The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Back in July, FPM said it would cost $70m. In the spiel about the analyst visit, they say it's going to be $35m. Is that right? Only half the price? They mention changing production and oil prices as well as working capital adjustments - but I don't get it.
Here we go... Faroe Petroleum's slick deal About 18 months ago I highlighted an opportunity in Aim-traded Faroe Petroleum (FPM:68.75p), an independent oil and gas company primarily focused on exploration, appraisal and production opportunities in Norway and the UK ('A slick operator', 5 Feb 2015). The shares were priced at 75p at the time and I had a target price of 94p. In the event the price came within pennies of that objective in April and July last year, before the subsequent oil price plunge dampened investor interest in the sector. I last rated Faroe's shares a buy at 86p ('A slick investment', 25 Jun 2015), a level that has yet to be seen again as share price rallies in both April and July this year petered out at the 82p level. However, with Faroe's share price slightly below my initial buy in price and also adrift of July's 70p placing price, a fundraising that raised £66m primarily to fund the acquisition of the production assets of DONG Energy, I feel that the risk:reward ratio is skewed to the upside. Not only are the shares trading well below core net asset value of 84p a share, according to analyst Werner Riding of brokerage Peel Hunt, but it's clear investors have an appetite to support small-cap oil companies willing to exploit selective acquisition opportunities in the current environment. For instance, the five Norwegian North Sea producing oil and gas fields acquired in the DONG Energy transaction added 8,000 barrels of oil equivalent (boe) per day to Faroe's production and have lifted its 2016 average daily production to between 15,000 and 17,000 boe. The $70.2m (£53.2m) cash consideration paid equates to a price of $3.50 per boe based on 2P reserves, and $2.30 per boe based on 2P reserves and 2C resources, little over a third of the average price paid in Norwegian oil and gas asset deals in the past two years. Estimated unit operating expenditure is around $19 per boe, so with Brent crude recovering to $50 a barrel, then the acquisition will bring in substantial cash flow to support Faroe's promising development programme. It's worth noting too that Faroe retains a healthy balance sheet, with forecast year-end net cash expected to be around £88m, or 24p a share, thus offering scope for further exploration acquisition opportunities. And that's not being factored in to the share price, which is 20 per cent below core net asset value and on a near-50 per cent discount to risked net asset value after factoring in appraisal and development upside. The shares have obvious recovery potential, albeit largely driven by the future direction of the oil price. Speculative buy.
has put a speculative buy on FPM in fridays Investors Chronicle
Another 15% of Butch up for sale now Tullow are exiting Norway - lets have another rights issue - not!!
https://petition.parliament.uk/petitions/112044/sponsors/frRbCOsOLO6QqIN82UOX
As I suspected - no take up by Dana - or me !!
So another 6 million share's to raise circa £4.2 million at 70p - that's 2% off the share price and a rump to get rid of then
Little bit like the crumbs from the table with regard to shareholder participation in the DONG asset purchase. With additional 88 million shares now in play reflected in the 73p share price, I get the opportunity to purchase a further 1680 shares at the princely sum of 70p. POO volatility will probably bridge this gap, but 70p is now a very good baseline and a buying opportunity.
Be interesting to see if Dana was involved in the placing. 34 Million write down against its 18% shareholding, which is available for sale. Maybe they have more than enough and like the last time didn't assist. We will no doubt find out shortly
Timing is exquisite after two drill successes. Not to keen on my 100,000 shares being diluted, but its a bold move.
What are people thoughts on the purchase of assets from dong??
GLA
Apologies for board hopping; but ! The petition is going quite well; ~5400 signatures so far. Although it needs a boost. https://petition.parliament.uk/petitions/112044/sponsors/frRbCOsOLO6QqIN82UOX This petition was stalled in parliament since 12th Aug 15; finally green lit on 12th feb 2016. The FCA have finally replied, saying its nothing to do with them as they only deal with market abuse & insider dealing, now is your chance to have your say. If you hate seeing buys reported as sells etc!!!!!! Has already been sent to Martin Lewis, Daily Mail, Moneyweek & Watchdog. My local MP supported this petition by writing to the petitions committee to help un-stall it. There’s 650 MP’s in Westminster, So have you written to your MP? 649 to go! If this petition doesn’t reach 10,000; then imo we might as well have not bothered as it will almost certainly be filed B1N; @ 10,000 the government should respond. ONLY 8 weeks to go !!! So – If you haven’t yet signed or indeed have but haven’t passed it on to others, then now’s the time to do so.
the sidetrack will reveal, but for now 18m of gas and 21m of oil sounds promising ...
Having just offloaded Orlando, I could do a leap of faith and ruminate on FPM purchasing the Skerryvore 30% for the right price - that would give some synergy with PMG
That's both Brasse and Njord North Flank been given the green light. Its business as usual for FPM, whilst others sit on their hands during this prolonged downturn, they spin the drill. Admirable, and its time they lucked out. M & A must be tempting at the present time and it would certainly temper the markets reaction to another duster if coinciding - there are a number of tasty morsels that would cover the Njord shut in.
Where are you getting your figures from?
Apologies for board hopping but- The petition is going quite well; over 3600 signatures so far. Although it really needs a turbo boost. https://petition.parliament.uk/petitions/112044/sponsors/frRbCOsOLO6QqIN82UOX This petition was stalled in parliament since 12th Aug 15; finally green lit on 12th feb 2016. The FCA don't even reply on the matter, now is your chance to have your say. If you hate seeing buys reported as sells etc!!!!!! Has already been sent to Martin Lewis, Daily Mail, Moneyweek & Watchdog. My local MP supported this petition by writing to the petitions committee to help un-stall it. There’s 650 MP’s in Westminster, So have you written to your MP? 649 to go! If this petition doesn’t reach 10,000; then imo we might as well have not bothered as it will almost certainly be filed B1N; @ 10,000 the government should respond. So – If you haven’t yet signed or indeed have but haven’t passed it on to others, then now’s the time to do so. We really need a social / media savvy individual to help generate more interest in this. This petition will hopefully be the ring pull; sitting on top of the can of worms that’s allowed under the current rules and administered by the FCA.
Given it 135p. Looks quite attractive.
Should have added - some of its assets in the UK Sector
if AP is giving away its Norway Assets for a song - I wonder if we have picked up a musical ??
Decided it was time to dip the toe back into oil. Good article in D Mail today, looks like producers are coming to agreement on reduced output. Also note that Baker Hughes rig count is lowest for almost in living memory, down from around 3000 Feb 15 to around 1750 Feb 16. With Brent Crude touching $41/b today, must remember to fill up my c/h oil tanks!
You would almost think Kvalross was not water wet. I have a gut feel that some of Atlantic Petroleum assets may be coming our way. Long may it last
Not the news I wanted to hear. Plaudits for continuance of drilling operations, especially a pure exploration hole, but guessing a tad of pain today. M & A is preferable in this climate !!
Hi Peteb, good points there. Share price bottomed out at 43p. Interestingly the tangible net asset value per share is also around 43p. (essentially just removing the £140m intangible assets) So its interesting to see that the market has given it strong support at that price level and I don't think that is a coincidence. I agree I may have been too critical on the debt levels. As the current assets cancels out the current liabilities. Also a big chunk of the non-current liabilities. to go back to the market cap being bizarre I think in terms of valuation I always take intangibles out so i reckon market cap is about right.