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You make shareholders sound like a bunch of suckers. Come to think of it…
I'm not sure why we are arguing about events that are beyond our control tbh. As holders we hope for a good outcome & that is pretty much it.
Glalth
Thanks Jack - absolutely, I thought the sale would be done long since. I underestimated how long it would take the buyer to complete its due diligence (my fault, big oil is nothing if not slow) but in fairness pretty much everyone else who guessed got it wrong too. But by trying to completely change the argument should I read that you are admitting that you both misunderstood and misrepresented my statements earlier today around Victory NPV vs sale price? Because you did, and harking back to predictions on sale timing doesn’t change that.
Anyone heard what is happening in Romania over the last year. The silence on Parta makes one wonder if that is another 'dead duck' or whether the begging bowl from our company Danube Petroleum will also be out for funds from Victory, as well as Rathlin.
Looks to me like the first RNS will be to do with Rathlin. I'm expecting their results to be in the public domain by next week at this time. The groundwork will be set then for investors to understand why there will be no dividend. The monies received for the sale of Victory will be used to finance further development of West Newton 'and other 'assets'; they usually throw that statement in for more obfuscation. I'm afraid those looking towards a financial payback will be disappointed. For those who are completely hooked this type of pronouncement will be more acceptable than a 20 or30 quid average dividend, and the dynamic duo know this. So there you have it. No divi but a promise of transformational assets coming up trumps over the next few years via the investment that Victory provides.
Smythery
Can I read ?
What all 24 of your slush posts.
“And Victory news will come by mid June - the buyer’s KYC on Corallian holders shouldn’t take more than a month or so.”
I think the only KFC you have any idea about is fried chicken.
Try to post something useful for a change.
Space cadet
Jack
“where the main variables have moved in favour of the Seller” Yes the gas price has risen which will mean a greater interest in the asset. However the variables that are fixed are the fact that the owner cannot develop the asset, either technically or financially. It cannot raise debt against it in the current market , and the equity markets are closed, and have been for a while esp for one asset non producers.
So at the end of the day the trump card the seller has is only that they hope to have more than one bidder. The trump card for the buyer is the seller does not have any other options, and if there’s no exclusivity to the non binding offer, they have the whip hand in setting the price and terms, regardless of any NPV calculation.
Just bought back in after selling out after the West Newton shambles and consistent 'in the know' corruption allowing certain people in/out before news. I'm back in because the gas assets are now far more valuable and there's a chance someone makes an offer for West Newton out of the blue.
Just read through a few posts, is Victory actually up for sale or are people just discussing the NPV etc?
All the best
Ok Jack
I’ve said what I think it will sell for, how about you ?
Jack - beginning to wonder if you can read? Have another go at what I wrote, slowly this time, and you’ll see that my point was not that the NPV is not a useful indicator of value, but that you can’t take the NPV and apply the forward gas price and think you’ll get to a number which is anything like what a buyer will actually pay.
Deemule - I don’t much care if you think I’m a holder or not, but I am, and am willing to bet I’m in this share deeper than most. That doesn’t mean I’m deluded about the potential sale price of Victory though, and it’s going to be frustrating when the price comes in as a few tens of millions for RBD, as there will be many people claiming management have undersold the asset, whereas in fact it’s their own assumptions which are utterly unrealistic. I very much hope I’m wrong and it sells for megabucks, but I don’t think it will. Happy to hear about any recent comparable transactions that suggest otherwise. Fire away.
RNST,
As you are aware, the oil industry use NPV10 to standardize value reporting of a particular proven reserve. Obviously to use this model, there would be a reasonable expectation of certainty that hydrocarbons can be recovered from the field.
The cost of capital is academic, and not intended to use individual WACC (Weighted Average Cost of Capital), as that would make NPV models non standard and not fit for the purpose they are intended. A Seller or Purchaser/s would all have differing WACC's, but NPV10 is a standard.
You quite rightly say that ANY NPV 10 is as good as the assumptions made. Slide 16 & 17 show the assumptions made back in 2020 by the Seller.
https://reabold.com/wp-content/uploads/2017/10/Reabold-Victory-Presentation-FINAL.pdf
Since then the modelled resource has increased, c93% tax breaks are available on the CAPEX and the price of gas has dramatically increased. All three of these variables would be in the mix with any perceived risk and uncertainty, the Purchasers WACC, Tax status, access to common infrastructure and available Markets.
Let's call the 2020 NPV10 a benchmark, where the main variables have moved in favour of the Seller. Anyone who argues against that is quite frankly nuts.
We are closing in on end time when all will be revealed. I personally think the PRICE will be based on the satisfaction of Shareholder returns on what they think is acceptable.
Nothing else matters....
Jack
GG Again Putin has done RBD another big favour Parta which is huge.
Development will be funded by the EU to a large extent and the Romanian Government has cut the taxes on developers and producers as their taxes had been too high. They need what we have got lot's of gas and condensate.
Hopefully we can get back project progression after this. Almost there one way or the other, got to have some guts to invest in AIM regardless.
"Basically rubbishing the NPV"
He wasn't rubbishing the NPV, just pointing out its not the same as the sales price of an undeveloped asset in a limited market.
This is classic aim small cap promotional stuff, its correct as a number, but it's not a guide to the real value now.
The NPV is a simple mathematical calculation based on an un risked DCF relying on an a set of presumed costs, volumes and dates, all of which are best estimates.
It doesn't address the inherant risks of, actual reservoir performance and deliverability, recoverable volumes, actual income costs and timeframes. It also assumes a cost of capital of 10%, which is way below the cost of capital for a speculative Aim company...
The reality is some investors think it's the current "value" and so unsurprisingly expectations are set in the 100's of millions and inevitably they are dissapoinbted and cannot understand why it was sold "cheaply".
I guess we'll see shortly...
Touched a nerve ?
"people taking the NPV and applying the current forward gas price or anything even close have absolutely no idea"
Basically rubbishing the NPV or anything close.
Not a clue........What a dick !!
Jack
Smythery you are not a holder here green coffin club for you.
Jackdiamonds - I didn’t say NPV was irrelevant did I? In future please keep your critiques to statements which people have actually made.
Truthfactory - no-one sells forward 2024/25 gas, there is almost no liquidity that far out. And you certainly don’t sell forward when you haven’t yet started to produce, it would be absolute madness. Any delays to first gas and you’d be stuck fulfilling your supply contract on the wholesale market at huge expense.
A few usually means no less than 3 and no more than 5 in my book. As I’ve previously posted it depends on the presence, if any, of milestone kickers in the deal, which is the easiest way to Bridge the gas price expectation/reality conundrum.
What's your version off a few 10s of £millions ...2 x 5 x ..10x ....15x ???... Without being more specific you could claim to be right even if you turn out to be wrong !!!!
“You do know that oil and gas majors forward their inventory don’t you?”
Majors usually don’t. , it’s called hedging, and nobody of any scale takes out long term hedges. Usually the smaller/mid caps hedge sufficient to protect their upcoming Capex budget. Investors would get pssd off if majors hedged their forward production as they lose exposure to commodity prices.
I guess we’ll see soon, but id be surprised if it went for more than a few $10’s mm based on similar small to modest UK gas Development projects being hawked around at the moment.
Smythery
I think you are deluded stating that NPV is irrelevant in business transactions.
Victory is already at an advanced stage, as stated below, so I feel your comments are not correct.
“Victory is in relatively shallow water, close to pre-existing subsea infrastructure, allowing a cost-effective tie-back solution. It is fully appraised and requires no additional pre-development drilling. A recently compiled CPR has ascribed recoverable resources of 179bcf1 of dry gas to the field, which is situated in an area of significant infrastructure, meaning its development is expected to be simple whilst providing meaningful gas resource to the UK.“
We are not advocating swapping 50p a therm for £4.25 current but any business people would recognise that the value of the underlying asset has changed significantly.
https://d1ssu070pg2v9i.cloudfront.net/pex/kistos/2022/02/22095604/GLA-acquisition.pdf
Even looking back to Jan 22, when the price per therm was c£1.80, there was a 40million contingent gas price payment (See page 3 of attached)
These are definitely not the same assets, but the business metric was there to account for widely fluctuations in gas prices.
That is even more apparent today.
Jack
PS Nice to see the Corallian Victory field on the graphs, illustrating the closeness to infrastructure !
Smythey, you are spot on, 2024/25 before production. Who knows what price gas will be then, bet it's a lot less than now. 20 million tops for me
Countryman - please, show me evidence of anyone paying >£100m for an undeveloped gas project in the North Sea, Norwegian continental shelf or anywhere else. Victory is not going to produce gas before 2024/25, if - and this is absolutely key - it ever does. Because this is not a sure thing, and a buyer will not pay up assuming it will definitely produce, it will be risked appropriately. It’s also not a huge project by any means. I am as keen as the next person (I suspect more so) for a good sale price, but people taking the NPV and applying the current forward gas price or anything even close have absolutely no idea
You maybe your correct as I do not know the full details on the negotiations..... But it seems very odd to me Corallian would have to pay Reabold a 1/4 of a million within 90 days because the Reabold negotiaters failed the process ......I am thinking a very good sales figure should be achievable because at the heart is ownership off a commodity which has undergone a seismic upward shift in it's value since Victory was first acquired....
Lenin I think I heard somewhere that because of the dynamic duo's financial accumen that they would be the lead negotiators on the sale of V.poiu nobody is surde of a potential strike price so we have to wait & see. Personally I would be disappointed with 30 mill.