.
It's a waiting game in a sense, but the current risk discount is overdone in my books. The discount for the risk involved is too high given there is a decent change the funding will be closed soon. Once the funding is annouced, I believe we will see a serious re-rating.
Hopefully we will have a very happy Cookoo in 2024!
Thanks, I'm sure good advice. I know with other shares it's always paid to go slow and if it feels too good to be true it likely is. Maybe that's why I'm not good with small companies. My normal holdings are in Rio and M&G and the US tracker (VUSA). This just feels like the we have a valuable asset even heavily discounted is worth more than 26p. Fingers crossed.
No 2 ,i am just going to say be careful ,the track record of this is not good at looking after sh only bonus for the boys,life style comp ,i need 90p plus to break even should give you some idea
Thanks Getafgrip, yes let's see.
It also makes me wonder how far Deltic intends to stay in as each project moves towards actual production?!
I had always somehow assumed we would cash out before production, as it in effect is an exploration company not a production company. On the other hand, I can see a lot of upside from retaining actual production rights.
I probably need to revisit some of their presentations, but would welcome thoughts from anybody here.
I've never bought into a penny share before that's had a strong upside so I'm interested in anyone who has experience. We've just had an independent company valuation give a NPV10 of £200m. This is the current value of future cash flows with a 10% discount factor (the discount factor represents the cost of capital for an investor). Does this also include discounts for unknown operational risks - I'm assuming not? And from this it gives a indicative share price of around 170p. Any deal will only reflect what someone's willing to pay. So the outcomes we seem to have are, no one pays and we fund ourselves and realise the £200m or 170p per share. Or we cash out and get what the market will pay. What amazes me is that if this was a car which had been independently valued at 170p and had a price of 26p then folk would be biting your hand off for it. But with Deltic that's not happening and the sales volumes are tiny. Feels like I should be filling my boots and buying all I can.....am I missing something(other than it's only worth what someone's willing to pay for it? And the obv Green political risk?)
Deltic has already held talks about farming down/monetisation of prospects beyond Pensacola, Selene & Syros so as you say this will form part of the solution, but there are a lot of permutations. I really think lending will be a significant part of the mix though. As you say it lets them hold ownership of more assets, and it will provide an alternative/additional source of funds & pressure a sharper deal on farming down/monetisation.
Getafgrip, I also agree that funding will be done. And yes, the release of the CPR was carefully orchestrated and timed. To me it shows the team is on the ball.
I guess the only area where we diverge is on the source of funding. I have so far assumed the £20 million needed for the next 2 drills would be funded only through monetisation/farm down of Selene and/or Pensacola. However, you are suggesting lending might be an option. If so, even better, as more value would be retained. I think it may be one step too early, but let's see! It's for the same reason I have never really been adverse to a placing.
There still seems to be a lot of concern about the timing, and even whether a financial funding arrangement will take place for Deltic.It will take place, the only issues are timing & finalising the agreement.
There is no liquidity crisis in terms of funding a company with the prospects and backing that Deltic has. The release of the Competent Persons Report has been scheduled very carefully to support a pressure a very positive outcome to negotiations. Lenders are under pressure to become involved in the resurgence in North Sea activity, both commercially (many will have budgeted funds for this purpose), and politically in an election year.
As Deltic "transforms" so its funding mechanisms and opportunities will move up a gear. But, potential Lenders will also relish the shared limelight of the partnership with Shell. Also Shell can put considerable financial muscle behind ensuring that successful partnerships like this are given sufficient respect in the marketplace & this includes security of funding. If the partnership model with Deltic works they will most likely want to extend the partnership to future projects.
Funding of say £20m is not required instantly, or necessarily in one lump sum. It will be phased in as per the business plan and drilling schedule. There are a 100 variations of how a sophisticated loan facility might be implemented: it might be a rolling facility, it might be phased in terms of time or business milestones etc.
Realistically if a decision is made on funding really early in the game it is more likely to be less beneficial for the company and its investors, whereas the longer any deals take to agree the more likely it is to be of greater benefit to Deltic. Lenders will want to look at a deal that includes quite high interest rate forecasts, whereas many see them as having peaked. Also it is almost February & the point where Deltic develops its own revenue streams is rapidly approaching.
40p / 5p
I do know is if the deal cant be done, with the assets we have, changes need to be made at the top
Will take anything above break even of 0.72p
Positive upside of 1.04 / 0.06p - 4 fold swing on current price of 0.26p.
I will have 60p / 18p on the day.
105p/12p ( I view it being 85% upside and only 15% chance of failure) - 105p being a 50% premium to the company valuation at the time of the last rights issue. Surely a deal has to value the company higher than major investors values the company at the point of the last rights issue with all the positive news that's been confirmed since. I see some think the market will only value at around the same price, the final result will be interesting to see. Certainly feels like Deltic is in a strong negotiating position if as the RNS advised there is lots of interest 🤞
120 / 19p
90p/12p
55p / 10p