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I suspect there are fewer convinced its a 'done deal' that you might supose. A lot of people are watching and waiting but in the absence of news, the Delek mouthpieces come on the board periodically and spout their mantra that keeping the shares is a waste of time and it's time to move on. I take comfort from the fact they would not still be around were the outcome not in doubt. I agree that stock picking can be a minefield and that's why it is so galling when you find a stock you like with real prospects only to see it bought out on the cheap just when it is starting to prosper.
Hi Roth, Yes, I'm confused by the conviction that many posters have that it's a done deal. I remember your heads up on Skerryvore. Thanks for that. Regardless of what happens here I'll be watching to see who gets that licence. I know less about HUR than I do about SOU. I took a look a while back and as I recall the oil extraction process is unconventional. I'm afraid I stopped looking at that point. I used to do a scatter gun on interesting plays but the time required to monitor the investment was more than the amount invested warranted. So now I only focus on established plays where I can build up a substantial investment over time which I then watch like a hawk. I'm an electronics engineer but don't go near tech companies and forget first mover advantage. In the mid 90s I was part of a team in Cambridge that developed the ADSL technology for a US company Westell Technology. BT were excited about the technology but spent three years looking at it before moving it forward. I'm sure you've heard of ADSL but I guess you've never heard of Westell Technologies. Later I worked on a location system based on the mobile phone platform. As an engineer It was an exciting and lucrative time. The technology was acquired by a large chip manuafacturer and it's now in use in every smartphone using location. But the investors in the original company got about half of their investment back. As for companies with gas in the ground, AIM is full of them. Most have their moment in the sun. Some fly most don't and I'm incapable of distinguishing between them. I'm always on the look out but focus on productive assets, and measurable cash flow. I think the oil crash is over and we'll work back to the marginal cost of production mid 70s - I don't anticipate a technology reversing an incremental increase - and short of a black swan event (not a basis for investing) I don't expect the spike in oil price many anticipate. All the best, Londoner7
Thanks for your calculations Londoner. I'm staying the course with you on this one. I think Delek will be watching the institutions and be guided by their actions. if they say 'no', Delek have invested too much time and money to just walk away. Another stock I like (but not at the expense of IAE) is Hurricane Energy. Huge potential upside (if the Halifax and Lancaster fields are connected) but the current oil finds are barely in the price, whereas a lot is already priced in to SOU. Just my view - don't want to be contentious.
North99, Thanks for the clarification. I hope you make 'a few quid on an improved offer' and good luck with your other investment decisions. I've been watching SOU. Looks like interesting times ahead awaiting clarification on the TE8 result. Guess it comes down to whether the gas shows in TAGI flow. Best, Londoner7
Londoner, I'm willing to leave a couple of grand to see if I can make a few quid on an improved offer. I wanted to get the majority out as I'm looking to top up my SOU and possibly get into IRG. No other reason mate. North
North99, why do you maintain a small holding?
After much consideration. Sold the vast majority of my holding here. Can't complain as I've made a handsome profit (bought a good few at 18p & 25p). Enjoyed the ride, especially when she sailed out of Gdansk. Shame it ended up like this, was looking forward to production. Good luck all North
I have no doubt that Ithaca will be taken out and I look to the likes of Artemis and Cavendish to set the price. As a smaller shareholder holding out for the bid process to complete the best way I can play my hand to maximise my investment is not to tender my shares until all possible developments have played out and then review and decide a couple of days before 20th April. As shareholders tender their shares that information is passed to Delek so they have a day to day view on the progress of their bid. Like the larger minority shareholders they will be holding out till late in the process in the hope that nervous or less experienced shareholders tender their shares early. The fragmented natures of the shareholder register means that Delek depend on this. This is one of the few bids where the combined actions of smaller shareholders make a difference. If the tender response is poor my assumption is that Delek will sweeten the terms - 'Blue Horseshoe loves Bluestar Airlines'. If you are in the nervous camp and ready to tender early you are working against my interests so I'd prefer you sold in the market. But that’s just my opinion. There are plenty of posters out there who believe they have certainty on the outcome of the bid who will tell you what to do. Londoner7
NAV is based on an estimate of future production rates and commodity prices. So amongst other things First Energy will have based it on a 30K boepd gross from Stella at a 50:50 oil:gas ratio (I expect a higher oil ratio). On commodity pricing they are weighted towards Futures Strip Pricing because they believe it best represents current market expectations. The Futures Strip pricing scenario predicts an oil price 5 years from now of $61. Honestly, if you based your investment decision on an expectation of $61 in 5 years time you would not be invested in Ithaca in fact you’re unlikely to be invested in the oil sector. Incidentally, the Reserve Evaluator Consensus Pricing scenario has a price expectation of $77 in five years time. Closer to my expectations and more in line with the marginal cost of oil. To determine the value today of future cash flows First Energy calculate a discount rate of 9.6% - 10%. (The lower the number, the greater the value of the company.) In reaching this range they use the beta of ‘comparable companies’ which no doubt includes two highly indebted peer companies in the North Sea, Enquest and Premier Oil, which have been and still are, under considerable market pressure due to their debt load. So IMO this results in a higher beta than is warranted by Ithaca. Another factor in the discount rate is the cost of debt. Ithaca’s cost of debt is substantially due to the 8.25% paid on the $300 bond facility. A facility that Ithaca’s financial officer guided in the Q3 call would be reviewed in 2017 after Stella cash flows are established. Bottom line, First Energy produces a NAV range of C$1.00 – C$2.10 so we’re meant to feel good about an offer of C$1.95. So let’s narrow down the NAV to something which takes my expectations into account. The NAV under the RECP scenario at the 'low' discount rate is C$2.54. What I find very odd is that First Energy put forward a low case and high case of 9.6% and 10.0% respectively for the discount rate, as if it could be determined even close to that level of accuracy, with so many assumptions. For the reasons I outlined above, possible Stella production above nominal guidance, the expectation that the 8.25% debt facility could be refinanced from near term Stella cash flow, and the use of a dodgy comparable beta calculation, I can easily see 1-2% off the discount rate. Based on First Energy’s own numbers this adds between C$0.27 and C$0.54 to the NAV. I now have a NAV between C$2.81 and C$3.04. A bid premium would be in order. A modest 10% takes the NAV to between C$3.09 and C$3.54. Based on my assessment of First Energy’s figures, C$1.95 isn't tempting me to tender my shares! Artemis, Cavendish and others will produce their own assessment and will have 2016 full year financial numbers and an update on Stella to take into account. I have no doubt that Ithaca will be taken out and I look to the likes of
What about the scenario Delek's bid passes and they delist the company? It might be very awkward trying to sell your shares then, liquidity would be a big problem. The other scenarios I agree with.
That post post doesn't take in account the following scenarios: 1- Delek's bid doesn't pass the 50% level and Delek increase the bid. 2- Delek's bid doesn't pass, never bid again, Ithaca results pop and so does the stock price. 3- Delek's bid pass (the remaing shares keep trading in that case), Ithaca results pop and so does the stock price. 4- Delek's bid pass and they make other bids in the future trying to reach the 90% level that would trigger a forced sell of the remaining shareholders. 5- Another bidder jump in. And all these scenarios will be influenced by the coming oil price trend... Just my opinion
Indeed. Strange that monkey_spank didn't mention that possibility!! Delek obviously not confident of getting this shocking deal through.
BUT if the shareholders are going to reject it then Delek may up the bid price and you will lose out having sold, so makes no sense selling now if you think that is a real option...
I suppose we have to accept the Delek cheerleaders will be out in force over the next few weeks! Ah well, as Londoner suggests, put the kettle on and ignore the noise.
If you hold and the bid is accepted you will get $1.95 CND. If you hold and the offer is rejected then the share price will plummet as it did back in 2012. If you sell now and the bid is accepted then you will have lost nothing. However, if you sell now and the bid is rejected you will be able to buy back into the company at a considerable discount. It is clearly foolish to be holding this stock at this point.
The more I think about this, the more I come to the conclusion that Delek will be happy with anything over 50% (including the 20% already owned), hence the low ball offer. I suspect they want control of a listed vehicle to pursue their North Sea ambitions. Some clues; "the Directors believe that there are limited prospects for delivering a step change in the scale and operations of the Company without the addition of significant capital". "· While the AIM Rules for Companies ("AIM Rules") do not prescribe the required levels of free float for a company to be eligible for trading on AIM, depending on the number of shares purchased pursuant to the Offer it is possible that the subsequent remaining free float could be insufficient to satisfy the criteria for continued admission of the shares for trading on AIM. · If the Offeror acquires sufficient shares under the Offer it could be in a position to force delisting or cancellation of the Company's shares from AIM. Under the AIM Rules, cancellation of a company's shares from trading on AIM is generally conditional upon the consent of not less than 75% of votes cast by its shareholders given in a shareholder meeting". There is unlikely Delek will get more than 75% take up. So we could end up with shares in Ithaca Mark2 listed on AIM and used as an acquisition vehicle by Delek. I wouldn't be unhappy with that - could be a very lucrative proposition!
are available on the Ithaca website under a tab Takeover. There is no need for private investors to take or consider any action until the big boys come out. Delek need 50%, we can sit tight and await developments, including the update on Stella in a week or two. Delek are now commited to paying out on >50% acceptance at a minimum of C$1.95. As someone recently pointed out. Put the kettle on and put your feet up until the Stella update. Londoner7
Oh aren't they considerate, not wanting us to risk our money any further, a historical event on AIM no less. A few months ago they couldn't get enough of it. Starting to play things down already, practicing for the big results play down no doubt. Absolute joke.
Doesn't seem to say anything new from the last release - why did it take so long? Seems they have changed their tune from being positive and bullish in the tough years to only focussing on the negatives and why its a great offer (now less than last time because of FX)
As expected, an understated RNS. Holding back information so we can`t work out how much oil we are pumping. An utter disgrace.
Anyone near our stella rig who can offer some info?
Keep calm. Put the kettle on. Put your feet up. No one will decide their response to anything until we have the bidder's documentation.
It takes a while to ramp up production and there will inevitably be teething problems - especially based on past performance. There will be some useful data int he results but it may not be we are at full flow rates and that does not really matter. We should give it 6 months to establish plateau and that would be the time to price this bid. Right now you probably have enough facts to downplay or ramp the story depending on your perspective. Given they have to defend the £1.20 bid, they may well understate the news whilst being factually correct. Our issue is one of trust and the timing of the bid and everything around it just smells wrong. So not the best way to present the results - which absent the bid would for sure have been rosy!
Only a couple of weeks away max from knowing a lot more about the companies results/stella numbers/ delek offer letter. It will be interesting to see how this share reacts in the run up to news. I have a feeling that stella is going well. ALB
Hi Roth i was thinking that every other oil share going down, must mean some big investors still holding here