Member Info for BILLFISH

The reason the share price shot up was the success of the TE6 and TE7 drills combined with a capital raise of approx £27 million where institutional investors were happy to buy in at 81p. All seemed well from a PI perspective.

However TE8 introduced the investors to the term "rugosity" and the ride got rougher after that.
A lot of the RNS covering that period are missing from this sight and the London Stock Exchange doesn't go that far back .
You will get the required info from Sounds own website

GLA
BF

Trellis, I think you are maybe being a bit unfair at the moment. I have been one of the most heavily censored questioners in the past yet on Sunday evening I received an invitation to record my questions, which unfortunately I could not do as I don't have a microphone attached to my desktop.

You ask for a better solution, well to my mind the best solution is for everyone to publish their questions then we can all see what has been censored and what has been openly answered.
To get the ball rolling here is the list of the questions Sarah asked me to record.

Sound Questions
What is the rationale behind forcing the PI to give up their pre-emption rights gratis?
Do you see a role for the Private Investor in Sound and if so what is it?
On the 10th March 2016 Sound announced HOT on the sale of 66.67% Of SEMS to Culebra Petroleum. Culebra Petroleum is advised by Toronto-based Comet Energy Ltd and London-based Lyndisfarne Partners Ltd on this transaction
Is the Comet Energy listed above the same company as the one mentioned on the announcement of your joining the Sound Board?
In the current Hot, the third party will procure a loan at 11.3%. If this company can procure that loan why can Sound not do it on its own behalf?
The current Hot mentions that this is a secured loan – what asset is it secured on?

On the second of June 2014 while serving on the board of Range Resources you endorsed a Vendor Finance deal with Chinese company Land Ocean that lead to the destruction of Range by the loss of all its Trinidad oil leases and production. I know you left the company in November of that year when you failed to gain support when standing for the chairmanship but did you learn any lessons from how that deal was structured and have you put in place any measures to prevent Sound from being held over a barrel by a non performing supplier who also controls the loans?

One of Sounds strongest assets is its 10 year tax holiday which starts from first gas. How much of the value of the asset do you intend to sacrifice following the current strategy?
The current CIP loan at 16.3% is not very competitive mainly due to the need to amortise the enormous “discount” over the length of the loan. Indeed if it was paid off early the effective interest rate would rocket up way into the twenties. The loan could be made more competitive in the current environment by extending the term by say 5 years rather than rolling the loan over with all the attendant costs and a new “discount” which would leave Sound in that same boat it is in now .Is such an option on the table or do you have another option to get the CIP hooks out of Sound’s flesh?
The new director works for what was formerly Petroceltic an Algerian focused company. Given the antipathy between Algeria and Morocco what is the rationale behind this appointment?

GLA
BF

Joe,
The certificate on the website is valid from 10:43 on 5/6/2018 to 10:43 on 5/6/2020.
If you are desperate to get in change the date on your PC to one that is in the above range and try again.

GLA
BF

Hi Bravedog,

"Can somebody explain me why it isn’t in the interest of the cy to have stock included in an FTSE Index ?"

The technical answer is that GKP does not have a Premium Listing.
GKP have never had a Premium Listing.
GKP have no ambition ever to have a Premium Listing
GKP will therefor never likely be a constituent in any index.

The wider reason is that the company's response to that question has been that their "local marketing initiatives" are incompatible with the stricter corporate governance rules required of a Premium Listing.

I think we both know what that means. So your choices are Premium Listing with no cash flow or current listing with the current cash flow. I know which arrangement most shareholders favour.

GLA
BF

Where have these dates been confirmed billfish?
-----------------------------------------------------------------------

They are included on the Notice of the AGM available for inspection on the GKP website.

GLA
BF

Hi Wiseman72,
Yes they are the confirmed dates.
GLA
BF

Hi Wiseman72,
The dates you are after are:
AGM 21st June, Assuming resolution passed then
ExD 27th June
Record Date 28th June
Payday 5th July
So divi in the pocket for the summer hols.

GLA
BF

Obelix,

They report the dividends value for Q1?
______________________________________________________________
There isn't one.

"Future dividends will normally be paid as follows:

First interim

Announced with half-year and second-quarter results and paid in September

Second interim

Announced with full-year and fourth-quarter results and paid in March

The record date for the first interim dividend for 2019, payable on 9 September 2019, will be 9 August 2019. The ex-dividend date will be 8 August 2019."

You will have to wait for the next quarterly/half year results to find out what the first interim divi will be.

GLA
BF

"The point being, a question-mark seems to subsist (ie no clear answers so far received) as to whether taking up' of warrents has to be in any way 'declared' to other shareholders, via RNS or whatever"

Yes it does, but not necessarily straight away.

A company is required, on a monthly basis, to inform the market of any change in total voting rights ( a TVR RNS)
This is often done by companies buying back their shares(SSE,HWDN) or companies issuing shares for whatever reason (conversion of warrants could be one of them).

WE are just about at month end now so if there have been any warrants exercised this month I would expect a TVR on Friday or Monday.

If the warrant holder has a lot of shares to shift he may want to exercise early in the month to give him some time to complete his transactions before the TVR comes out.

I hope this helps.

GLA
BF

Pont,
He always talks boll*cks when pressed on his shareholdings/transactions.
Sure the company won't be there in three years from when the awards were made April 2018. That has absolutely nothing to do with benefiting from the RSUs

"The vesting date under the RSU Grant is 1 January 2021. The RSUs also immediately vest in the event of a change in control".
is the last line of the LTIP announcement.

So they immediately vest on change of control which is exactly the same condition as the bonus of 1.5 times
salary. Seems like he figured 1.5 times salary offered more certainty in April 2018 than the results of the then prospective 3 well drilling program.

GLA
BF

Hi Sundance,
You have been keeping a low profile recently. The short answer to your question is it depends on how the dividend distribution is made. Cash is fine,stock in an entity trading on a recognised stock exchange is fine.If however you get an exotic financial instrument not traded on a recognised stock exchange representing say a contingent element of the deal then you would be required to transfer them outwith your ISA where they could be liable for taxation.

There are some wider aspects to consider though. This mornings discussion has been centered on personal taxation and the likely impacts of various options. This is wrong.

What we are discussing is a two stage process, the disposition of an asset and the distribution of the proceeds.
While the PI can manage the tax liabilities of the distribution process there are absolutely no mitigation options available to the PI to manage the tax liabilities of the disposition process.

Corporation tax is currently 19%. Any partial sale of the companies assets would have to go through the P&L where it would attract corporation tax before any residual distribution could be effected.

Everyone(SIPP,ISA, ordinary shareholder) would be struck with this stick. I would suggest in the absence of some severe mitigation that this is not a good route to pursue. The sale of the company as a whole however does not attract corporation tax and the PI would be left to manage their own affairs as best they could.

I wouldn't get my knickers in a twist just now though. When the bid comes there will be a minimum of 60 days from bid to completion, longer if a competitor appears. The market will put a value on a SOU share which will incorporate all the elements of the bid. If the bid includes elements of contingency that you are not happy with or are unsure off from the tax perspective you can just sell in the market and pass the problem on to someone else.

GLA
BF

Hi Shed,
I am not suggesting anything, merely pointing out that should TE10 be successful that is not necessarily a reason for liquidating SOU as the market will offer investors an opportunity to cash in their chips.

I don't think SLB will take us over, rather the reverse they might sell out and define our value for us.
SLB took stakes in a number of situations, partly as a result of the POO squeeze on service companies and partly to diversify into Upstream O&G.

Since the recovery in the price of oil they have reversed this notion, the biggest example being the pull out of the Fortuna project which cost Ophir to lose the license and they now find themselves being picked over by the vultures.I would suggest SLB are more likely to trade some of the positions they has acquired as all their kit is out on hire and their margins are recovering.

There are a plethora of opportunities in the O&G field at the moment, not to mention the bounty that will be thrown up by the Brexit shambles. There is no need for investors to feel pressured into maintaining an investment they are not happy with. JP is his own worst enemy by consistently failing to deliver anything he promises.

Simple things like the 3 CPRs we were promised after each phase of the seismic, 3 back to back drills etc.
Had each of those been delivered in a graduated fashion then the PI would have been able to judge the risk as we went along rather than having to make judgements on step change announcements in a pub or other gathering.

GLA
BF

"the the pipeline consortium are Spanish". Hud the phone, where did that come from?

There are 5 sections to the GME all owned and operated by different companies/consortia.

The bit crossing the Moroccan territory is a 48" section owned by the Moroccan government and operated on their behalf by Metragaz which is a consortium of Sagane (a subsidiary of Spanish Gas Natural), Transgas (Portugal), and SNPP (Morocco).
The Moroccan state also has an interest in the twin 22" underwater pipes that pass through the Straits of Gibraltar.

What is happening is that Algeria current export their gas to Europe via the GME. Morocco exert a tythe in the form of a Gas Transit Agreement for allowing the gas to flow across their lands. This agreement provides for approx 5% PIK to be applied and this gas is diverted as feed-stock for one gas power station and half the feed-stock for a second power station. The balance is paid for gas.

This arrangement ends in November 2021. What happens next is exercising many minds at the moment.

GLA
BF

Hi Guys,
While we have been busy the last couple of days knocking 3 bells out of each other the world has continued to spin on its axis.

In this case yesterday saw Sonotrach announce a £1 billion dollar contract for Petrofac to develop the Ain Tsila field next door.

"Petroceltic Ain Tsila Ltd (“Petroceltic or the Company”) is pleased to announce that Groupment
Isarene, the joint operating company set up by Sonatrach, Petroceltic and Enel, has awarded the
engineering, procurement and construction (EPC) contract for a gas processing facility at its Ain Tsila
project to Petrofac International (UAE) LLC (“Petrofac”) on a lump-sum turn key basis. Petrofac is a
leading international service provider to the oil and gas production and processing industry.
The contract, whose value is approximately $1bn, is expected to be completed within 42 months. The
lump-sum engineering, procurement and construction project scope of work includes commissioning,
start-up and performance testing of the processing facilities, gathering system and export lines"

Jildy,Jildy Gunga Din.

GLA

BF

Hi Shed,
You will get your referendum. If TE10 comes in the SP will appreciate ,and those who feel that is journeys end for them will then step off the bus. Those who want to see the result of TE11 will carry on to the end.

You might even get some who will sell some and keep some just to see what happens. The proposition that you wouldn't drill TE11 because some shareholders are nervous is ludicrous.

Everyone will have the opportunity to assuage their anxiety between drills.

GLA

BF

Hi Cransley,
You have come back with the best piece of information to date
"indicated value of the seismic is cost plus 10%.so about 32miilion."

So the seismic is worth 3p per share and not the value of 10% of the underlying hydrocarbons. That certainly explains JPs somersault from being a buyer to a seller of the shares and why the SP is where it is.

Are you sure the Cos for TE11 is 8%?. I thought our exploration director would not sanction a well with a Cos under 20% or was it 25%.?

Paying a dividend via an unlisted company would be a slap in the face to all those shareholders who have transferred shares into an ISA. The unlisted company would be a non-qualifying asset for ISA purposes. It would have to be held outside the ISA where it would be subject to the dividend allowance of 2K per year.
Also many of the trading platforms won't allow PI to hold unquoted shares.

Any return to shareholders would be better done via the Capital route where the annual allowance is £11.7k.
You could do this by creating a different class of shares in the same company and the company buying them back from future income. This would allow them to be kept in an ISA and protect the future income stream from tax.

If you want to see how this works look at how Standard Life did it a couple of years back when they sold off their Canadian assets.

I would vote against any LE that involved non listed vehicles. There are far neater solutions that Rothschilds should be able to advise on.

Where did you say the company was going to get the cash to pay the £2.50 dividend, their distributable reserves are negative at the moment.

Well done for getting a statement on the seismic worth.

GLA
BF

Hi Guys,
I agree with Shed about JP losing his nerve. 2017 saw JP increase his stake in the company by 1,551,287 shares in 3 separate transactions at a cost of £751,116.07, including £45,000 of his own personal wealth.

That is an average price of 48.41882 pence.

2018 saw him sell 1m shares at 40.86p or a loss of 7.55p per share, £75,588.2 loss in total, just as we were going into the new drilling campaign.

We also learned of the trading plan , which was put in place to obviate the strictures of the close period rules to further reduce his stake in the company. Latterly the PI have been made aware of what, superficially, appears to be a Quid Pro Quo where rights to participate in the LTIP have been traded in exchange for a fixed rate bonus based on his salary. None of these measures generate confidence for the future appreciation of the SP.
However if TE10 comes in then this will counteract the CEOs pessimism.

Last year the accounts were signed off on the 21st of March and the preliminaries were published a day later.

There is absolutely no chance whatsoever that anything will be discussed tomorrow that preempts the contents of that report. Rather, if any line of questioning proves to be too "interesting" the juxtaposition of accounts publication will provide the necessary shield to protect the company from answering.

You will have to be careful in how you frame your questions to circumvent this barrier.

Questions on the LTIP vs Change of control bonus could be couched in determination of the thought process behind it rather than the fiscal ramifications themselves.

Questions on company structure alterations could be valid. Have a wee think about what I said about note 8 to SEMEs accounts. After all the SARL company is the local Moroccan company that holds our licenses.

JPs view on Tax would be a good avenue to follow. He is after all an accountant and a former CFO. He has chosen a different path from the PI. While he has unearthed the virtually unused Trading Plan, he has eschewed other more obvious instruments like ISAs or transferring a portion of his shares to his spouse to qualify for double allowances.

I am not saying he is wrong, so far he has generated a £75K capital loss which he can carry forward while us munters, who transferred our shares into ISAs have no opportunity to mitigate the loss.

However his views on the appropriate Tax strategy for a Sound Investor would be interesting and need not fall foul to the purdah rules preceding the companies annual report announcement.

GLA
BF

shorter life than a Chelsea football manager.

GLA
BF

Continued.
The infamous RNS rightly caused an awful stink but most people seem to have missed the most important point.

It wasn't JP selling a million shares at a loss.
It wasn't JP announcing his trading plan to sell down his shares to 3.1 million.
It was "The Chief Executive has elected not to participate in the new LTIP" - now that is a bit of a bombshell.

No new options are being granted under the old plan and the CEO has stepped out of the new plan - one has to wonder why?

As at 24th Dec the shares plus warrants = 1123.4 million. To get 10% of the company options and RSUs would come to 124.8 million.

There are already 27.7m Options and RSUs in issue so that leaves 97 million RSUs to be issued none of which can come JP's way if they are to achieve their ambition of attaining the 10% cap.

I wasn't too fussed about this initially as examination of the distribution of the options showed JP getting the thick end of the awards and if he wanted 5% of the company that was fine by me if he delivered a good LE.

However by stepping away from the LTIP he is swerving the opportunity to greatly enrich his family which was supposed to the rational behind the trading plan.

In the end JP will be left with 3.1 million shares (which are obligations under the 2017 plan, not incentives) plus a bonus of 1.5 times basic salary on change of control which is a fixed reward.

By stepping out of the LTIP it is difficult to see where JP will acquire the motivation to drive a hard bargain at the LE.

I think JP needs to stand before the PI and explain the rational behind stepping away from the LTIP and accepting a fixed bonus instead based on his salary.

Who is going to benefit from the other RSUs then?. The Sound full stop is but a couple of chapters away, hardly time to add any value which justifies such largess I would have thought.

RSUs
I would urge all attendees to come armed with some rotten fruit and pelt and member of the board who attempts to justify their existence. They are a Yankee confection broadly similar to an option with the advantage of limiting the downside risk if framed the right way.

Well I don't want the recipients to limit the downside risk. If I am to receive the financial equivalent of a knee in the nuts then I want my pain to radiate outward and touch those responsible for delivering the blow. I don't want them to be able to protect their neither regions by a fiscal box.

I would have voted against the new LTIP, but I can't, as Sound is one of the most autocratic companies of the board.

A question for JP would be "why do the machinations of the Rem Com never manifest themselves in resolutions at the AGM and why does the Remuneration report never get voted on in an advisory capacity".

It is all very well getting a smile, a handshake and a pint but a vote on some meaningful resolutions would go further I feel.

On a lighter note you could ask . in Sound companies why a CEO has a shor

Hi Guys,
I am using the response to this question to both answer 250SWB questions and tease out some questions that would be good to raise at the event on Thursday. There are a myriad of important questions that can be asked, the most important concerning the motivation of the CEO, which do not rely on any information that has not been in the public domain for months and in some cases years.

I am going to take 250s question in order. Without the sales price we have no definitive knowledge of what the Horst is worth. Until the testing is complete we do not have a definitive value for TE10. I am about to demonstrate we do not have a definitive handle on the amount of shares in issue.

Taking what we can definitively demonstrate today then of course the SP is overvalued.
However an SP is not about what you can demonstrate today it is a discounting mechanism for what you can demonstrate 6-12 months down the line, and that is a completely different picture.

The recent RNS have confirmed that the definitive GSA is several months way. What JP does is deliver a deal in 2 parts. The Heads then the definitive deal.Sometimes , as in the case of the Petromaroc deal the definitive deal bears no relation to the Heads. JP has so far committed to announce only the Heads. This is because he is speaking to two separate audiences. The Heads are for us and he does not want to tip his hand to a third party until he is ready to deal with the consequences, which in my opinion will be when we are further down the drilling program.

I would ask him to talk to the GSA. How long after the Heads would he expect to deliver the definitive deal and what additional features would it have?.

TE10, I do hope it comes in. What a difference it would be were TE10 a success and TE11 the cherry on the top than the other way round where TE10 was a bust and TE11 the last chance. I must admit to a little trepidation though. This is ground dog day for me.I have stood here before in my Fastnet shoes, where the drilling was looking good, arguable a better management team, some of whom had already delivered outstanding returns when at Cove and yet fate was still able to stretch out a hand and snatch our lollipop before we even got first lick..

However the most important questions , which should come ahead of anything else should be reserved for the shares in issue, the LTIP and the motivation of the CEO.

There is a nasty wee line in the remuneration report which has been there for ages and didn't cause me any concern until that infamous RNS of a year ago.

The line in question is
"Over the long term, the Board wishes to move towards the 10% approved cap".
What they are talking about here is the number of options to issue. That is 10% of our company and long term could mean the end of the month, when the remuneration report for this year gets signed off. JP , last year, toyed with the notion of it being the last AGM so there is not much time left