Firering Strategic Minerals: From explorer to producer. Watch the video here.
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On a net valuation basis post the latest Nigerian CPR
1413m shares and £1=$1.275
Base case valuation at just over $60/b oil price.
Uquo & Stubb Creek 2P & 2C = $439.4m. Accugas = $636.3m. Total = $1075.7m = 59.7p share.
At end of June 2023 net debt = $443.4m.
If the net debt hasn't reduced and is still the same as of mid year 2023 - then with roughly $59.5m Stubb Creek acquisition costs to add to that ( less almost 7 months reduction for the effective transaction date for 75% of the cost) = approx $55m in total.
Net debt perhaps $498m = minus 27.6p share.
Net value (after debt) for Nigeria around 32p.
In Niger, Reclassifying the 33 mmbo 2C to 2P at $4/b = $132m or 7.3p share.
In the absence of S.Sudan i get an overall value of 67p less 27.6p in debt = just under 40p/share compared to 26p now.
*** Above is my baseline for not making any reactionary decisions re price swings come what may re S.Sudan ***.
Obviously the faster the net debt reduces, this should translate to an increase the share price.
I would like to think that with the S/Creek oil acquisition, it will help to reduce net debt faster, dollar liquidity etc and also from some more gas sales after compression completion etc.
Given the resource upside in Uquo and S.Creek, i'd expect the next few years production to be more than replaced there.
Also the 2C Gas at Stubb Creek when reclassified to 2P should also help increase the valuation beyond the current core value.
With Chad playing out in the background, one other way of significantly or eliminating the net debt is the award (if any) of substantial damages for the loss of the Chad oil fields and pipeline and also the Cameroon pipeline interest in a seperate issue that is not included here - nor have i included the Cameroon valuation.
In the absence of any further acquisitions and as we stand we have the 2 billion bl + exploration potential in Niger - but getting more value there depends on how soon we start to return to proving up barrels and adding to the share price.
The unknown is S.Sudan. If it completes at a $1,250m cost and if this is reduced by now down to a net $400m debt at completion to pay - it might leave up to $850m core value or a net 47p/share provided no dilution etc and if the oil is not shut-in for any length of time.
Roughly equates to 87p net = around RockyRs revaluation estimate with 50p on top for $900m net debt = 137p when net debt eliminated/net cash positive + upside from getting a move on in Niger exploration ?
Thanks Zengas, appreciate your thoughts and taking the time to articulate them to us. RR will be chuffed that you've confirmed his thoughts on the sp, albeit with a tad more reasoning ;-)
K - that really did make me laugh. Hope you’re well mate and enjoying sharing all our frustrations when let we twiddle our worn out thumbs.
Ha, yes, all good thanks RR. Busy decorating my son's new house (for free) so not got much idle time at the moment. Fingers crossed for something positive on SS in just over a week, but not got a clue how that one is going to turn out. Would be nice to get back trading again for sure.
I know some posters were saying 15p on return if no S.Sudan, but i never seen any workings to say why it's worth that.
Therefore without sticking a finger in the air to get 15p (why not 18 - 13 - 21 compared to a nice round 15p) it's as much for my own benefit not to make a reactionary decision just because others might and try and understand the sum of the parts valuation.
Whatever happens and at some point we get back to being unsuspended, perhaps the directors might show some further support by buying and demondtrating confidence at whatever price.
Last buy was from the new Chairman with 6,095,726 shares at 26.25p for £1.6m.
I cannot wait for the Zengas £2 party. Bring it on Zeng, start booking venue.
You all are amazing posters. Thank you so much!
Even without SS but with this new deal let’s hope price will keep.
''In the absence of S.Sudan i get an overall value of 67p less 27.6p in debt = just under 40p/share compared to 26p now.''
My rule of thumb for a long time here now is to divide Zengas's - brilliantly worked , in fairness - valuation analysis by two and go with that as my s/p target view here.
And 20 p instead of that 40p figure he works below is not far off my view on this maybe - but hopefully not, obviously - going as low as 15p ish on coming back to trading here if South Sudan kinda dead in the water then, and no other major deal completed - or in an unequivocally advanced state - at that time either. (I'd add on top the recent RNS - Consolidation of Stubb Creek Field Interest - as a small medium positive to push my 'maybe going as low as 15p ish' view up a bit towards that 20p figure)
I note my previous share price predictions over the years here versus Zengas's versus the actual s/p chart as support of my rule of thumb... and believe that to be a reasonably compelling support
That's not to say that Zengas's analysis is anything but utterly brilliant here.... and much appreciated too.. but s/p's are influenced by myriad non 'fundamental' factors; very especially on AIM imho
PS; I too cannot wait for the Zengas £2 party... which is of course possible here in due course... as are a myriad of other share price outcomes..... and great if Tier is a young man today too.
Not sure who’s right on the share price prediction but one thing you’re certainly right about my gender, though there are currently too many to choose from one might be a little confused 🧐 I too think price will drop if we return without SS and it does look no deal in a week’s time. Further suspension is not a bad thing as long as we can get it within the next deadline. If trading again I hope it won’t be in the teens after bagging this latest deal. Hopefully not too long to wait for the meetup @ZengasMansion.