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Happy investor, I'm not quite as pessimistic as that as I don't think debt holders would want to force a fire sale of assets at current prices. If I were a debt holder I'd be happy with the deal that was being suggested but I'd be insisting half the free cash flow went to paying down debt. Another possibility would be a debt for equity swap which would put the company of a much firmer footing and would allow for an attractive merger.
Whatever though I'm sure there will have to be an rns before markets open on Thursday.
looking a little grim here if oil price doesn't bounce strong today. SP 16.15p
This is an excellent point and one I have previously made albeit not with your eloquence and detail.
However, the problem is that any company reversing in would acquire a lot of debt and much of it is a mish-mash rather than traditional reserves based lending. I don't think many companies would want to take it on.
Some of the assets are attractive and lenders may choose to force PMO into administration to sell off assets. I think:
Cairn would probably be interested in Catcher but there would be other bidders, for sure. Of course, PMO operate Catcher so whoever took it over would assume operatorship responsibilities.
Tolmount is close to first gas. The likes of Delek might be interested.
The South East Asian assets are mature but highly attractive (being close to growth markets) and should be quite easy to sell even in the current climate. There's exploration upside in Andaman, too.
Zama might attract an American oil company willing to take a punt at a keen price.
Then there are other bits and pieces in the North Sea...
I don't think creditors would get all their money back. But they won't get their money back with PMO's current strategy anyway. So, perhaps they decide it's time to cut losses?
Last month Reuters had this story:
"TEL AVIV (Reuters) - Israel's Delek Group DLEKG.TA said on Monday it is in talks with third parties about a possible merger of its North Sea energy operations, as it reported a second quarter loss.
Merging Ithaca Energy with an international group would be part of a process of turning it into a public company traded in London, Delek said in a statement, adding that it also expected to receive a cash payment under the plan being considered."
Now how many international O&G companies are listed in London can absorb the Ithaca assets and pay in (lots of) new shares such that in effect Ithaca becomes a "public company traded in London"?
The reality is there won't be a take over. Premiers recent announcement of discussions with Chrysaor were an important signal to what will likely happen. North Sea Private Equity oil co's cant IPO so will need to reverse in to existing listed entities.
Graeme Sword of Blue Water one of the bigger oil PE players said this earlier this year in Energy Voice after failing to sell Siccar Point...
“Looking ahead; I think there’s going to be quite a lot of activity, one way and another. But it’s going to be through mergers. It’s going to be potentially private companies reversing into quoted companies. And perhaps it could take the form of PE firms injecting capital into public companies which have tended to have fallen faster and further than those in private hands."
Its clear PMO are a target for PE players with North Sea companies that can't sell or float. As its a reverse then the management and key shareholders/debt holders will call the shots. The obvious candidates for reversal into are PMO, ENQ, Tullow and Cairn. The obvious candidates to be the reversor are Chrysaor, Siccar, Ithaca(Delek) and perhaps Zennor, Neptune are perhaps a bit big for this but nevertheless an IPO is not doable in the current climate. There is little option when PE money has a 3-5 year life before they want their return...if they cannot float or sell, then the next best thing is swap for ready listed paper they can eventually sell.
Gain considerably more on a take over
Of course an announcement of a waiver could still come this afternoon or by tomorrow. One would have to surmise that a waiver is still the likelier outcome should talks be making reasonable progress.
However, this is now a share that could easily lose 50% on no waiver or gain 10% perhaps on a waiver. It is not a good gamble imho.
Best
Happy