Member Info for 34adsaddsa

Only rational explanation is someone is dumping shell to buy something even more exposed to oil prices.

I have no idea who is dumping shares here but they need their head checked.

I think things are going to start changing after this year's exploration at Hanut in Egypt and LMS-2 in Morocco, regardless of how successful it is. We're going to see some combination of:

Dividends, buybacks, acquisitions or a sale of the company. The stasis will be coming to an end. If Hanut is successful then we get much more certainty on cash flows. If it doesn't then SDX's wings for risk will be significantly clipped IMO.

This is the only thing I don't understand about SDX: How large are their 2p reserves in Morocco and are they all connected/easily connected to their pipeline. If they stopped drilling, how long would it be until they were unable to meet customer demand?

I would be annoyed if they paid a dividend so soon after issuing equity below 20p and farming out 30% of Egypt..

The way things are going, I think we'll end up seizing Air India's planes whenever they land in the civilised world.

Another telling quote, explicitly mentioning the trading price of the fund: "The Board is supportive of the continuation of the Investment Manager's modified investment strategy for the immediate future. However, the Board does propose to monitor the Investment Manager's success in repositioning the Company's existing investment policy through the modified investment strategy over the next twenty-four months. In the absence of a significant improvement in the performance of the Company, taking into account, among other factors, the trading price of the Ordinary Shares and portfolio performance over that period, the Board will seek Shareholder approval before 31 December 2022 to amend the Company's investment policy to provide for the managed wind-down of the Company."

I've been doing some further work and thought I'd share. Some current valuations which are known because they're publicly traded:

Centennial: $88.17M, CNOR: $16.66M, Enviva: $31.55M
= $136.38M

Since the quarter end they've invested in Loanpal: $25M, Freewire: $10M, DCRB: $10M, DCRN: 0.6M I'm assuming those valuations are flat.
Cash adjusted for those investments = $49.4M
They also own: Onyx: $53M.

So far, we're at 53+49.4+25+10+10+0.6+136.38=$284.38M. The current market cap is $252.38M
Now we have the "wild cards": ILX 3, Carrier 2 and Hammerhead Resources.

Bad news on ILX 3. They've hedged 60% of expected production out to October 2024 at $44 per barrel. If those hedges are still on then we've probably really lost out.
Bad news on hammerhead: They issued further equity in 2020 and REL didn't participate. That stopped Hammerhead from going bankrupt but diluted our share of the company and reduces our upside.
Carrier 2 seems fairly trouble free, albeit they're reducing debt rather than paying dividends as they have in previous years and they've hedged 45% of 2021 gas.

I'm pencelling in: $150M for ILX 3 (that's +15M since 2020 end), $30M for Carrier 2 (that's 2x since 2020 end) and $44M for Hammerhead (that's 2x since 2020 end).

284.38+150+30+44=508.38M NAV. 252.38/508.38 = 0.496 of NAV.
So it's trading at just under 50% of NAV. Seems attractive. But there's more. Quoting from the annual report: "The Company's independent directors are supportive of the continuation of the Investment Manager's modified investment strategy for the immediate future. The independent directors will continue to monitor the Investment Manager's success in repositioning the Company's existing investment policy through the modified investment strategy. At the EGM, the Board committed to review the Investment Manager's performance and, before 31 December 2022, decide whether or not it would be in the best interests of all shareholders to request an EGM to vote on a run-off of its portfolio."

In other words, if this thing doesn't pick up sharpish we're probably going to liquidate this sucker. Oil prices could fall sharply. Or the company's discount to NAV could get even wider! Ultimately though, I think this thing is a safe bet. It either starts rallying or it's going to liquidate and shareholders should get back at least £5.50 per share. Probably more given what oil is doing. This kind of discount is untenable. It'll close one way or the other.

They paid ~235 million for merlon petroleum. It's currently producing about 4,000 barrels per day. They're having to farm out to get cash to get production up. I think once it's clear they're on a pathway in Egypt to significantly increasing production in 2021/2022 it'll rerate fast.

They're supposed to be getting better terms in Egypt (as other companies have) but nothing concrete yet. News on that would help. Only people truly in denial trust the competence of the management here.

Vietnam is fine.

A total collapse in confidence due to repeated management missteps and very high G&A costs.

By my calculations, the value of REL's holding of Centennial Resource Development has increased by about $65 million since the last valuation was published at the end of December. The stock is up 280%.

If we assume the valuations of Carrier II, CNOR and Hammerhead Resources have doubled (quite conservative IMO) then Centennial+carrier2+CNOR+Hammerhead+cash = greater than current market cap.

That's without including ILX III in Gulf of Mexico ($135M at end of December) or their two ESGish investments in onyx (53M) and Enviva (29M).

This thing has been a catastrophic disaster for investors and it's extremely unfortunate some of their holdings were marked to zero (went bust). They've also somewhat pivoted to ESG at exactly the wrong time but it's still got monster upside at these oil prices IMO. These holdings which are down 90% can double and double again.

Hanut-1X exploration well is Q3.

I should have added: assuming they aren't obliged to significantly dilute existing shareholders.

If it were that simple, why hasn't it already been agreed?

RR did their equity raise at the bleakest time. Last October: Cases rising, no vaccine hopes, Oil at $35, prospects of lockdowns restarting.

Given that shops are about to reopen in 6 weeks' time I think they'd get quite a lot of interest as an obvious reopening/normality play. The shares are obviously cheap once the covenant issue goes away.

The question is: What will they have to do to secure the refinancing from prospective lenders.

You're writing as though it's up to the CEO to choose when he does a RI but that's not correct, the banks can make him do it.

I agree that they probably don't need the money, but it's not under their control. Why are they refinancing? I think it's because the banks aren't happy.

They don't have to need it - the banks just have to want it.

I sold mine around midday for 48.6ish because there was no RNS on covenant waiver.

The "refinancing" sounds very vague. I don't think I'll buy back in at this level tbh.