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Looks like gold tested and bounced off the bottom of the recent uptrend channel, as I mentioned it might the other day.

HOC also bouncing off the same point on its chart.

Fed news tomorrow likely to be the main driver here though.

Gold going to bounce off the bottom of its uptrend channel around the 1905 mark?

Perhaps tomorrow or Thu, with news from the Fed to send it one way or the other.

Expect HOC to follow it in either direction.

BashRisks,

"big firms are still 80-120% down from there peaks and will recover 3-4 years time, and I would advise to stay away from PMO instead of risking more"

Some are over 120% down??

I really wouldn't be handing out advice after that statement, sonny!!

Megla,

I meant the number of shares that could be issued was potentially alarming, as it could incur significant dilution to existing holders if done at a low price. Per your other comment, not all PIs are going to be able to buy additional shares to prevent this dilution. Obviously, the company going bust would be more alarming.

Thanks for info on the RI pricing.

If they postponed the BP asset purchase, that would mean around 40% less shares to issue down at this level, but if PMO wait until markets and the SP improve, then the deal would likely become more expensive again anyway. Hmm!

Probably no getting away from the need to raise $300m to reduce debt though.

Undoubtedly, they will plough on with the plan... and probably a share consolidation shortly after to reduce the share count back to a more reasonable number, which will raise the share price. In my experience, share prices tend to reduce after a consolidation, as you've just opened a large wedge in the price that often gets sold into, until things stabilise at a new level.

The number of shares that could be issued if the share price continues to fall is rather alarming.

$530m (£405m) to be raised (whether via a rights issue, or some of it underwritten by creditors via debt-to-equity swap).

At 22p (today's price) = 1.8bn additional shares

At 16p / share = 2.5bn additional shares

At 10p / share = 4bn additional shares

Add on the current 922m shares in issue.

OK, it keeps the business afloat, but IMO that is a massive pound of flesh that the creditors are demanding.

Wouldn't the price of any rights issue be done at the prevailing VWAP over the last N weeks, or on the prospectus release date?

Holders here need to hope that crude doesn't pull back any time soon, and that global markets stay buoyant over the next few months despite Covid.

This couldn't have come at a worse time for PMO shareholders.

Sounds great.

You conveniently forgot to mention the approx 2.5 billion+ shares likely to be in issue.

Some disgruntled shareholders on Twitter...

https://twitter.com/PremierOilplc/status/1296375948712054784

Dodger, good move.

You'd almost swear this was an AIM company the way long term shareholder value has been trashed.

Ferret,

PMO will be far from bankrupt, their balance sheet will be healthier and assuming oil price doesn't totally collapse they should be able to ride out Covid until oil prices improve, at which time should be producing 100Kbopd.

But, the share price, which is basically all PI's are interested in, is going to be muted for some time to come after this.

Even to get back to 50p/share from the other week, will require a market cap of £1.25bn (approx), which is 5x today's market cap. I don't think that has sunk in with many here yet (assuming my rough calcs are correct).

Old KenniGT boy will be waiting some time to get his money back IMO.

Personally I won't be touching this again until full details of the refinancing are known, and the dilution has occurred.

Glad I have been sitting on the sidelines here.

Some rough workings...(someone please check my numbers, this is very quickly done)

Market cap today at 23p is £210m.

Equity raise of $325m required, circa £245m.

£175m ($230m) is for the BP acquisition.

At today's share price, that's over 100% dilution from a share count perspective. Obviously the BP assets will provide immediate cash flow from production.

Creditors will convert debt to equity ($205m, or £155m), so PMO will not be paying interest (at 8.34%) on that amount going forward.

So, £155m of new shares will be issued from the debt conversion. Approx another 75% of shares. Total debt should be down to $1.6bn at the end of this.

NEW SHARES:

Shares in issue today = 922m

Equity raise shares to issue = 922m approx
Debt conversion shares to issue = 700m approx

So, roughly 2.5bn shares in issue when this whole situation completes, based on the equity raise taking place at 23p.

That means we'd need a market cap of £2.5bn for the share price to be valued at £1 again, which is over 10x today's m/cap.

Puts things into perspective, what?

KenniGT,

"The difference is PMO is doing 67kbpd at the moment.
BP acquisition will add 19kbpd, Solan 10kbpd, Tolmount 20-25kbpd. So over 110 kbpd in near future. "

So never mind what TD said in the video link you posted earlier where he said production would be up to 100 Kbopd by this time next year.

"Some people on here were saying it would be the catalyst for the sp hitting new highs and that the raise would be at a premium. "

Yeah, that was AK57 if I remember correctly, saying it would be at a premium. LOL

SS17,

"if it stays low like this PMO will struggle to survive with $1.96b debts cost"

The debt will not be $1.96b after the fundraising.

$300m is being raised from equity to reduce the debt.

It must be enough to keep the financiers happy.

$1.6bn of debt for a company that will be producing 100 kbopd within the next 6 months should be manageable.

Oil price dependent, of course.

Is Tony now on the board of ARCM too?!

I dread to think how many shares will be in issue when the refinancing completes.

Financiers getting their pound of flesh to offset the added risk they are taking on, especially when global markets are in the doghouse.

BP acquisition aside, the refinancing was always going to come at a cost to PMO - can't blame TD for this part, as the debt has to be renegotiated/extended, and PMO not exactly in a strong position to barter. Extending the debt gives the company breathing room to ride out the Covid nightmare, but obviously at a cost.

I expect that the number of shorts will dramatically increase again, as per previous refinancing, to hedge against their new positions.

GLA.

PS. Greetings, TR61 !

Yes, it does say that the Mexicans will honour existing contracts, but I still don't think the rhetoric bodes well for deals.

Potential that Zama sale may not happen:

https://www.bloomberg.com/news/articles/2020-07-29/mexico-to-consider-energy-opening-reversal-after-2021-amlo-says

These are the warrants relating to the previous refinancing. See similar RNS from 1st June and 1st July.

Nothing to do with the upcoming fundraising. That is yet to come.

That said PMO were supposed to have agreed terms for the finance extensions by end of July, and that should have been RNS'd ... must be delayed.