Shamaran Petrol Share Price (0VH4)

There is a good update article from Garrett Soden, the CEO, that clarifies the damage is limited. Do use google translate.

Buying opportunity.

https://efn.se/oljebolaget-mitt-i-krisen-nastintill-otankbart

Just had a call with friend from Kurdistan. There are flares visible. I hear that both DNO and ShaMaran are producing

Probably not announcing it because of the security situation.

You can access the session recordings of ShaMaran presentation at Sparebank conference:

https://sb1markets.gallery.video/ec2026/.

Access code: EC2026.

Investors are worried that ShaMaran will issue tons of new shares in Oslo, that investors will lose their voting rights and that it will cost them money to convert from the Swedish share to SDRs.

ShaMaran cannot keep the Swedish shares as a Bermuda company. They have to use SDRs.

There is no cost for Swedish shareholders to hold SDRs, and there is no difference between SDRs and the underlying shares.

The Bermuda-Oslo structure will be much better for paying dividends — no withholding tax like in Canada.

ShaMaran posted description on their website. Do share

https://shamaranpetroleum.com/site/assets/files/5599/simplified-roadmap-for-investors-final3.pdf

We wrote a detailed ShaMaran thesis on our Substack, on our blog and on Seeking Alpha - search for it under FitInvestmentIdeas.

Today a reader send questions on Baker MckEnzie possible further delay and on comparison between the SNM and others that sell oil locally. I share below my response:

WoodMac has a fixed-price contract with Baghdad so they have no incentive to delay their report or to spend more hours on it than necessary. 

 

The delay on the report due date from December 31 to March 31 was because Baghdad was distracted by the election in November and did not engage WoodMac until December.  They were supposed to engage WoodMac immediately after the pipeline opened at the end of September.  Typical of the region.

 

The companies that are exporting (GKP, SNM, etc.) are being paid the same as they were under local sales (about $32/bbl on their net entitlement—see the SNM slide online that explains this).  They sell all of their oil to SOMO (with better Iraq sovereign credit risk) and are paid directly by Vitol.  There was an initial working capital risk when the pipeline opened because of the longer payment terms (30 days) than local sales, but payments started in December and have not stopped, so there is no advantage now to selling locally.  Plus, the exporting companies are building a receivable on top (about $25/bbl at $65 oil) to be paid after the WoodMac report.  So, they are already recognizing full price for their oil since the end of last September.

 

The companies that chose not to export (DNO and Genel) are getting paid a discount to their previous local sales (now about $30/bbl) because the local trader has to make a profit buying their oil and then putting it into the pipeline for export (at $32/bbl).  Worse than that, they are not accruing any receivable for the additional amount that would be due after the WoodMac report.  It was a very expensive hedge by DNO/Genel and totally stupid.