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An opportunity for the company to wow the market but, yet again, they drop the ball. So much for past statements about not needing to raise funding because of accumulating cash flow. We now have a statement to the market that, in order to achieve the 2024 budget, more funding will in fact be required.
PB and his colleagues just do not have a clue about how markets react to such situations and, frankly, their PR advisors should be fired (if not PB and his colleagues).
The market is sick to death of hearing jam tomorrow from TXP and has not surprisingly reflected this in the share price, yet another blow to long suffering shareholders.
A complete clusterf*ck as Clint would say. This is all about retaining jobs and employment and has absolutely nothing to do with investors' best interests. LB has been a complete and utter disaster and I see 1/2p shortly.
Glad to see the sp holding around 55p rather than in the 40's. But it is still puzzling why the sp is where it is.
When you examine TXP it is difficult to find downsides. Yes, Cascadura infill drilling might not be successful and other discoveries may turn out to be failures but information accumulated to date suggests the opposite. For me, this is now all about the passage of time and, from published data, the sp should conservatively achieve 150p if not beyond. If everything falls into place and high level predictions achieved, £2 should not be a barrier. But this will take time, perhaps up to 24 months.
Hang in there!
The performance of this share price is simply a mystery. The rise last week appeared to be on the back of nothing as is the fall since. At $4m per month, the company does have the funds to undertake infill Cascadura drilling, which itself will bring in further cashflow, as well as development wells on other discoveries, again with the prospect of additional cashflow.
There is just no rationale for the sp to be at this level, which values the company at less than 3 year's Cascadura production, all of which is sold under long term contracts to T&T, that is virtually risk free. Except that, as has been said before, the market is waiting to see a sustained period of production and cashflow and the drilling of rather wells.
What the company could do is consider a share buy-back or even pay a dividend. However, with Cascadura only producing since early September, the sustained period mentioned above is perhaps 6-12 months. Only then, hopefully, will the the sp begin to represent the value of the company. For the time being however, I would say that this is a fabulous buy opportunity, particularly if the sp slips below 50p again.
RJ, Your allegiance to this company and, it would appear, the BoD is, and I mean this seriously, commendable. Like you, I am holding a modest amount of shares which are underwater but these have been consigned to the bottom drawer for the time being. If you feel that you would invest in a further capital raise that is your decision. All I have set out are the facts of the company's performance over the past 2-3 years which, from whatever perspective you look at TXP, suggests that one puts their money elsewhere.
Let me ask the question "If you were an analyst reading about this company's historical problems, recent problems and the lack of confirmation about gas in the ground, would you put money into an equity raise?" I think we all know the answer, which suggests that this is now a completely binary situation - HE1 is either able to raise funding or it slips into administration.
Sturm, The company's announcement about Cascadura back in 2020 included the following:
"Estimated before tax 3P 10% discounted net present value of future net revenues ("NPV10") of $802.9 million, 2P NPV10 of $519.2 million, and 1P NPV10 of $287.7 million."
This, I believe, is what PB based his "wall of cash" on.
Given the company's current market cap of C$253m, which is ca $187, you can gauge the potential upside for the sp from 60p. For example, the 3p figure of $800m, would result in an sp approaching £2.60, while the 2P figure of $519m, would result in an sp of £1.65.
... and really not much else to say except to add that this is what happens when you put inexperienced, incompetent people in charge. Let's be honest, this company has bounced from one problem to another and is now effectively saying "Ok, we screwed up but let's have more of your money please."
Lorna and others need to go asap.
Can anyone on this board come up with a viable explanation as to why this company is valued way below its worth? It has both oil and gas production and is generating some $4m per month in revenues, it has the necessary cash flow to fund additional production wells on Cascadura and to drill development wells on other fields, it has a portfolio of known reservoir formations, it does not need to raise capital, it is operating in a fixed price gas market and it is servicing debt.
Yet, its market cap is only about 40% of Cascadura NPV, let alone the additional value of its other field assets. Unless there is anything untoward in either the Cascadura reservoir or production or the company has another major problem, I am at a total loss as to why this is trading around 48p.
Hm, I think you are right. However, the problem is that such reports get published in yahoo!finance. Ok, that is not the be all and end all of investor websites but it does get read by millions.
You have to think that something is going on though; the sp is simply not reflective of the npv of Cascadura or the other assets on the company's books.
Sturm, Thanks. That does present a credible explanation for such an unprofessional review. However, it is slightly worrying that companies like TXP can be seriously undermined, technically and financially, by the publication of such ridiculous reports.
Turbot, Spot on old boy. Always welcome insults and the mutterings of those who feel they know everything. Reminds me of woke lefties who always report to foul language and insults when they realise they are losing the argument.
I have just seen an editorial by Simply Wall Street (published in yahoo!finance) which comments quite negatively about TXP's ROCE. I am assuming many posters had seen this at the time of publication but thought it worth reflecting on what was stated.
On that date, it calculated TXP's ROCE at .0035, which it states is not only low but under-performs the industry average of 13%. Further, it states that TXP's ROCE reduced by 98% over the past 5 years, while the business employed 98% more capital (albeit acknowledging the capital raising).
While TXP's share price decline commenced in early August, the publication of this editorial will certainly not helped matters. That said, I find it somewhat alarming that a professional organisation like Simply Wall Street would use such an broad-based analytical approach to value a company that was in the process of developing a gas field, requiring considerable up-front capital expenditure in return for long term earnings. Indeed, I would suggest that it is quite an idiotic approach to evaluation of such a company (which had only just commenced production from Cascadura early in September) without giving it a grace period of, say, 6-9 months production, before producing its calculations. In addition, I would argue strongly that a much fairer method of valuation of TXP should be the NPV of the Cascadura field set against the outstanding debt and equity utilised to get it to production.
Whether, this editorial is one of the reasons for the puzzling decline in TXP's sp is unproven but, sometimes, I do wonder how firms like Simply Wall Street get away with such nonsense.
It will be interesting to see year end production and cashflow data from Cascadura
RJ, In the history of man, pessimism has always been the scourge of those who think everything will be better tomorrow. You are a classic example of this blind optimism. For the record, I remain a (loss making) shareholder but have consigned these to the bottom drawer of the filing cabinet and will continue to reign pessimism upon this hapless company and those who chase hapless causes.
So far today there are 51 posts on this board. You have to read them all (a labour in itself) to realise how disparate they are, which is a surefire indicator that nobody knows what is going on with this company, except that the share price is gradually sliding south.
I just get the impression that many shareholders post optimistically in the hope that it will all be right on the night. The reality I suspect is probably going to be considerably more pessimistic. Not even the confirmation of helium has been able to arrest the downward trend.