Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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@Tamovv - Yesterday's market reaction exposed the harsh truth - we operate in a traders' arena rather than an investors' domain. The herd mentality fixated myopically on the near-term 3% sale, disregarding the seismic 120% production surge projected for 2030. However, my mantra remains unwavering: "Don't argue with the market, exploit it" :)
To me, the crowning jewel of yesterday's presentation was the chart on p.17 (https://ithacaenergy-files.fra1.cdn.digitaloceanspaces.com/Documents/Business-Combination/2024.04.23_Combination-Of-Ithaca-Energy-And-Eni%E2%80%99s-UK-Oil-And-Gas-Assets.pdf). Observe how the combined entity's 2P reserves dwarf Ithaca's current 2C contingent resources, a disparity so vast, it alone is sufficient for me to be in favour of this deal. The synergies Mr. Lewis emphasized in his answer at the end, coupled with the prospects of an elevated credit standing and augmented short-term divis, are the bonus.
Can´t wrap my head around todays SP (non) action. Thought the recent drop was caused by weak Q1 production, which is negligible now given the accreditive production for old non-diluted shareholders. Fears about a dividend cut aren´t valid any longer too. So the recent SP drop has been solely caused by political statements / expectations around laber in my opinion, otherwise we should have seen some reversion today.
Q&A session was rather lame today, not many additional useful information in my opinion.
Anyways, I still like the ENI move. My model shows tax loss consumption by the end of 2028 now. Until then the ENI assets contribute to CFFO after tax (also on a 61,5% basis for non-diluted shareholders). Dividends for old shareholders approx. 1,4 bUSD at current commodity prices by end of 2028 at current commodity prices (without any windfall tax 75 to 78% worseing effect of course), which is close to current market cap... Still feels crazy undervalued to me, but maybe I am totally wrong and things around O & G in the UK will indeed turn absolutely terrible under labour and Cambo finally gets cancelled etc.
In any case ITH is a highly political stock and big bet on the industries future. However, the ENI deal de-risked the political exposure for old-shareholders in my opinion given additional optionality, so really don´t understand why there wasn´t any move today. The delek sale of 3% can´t be that disturbing or am I wrong?
Agreed a good deal. The market overreacted previously to the fall in the production forecast and anticipation of a reduction in the dividend.
Well even considering the enlarged shares in issue the impact on the dividend payouts is really negligible now considering the enlarged group will be able to develop it's assets with ease, reduce costs and produce significant amounts of cash for significant further acquisitions. The SP is excellent value for those who look beyond the next dividend payment. Disappointing reaction this morning but anyone with eyes should see there's value to be had here.
Tamovv - “…… might be caught on the too optimistic side again, but this reads between the lines as UK politicians are not complete idiots ……”
🤣🤣🤣
However, it is an election year so anything said by either party should be taken with a generous pinch of salt ……
Well...to be honest, it is actually MUCH MORE than I have been waiting for (expected).
Especially the special dividend announcement in massive news in my opinion.
As I have presented on this board, I was expecting a 2024 dividend of around 180 mUSD given the very weak reported January/February production (and of course all other known headwinds on ITHS dividend capacity).
At a first sight the ENI UK transaction looked fair to be, but not as good as the HBR/Wintershall for example. Now it looks like they are either completely "overpaying" shareholders from debt. capacity (but I doubt ENI is in for the short term slaughter of debt. capacity), or the short term 2024/2025 synergies of the proposed transaction are significant.
I am very pleased to see the new production guidance, taking ENI UK contributions starting from H1 into account. The standalone Ithaca part seems unchanged, thus I see it as reconfirmation that Jan/Feb actual prodution already was included in the initial guidance mentioned presented for the standalone basis.
(up to) 500m dividend for 2024/2025 ("real dividend" payed in two regular tranches, not as the initial 400m "cheat" stretched over 3 tranches) means up to 307,5 mUSD for old shareholders like us on a non-diluted basis. Thats obviously much more than I expected (20,6% forward dividend yield based on yesterdays closing market cap).
Corporate governance is about to improve significantly with Eni directors to be nominated to join. Shareholder structure to be more balanced. The only short term drag on the SP could be Delek forced to sell 3% to the public, but this should be more than overcompensated by the special dividend outlook.
Interesting to see them having mentioning Norway several times during the last Q&A sessions. Now they show Norwegian Var Energi (ENI subsidiary) as a full powerpoint slide success story of Eni. I might be caught on the too optimistic side again, but this reads between the lines as UK politicians are not complete idiots and that there is something useful in the making for UK O&G in general.
No investment advice (I am much more invested in ITH as I should be and thus heavilie biased), but I see the SP flying today.
As expected, The ENI news we’ve been waiting for …..