Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
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Ralph, Sea Lion is going ahead, oil will flow from the Falkland....IMHO-DYOR
"which is expected to get FID later this year" hope so.
Thanks to Malcy's Blog:
Borders & Southern
I wrote briefly about Borders & Southern recently, on 1st March Harry Baker took over as CEO and he kindly invited me in to meet the team and look at the maps and squiggly lines that I hadn’t seen for many years. I met with him, Finance Director Peter Fleming and Business Development Manager, Bruce Farrer.
There is clearly an enthusiasm at the company that I for one hadn’t detected before, the company has three production licences in the Southern Falklands Basin, 100% owned and the operator. Readers will know that fiscal terms locally are favourable with a 9% Royalty and CT of 26%.
There have been both 2D and 3D seismic operations completed and a drilling campaign which discovered the Darwin field with its first well. Darwin is a 3.2 tcf wet gas discovery with, two adjacent tilted fault blocks, Darwin East and Darwin West which have an un-risked best estimate of wet gas initially in-place for the combined area of 3.2 TCF and for gross Contingent and Prospective Resource of 462 million barrels of liquids (condensate & LPGs).
Most importantly, the significant amount of liquids makes the discovery economic at current economics in its own right and with near field prospectivity there is very decent upside. I get the impression that the primary move for Harry Baker as incoming CEO is to monetise this discovery and with a data room open that option is route one.
But as he said to me in our meeting ‘funding is the key to unlocking this asset and there are very few projects around the world with its risk profile’. Indeed we both feel that with a great deal of under investment of late, partly created by ESG and a misread of fossil fuel demand, companies are competing for more, not less substantial opportunities worldwide to fill their hoppers.
This makes a number of things that might happen quite important to B&S, firstly there is the small matter of the Sea Lion project still underway in the nearby North Falkland Basin which is expected to get FID later this year, should that happen it would surely give the SFB a significant boost. Another positive is that there are plenty of rigs in the Namibia area for obvious reasons and that mobilisation from there is a simpler task than most.
Accordingly I feel that this is a brilliant opportunity for Baker to use his industry knowledge and perhaps more importantly his financial heavy lifting skills to develop this asset which is one of very few worldwide projects with the opportunity to make a difference.
Https://ukdefencejournal.org.uk/argentina-has-purchased-24-f-16-fighter-jets/
A good decision and will hopefully result in more western investment in the Argies' own resources, including energy.
Guess should've said award there rather than settlement!
@SH re FIG. I'd say (well, already have on here!) that signing off on OM prob involves a good indication of tax status on the deal, a 24/5 year event. May be why it only gets done in next weeks/months.
Would frankly be ridiculous for FIG to get, or even really to ask for, a cut of a settlement that is wholly for net of tax profits taxed elsewhere (Italy). Its restitution for something FIG wouldn't get anything of.
Indeed Paul, LTT was bang on the money.
One would hope in this case, seemingly quite clear cut, that it's more a few months at the most. FIG are the disappointment for me atm though.
Thanks SH - in line with what LTT reported.
Judging by other cases the outcome could take anything from a few weeks to 12 months but hopefully by the end of the year.
Still no news on the sale of the award being signed off but I’m sure that’s just a formality.
Latest Development:
April 11, 2024 - April 12, 2024 - The ad hoc Committee holds a hearing on annulment in Madrid.
Yes TNM, I did indeed (unintentionally) press the 0 button twice on my mobile whilst typing that message. It's easy done on a mobile,although I did correct it for the next post when mentioning Ithaca.
I hope it didn't cause you too much distress and trust you will accept my apologies for pressing the 0 button twice 👍
ChessM
«Ithaca Energy = Production 700,000
Market Cap 1.25B «
I think Itachas production for 2023 avreager 71000 barrrls per day so I think you got a zero extra :)
Best regards
N
SH ,No one's figures are right or wrong at this stage so all opinions are valid and welcome 👍.
I would much prefer yours than mine as I tend to er on the side of caution having been in this aim game for 25 years.
Naturally, if production ramps up to 200/000 as hoped,or even 100k,then you will get your multiples of £249mln and there's no reason to suggest, that in time, it won't. I was only referring to 15/17000bopd.
60/70k net to rkh would be a totally different ball game & a mkt cp of £1Billion+ is certainly possible then as we see with Ithaca, who produce 70,000.
A well presented post overall 👌 and I gave it a tick.
Thanks as always Mogger. Of interest
'‘....on the financial plan that Navitas put together to deliver Sea Lion’ 5.10 minutes
Begs the question, have Navitas already sorted out the financial aspect??
Chess,
1. I stand by my figures as they are based on current POO and Navitas data.
2. 50,000 bbl/d 17,500bbl/d net to Rock is the initial phase. Navitas stated the long term potential for the Basin could utilise up to 3 FPSOs with a total production of approximately 200,000 bbls/d, 70,000bbl/day net to Rock.
3. Your examples are for UK listed companies, who are subjected to approx 75% 'daylight robbery tax' until 2028 I believe. A socialist Gov will likely increase and extend that tax'
4. Your example Enquest Production 43,000 Market Cap. £325mln. ENQ's SP has halved in the last 2 years btw.
Results for the YE 31 December 2023
'Statutory reported LOSS after tax $30.8 million'.
5. FIG are taking just 35% tax and royalties.
6. Rocks estimated debt of $455m to get to first oil will probably be paid off in 2 years of production
7. Navitas/Rock have $700m of tax to set against taxable income, so presumably just 9% royalty to pay for the first 12.5m bbls produced.
I'm in two minds whether you are a subtle deramper, or just trying to trying to lower expectations.
It's always good to disagree AA but I don't know what your disagreeing with because I never said or thought the share price is solely made up from production, that's why I stated each case was 'unique' !
If you read my post I was actually saying to SpaceHoppa that the shareprice is more complex than the bopd X oilprice and I gave numerous examples of mid-sized UK oil producers to back that point up.
My other main point is that, contrary to Spacehoppa's statement, you will not have a market cap multiples of £249mln on 15/17kbopd, regardless of anything.
I totally agree that tax royalties/reserves, location,production costs ect all play their part alongside production to determine the shareprice.
Agree Paul, disagree TCM.
Valuation doesn't just depend on the production levels and as Paul mentioned, reserves and tax rates play a big role.
North Sea oil is not the same as Falklands oil - each barrel of oil from the Falklands basin is equal to 3 barrels of NS oil - this is based just on the tax differential.
Then comes reserves - North Sea is not full of oil anymore. Reserves are scant. Companies like Enquest barely have 2yrs of reserves not matter what they say in their annual reports. When oil was $110 average during 2010-14, reserves were valued at $10 per bbl. When oil prices goes above that level you can expect the reserves to be taken into account in valuation.
Thanks Mogger. Good to hear the EIS has now been submitted - a lot still to do on the FIG end by the sound of things but all being well things should be in place for project sanction by the end of the year.
Thechessmaster
Valid points, however the variables such as taxation and risk premium would wary wildly across the companies you have listed I imagine. And in those two categories I think we should be placed better than your average Oand G company
Thanks to Mogger; .
An interesting insight and one gets the impression Navitas are serious & very keen to get things moving. Roll on Funding & FID.
All,
Some interesting information for your delectation
https://youtu.be/U1tC0RRZqik
Mogger
If we get FID & OM in 24,then a £200mln mkt cap is certainly not unreasonable ,that's around 32p, which, all things considered, would be a good result !
Totally agree Paul 👍, that's why I said each company is 'unique' but Rkh is not going to be valued at many multiples of the £249mln SpaceHoppa suggests on 15/17000bopd.It simply doesn't work like that in real life as you can see by the above uk mid-sized producers.
These comparisons are a bit pointless given the difference tax regimes, 2P reserves and decline rates.
Lots of different factors will come into play, not just production levels.
Ithaca Energy = Production 700,000
Market Cap 1.25B
Tullow Oil = Production 62000
Market Cap £549
Enq = Production 43,000
Market Cap. £325mln
Gulf Keystone
22,891 Bopd
Mkt Cp £261
Capricorn Energy = Production 30000
Market Cap £157mln
On the above basis, Rkh can be reasonably expected to be valued around £175/200 mln on production of around 15000/17500 bopd.
This is the reality & is very different from doing Daily Production X Oil Price !
Spacehoppa, That's all well and good posting figures like that and whilst I agree the shares will increase in line with profits- figures like that are a gross oversimplification because in reality it doesn't work like that because they will also be continually investing for the future (after debts paid) so it will never be total earnings @ high price = total profit like you portrayed.
For example ; let's look at Harbour last year, operating costs $16, $3.7Billion revenue @Oil price of $82.50, so massive profits expected yeah ? ..No, Profit after tax was $32 million.
Harbour is just an example, you can X bopd by oil price on any producer and the profits are rarely simply the figure of the two.
Of course, each company is unique and rkh will be vastly different to Harbour but the point is you can't simply pick a high oil price X it by bopd and expect that to be the profit, it rarely, if ever works like that as new capital is always required for growth & the future .
Also, the project won't start @ 50kbopd and they must pay the debts off first , so it could be 5/6 years ( depending ) before profits start rolling in and many investors want to see returns sooner and that's why a T/O may appeal to some holders.
As a guess, I think a more realistic profit figure for rkh would be around £100 to £150 mln a year as I take a more conservative $70 and production will not start a 50,000 and no one knows when this will be attained. I also expect new wells to be drilled as the basin opens up and more development costs once the debts been paid off so it's a gross oversimplification to simply times daily production by a high oilprice.
Personally, I will bank some profits along the way to production but may also keep some for production & beyond as once rkh get FID this becomes a compelling medium term investment and regardless of the lack of market participants - the shares will nevertheless increase in value, just not to the degree most of us would like or expect.
The maths with POO at perhaps .....$85