Member Info for BILLFISH

Hi Peter,
I am sorry I haven't finished doing the Due Diligence on that company you wanted me to look at.
That CEO is a munter though.
I have managed to get you a set of accounts from a similar business that has a good profile to compare against. Only problem is that it is a private company so you can't buy any shares in it, but if you are ever over in Belfast you can have a look for yourself. I hope to have your stuff all written up by this weekend.

The guys from Barrow Island stayed in Edinburgh longer than expected as there was no snow anywhere for them to see and that was part of the reason for their trip.

It's been a mutual education exercise. They have been teaching me the economics of LNG plants and I have been teaching them that everything that goes into a pint pot does not have to be golden and fizzy.

I will see if I can move some stuff around and free up the date but the Brown Trout Season starts on the 15th and I still have some commitments in that area. I wouldn't want to take someones ticket then not turn up on the day.

GLA
BF

Na they are just there to keep the flies occupied lol!

Hi HolyTrinity,
Thanks for that. You have to be careful these days about inclusivity.
Everyone is a victim these days of one ...ist or another. There are some ..ists coming out of the woodwork that I have no idea who or what they are but they have to be included as well.

So for the conspiracy theorists I offer the following:

Go to Companies House
Dial up Sound Energy Morocco East
Go to Filing History
Check out the latest company report
Familiarise yourself with note 8.

That should keep them occupied for a couple of days.

I have some answers to some of the questions you may have but when I pressed a little further Sarah said she would get me the info but never came back so I suppose someone higher up vetoed that.

GLA
BF

Hi Crude,
You still haven't got it . Forget gas, forget mcf. Just think here is a deal that gets you X amount of dollars per day for Y years. What are you prepared to pay for this income stream.

I would suggest the calculation involves discounting the world interest rates back to current values to determine the value of the income stream. Individual company credit rating would also play a part so the value of the income stream would vary from company to company.

GLA
BF

Hi Crude,
I won't be at the event. I haven't had an invite. I am on the mailing list, got the TVR and today's note but mysteriously no invite to the London do.

Maybe Sarah figured that coming, as I do, from the land credited with the invention of copper wire when two of us bent down to pick up the same penny, that I would not be able to stretch to the price of a pint in London.

GLA
BF

Crude,
I think you have got the wrong end of the stick. SOU's idea is to sign a GSA for TE5 only i.e. sell the income stream from that deal only. Future deals for the rest of the gas would be at the behest of the future owners who may well find themselves in a completely different pricing environment.

I think I did manage to establish at one of the FSCs that title to the gas will be exchanged at the metering station where the spur joins the GME,so no one knows where it will go after that. It will certainly cause the Algerians to take note.

GLA
BF

Hi HolyTrinity,
There are a few other considerations to think about.
There are going to be two pricing regimes in Morocco.
The current one or "Golden Age" from an indigenous producers perspective, where the local producers are sheltered from world price competition. In this regime fanciful prices like $8 are discounted far into the future when assessing the values of potential reserves.

The other regime has the local producers feeling the cool wind of competition and having to adjust their prices accordingly.

A good local example would be SDX(for clarity I am a shareholder). They recently announced that they were signing 5 year fixed term deals in the range 10-12 dollars with the average being $10.5 in Morocco.

The same team also announced that they agreed a deal I think off the top of my head for $2.85 in Egypt.
They are not strictly comparative as the Morocco prices are burner tip prices and the Egypt prices are wellhead prices but you can see , broadly speaking, what effect world price competition can have.

In Morocco the two regimes will be divided by the construction of the LNG terminal and latterly by the Nigerian pipeline if it gets built .

This is why I favour the term of the GSA as the best guide to future worth.

Some of those sitting round the table will have a better idea of when the LNG plant will arrive than others and this will be a stumbling point in the GSA negotiations.

You would be blind however not to notice that none of the local consumers are signing beyond 5 year terms.
I think that expresses the local view on when they expect price competition to arrive

JP has said in the past that he favoured indexing our gas prices to the price of oil. I must admit I was not too keen on this initially as my view is that long term the prices of those two commodities will diverge.

However faced with the step change of world pricing I would be open to an element of indexation depending on how it was framed.

GLA

BF

Hi HolyTrinity,
I don't have a price at the moment. I had a figure in mind but JPs bolt for the door at 40p has, I think taken everyone by surprise. I am conscious that a year earlier JP was perfectly happy investing his own money at 74p so something spooked him to dash out at 40p.

To my mind that something was the seismic and so much of the project value is tied up in there.

My hope is that he does not compound that error by continuing on the daft path of negotiating SOUs shareholder wealth in camera and presenting a fait accompli for shareholder approval.

Where would the board stand if the shareholders reject the offer. Their position would be untenable.

My hope is that JP would once again don the red tails and black top hat and conduct ,Barnum style, the last act of Sound Energy in a Cove Energy style spectacular competitive bidding bonanza.

I feel that is the only way the SOU shareholders can be certain that they have received fair value, whatever that may be, for the assets they currently hold.

GLA
BF

Hi HARRYCHRISNA,
I promised anyone who was interested that I would post up what the Scots investors were told last year about the GSA.

You were the only one who responded in a positive fashion so this is just for you.
Don't tell anyone else what I am about to say, just keep it under your hat.

From Sound Energy perspective the GSA is not about selling gas.

I'll just take a minute to let that sink in.

Last year JJ was due to present at an investor event in Edinburgh. That was the day that the Beast from the East rolled in an JJ got stuck and missed the event.

However with some sterling phone work from Saleem and the ever efficient Sarah a conference room was arranged for the next morning and JJ agreed to do has presentation.

Next morning arrived with a horizontal blizzard raging in Edinburgh so only a handful of folk were present. But, thosehad braved some pretty awful weather to get there, consequently there were not many shrinking violets when it came to the Q&A.

To be fair JJ had braved the elements as well and had to come uphill from Dean Village.

I posted up the meeting on III but left out the GSA as there were more important things discussed, Luca's departure, the pipe being 20" and the economics of the 3 well drilling program plus Saleem videoed it anyway.

JJ got a pretty hostile reception when the Q&A turned to the GSA. I think he was taken aback. Most of the objections have been rehearsed here before.
The question I liked the best was "don't you think an IOC would place a lower value on a SOU share that came encumbered with a GSA than it would on a share that was encumbrance free?"

That one I think got to the root of the issue.

Once JJ had recovered his composure he went on to explain that we were looking at the GSA the wrong way round.
He described the difficulty of the David and Goliath situation that was the LE negotiations.
That SOU needed another tool on at the negotiation table to get more leverage rather than just sell gas.

The GSA is that tool and what SOU are selling is money not gas.

The GSA that SOU hope to negotiate will have 3 elements:

1) A take or pay clause to secure the income stream
2) Price - flat or indexed TBA
3) Term - TBA

JJ professed that the GSA should be regarded as a Bond.
What type of bond is open to debate, it could be a short term fixed rate bond right out to a long term indexed bond.

SOU hope to use this "bond" backed by the TE5 assets as part of the overall package of assets put up for sale during the LE process.

I have consistently posted that price alone is not the main determinant in determining the success of the GSA.
The term will describe how far into the future the current price regime can be projected and that I feel that more than anything else will determine the ultimate value of our company.

Mind now HARRYCHRISNA keep this to yourself. We wouldn't want everyone knowing as much as wee do :).

Hi Partridge,
I am not sure where this suspension talk comes from. I have been involved in a fair few UK takeovers, some continental ones, even had a go at the Ruskies. Also involved in 3 defences won 2 lost 1 ( you always lose the last one). In all that time my companies shares were never suspended once.

A company takeover takes 60 days from start to finish, unless another challenger comes in, in which case it can take longer. Both companies can make bids and buy in the market. The eventual winner has to pay the top price he paid for your shares in the preceding 12 months. So it is very much in the shareholders interests to keep the market open.

You will observe the symmetry between the length of time it takes to prosecute a takeover bid and the time it takes to get a drill bit from the surface and complete the testing in Morocco . That will give you a clue as to when a hostile bid, could emerge, should one be in the offing.

There is one exception to this in the UK and that is the Reverse Takeover. It is too late at night to go over the details but basically the wee company gets suspended until it produces two wheelbarrows of paper and reapplies for its listing.

Currently Rock Rose are suspended while they process their takeover of Marathon's North Sea assets so you can get a flavour over there.

As Sound will be the target rather than the bidder I can't see any circumstances where we would be suspended once the fur starts flying.

GLA

BF

Hi Tincan,
The best way to estimate how the Sound saga will end is to follow the money. In this case the money comes in the form of directors incentives. In my experience it is very rare for directors to incentivise themselves to do one thing and then turn round and do something else and lose those rewards.

Currently Jimbo has incentivised himself to the tune of over £500,000 to sell the company and hand in his notice.
You can see this in the change of control clause, in the remuneration report contained in the annual report.

Should the intended disposition of the company deviate from the current plan you would expect to see an announcement of a modification in directors incentives to precede the change of strategy.

As far as SLB is concerned I am not as sanguine as yourself. When this journey started SLB operated under a synthetic arrangement and I am sure we got JP the express the notion that where Sou led SLB had to follow.

The current arrangement provides for SLB to act independently. Unless JP gets a jildy on, you cannot discount the possibility that SLB will cut his feet and strike a deal on their own, placing a value on our portion by default..

GLA

BF

Correction

2) Marco has a mortgage on Sems not Seme - sorry for that

GLA
BF

Hi Tincan,
nice dream but I think there are a few wee flaws in your logic.
1) JP has incentivised himself to the tune of half a million quid to sell the company.
2) Marco has a mortgage on Seme to cover the CIP loan.
3) It is more tax efficient to sell the company as a whole.
4) The mortgage and the loan are symbiotically linked until the debt is repaid.
5) The sale of the company as a whole and breaking it into bits are not necessarily mutually exclusive events.
6) JP has renamed every company he has been director of. Don't you think , just maybe, he is pulling your chain in the choice of name for the current enterprise.

GLA

BF

Sorry for the delayed response - have been away for a few days. I maybe could have chosen my words better.
What I should have said is the market will not see the actual sale immediately as, if you look at the previous RNS in September, it described the sale as "off market" so either the house broker or the plan manager will facilitate the sale and dribble the shares into market over time after the RNS announcing the sale has been made.

As for the London Event. How about the announcement of a new trading plan where JP increases his holding to 5m shares by the end of 2019 ? -- only joking!!!

On a more serious note it seems the Scots investors have a better handle on the GSA ,what it will look like and how Sound intend to use it, than do their southern cousins.

I may have some time this evening to put up a post if anyone is interested.

GLA

BF

The share sales today are not part of the trading plan. When those sales are made they will not be visible to you , me or anyone else in the market.

There are currently 3,000,000 options which will vest on the 23rd of March with a strike price of 16p.

If this deeply humiliating, car crash of a trading plan follows the route it has so far followed we can expect those options to be exercised on the day they vest.

If the Share price is still around the current level of 24p then the following is what is going to happen.

Sell enough shares to exercise the options.

That is 3,000,000 *16p = £480,000 . At 24p that would mean 2,000,000 shares would have to be sold to cover the purchase .

Tax and NI

Tax at 45% and NI at 2% is payable on the Income element of the options which in this case is 8p per option.
That makes Tax and NI of 3,000,000 *8/100 *0.47 = £112,800 or 470,000 more shares to be sold to keep HMRC sweet.

That would leave 530,000 shares from which you need to deduct a few more thousand shares to cover the services of financial advisors who are managing the sales.

So he will be left with something over just about 520,000 shares depending on the expenses.

When these are added to the 2.6 million shares he already has this will take him to the 3.1 million he was targeting.

This will bring an end to the sorry saga where Mr Parsons has created a situation unique in the history of British finance and allowed the opportunity to slip though has fingers twice.

His wife really should be beating him around the head with a sweaty sock for depriving her and their children of the millions of pound in Capital Gains Tax that will unnecessarily fall due from this plan, if he delivers anywhere near the returns he has promised his investors.

There is a bit of a conflict of interest in that should the test results be release before the 23rd and they are positive, resulting in the elevation of the SP, then the number of shares requiring to be sold would be substantially less.

GLA

BF

Shaun,
The gentle rustle you hear on the Echo board is the sound of yet another senior manager from the Sound trilogy slinking off into the long grass accompanied by the ubiquitous Trappist Fanfare.

Crude,
yet again you miss the most important figure in the journey of the Sound investor. Without that man, rather than the lukewarm ale or overpriced continental lager you would have a pint of black and tan in your hand and you would be drinking it on the sleety side of Lough Neagh.

It is over a year now since I informed the PI of Luca's impending departure. The company made no mention of it and I only found out by posing a direct question to JJ. Since then total silence.

I am not alone in believing that if there is going to be any element of valediction in the pub meeting then Luca deserves to be there to receive the thanks and congratulations from the grateful shareholders for providing the mechanism and connections to change the direction of the Sound company into what we all hope it will turn out to be.

GLA

BF

Hi P44,
I have some good news and some bad news. Tonight. I had a wee chat with Fiona and there is absolutely no interest on her part in farming into anything in Morocco so her $34m dollar purse wont be coming our way.

On a brighter note had a wee word with Sarah re the FSC ending abruptly. as per JamesParsnips complaints. Sara recons it will not be a biggy to get some kind of notification placed on the bottom left of the screen when the session is about to end so that those that have something to ask can get it in before the session ends.

Hope you are well with your new guise. What are the runes saying, Do The White Gulls Call ?

GLA

BF

Hi Sundance/crude/Jamesp.
Just a quick acknowledgment of your responses to my post. I will have to scoot as Fiona McAuley is in town tonight and I an hoping to have a chat.

Sundance
" I haven't lost my sanitary with these company,s" yep I don't think your the only one sh**ting it.

Crude

"Cereal CEO" I think that one takes the biscuit.

JamesP I was caught out the same way.They seem to switch off the question collector without notice while they are still answering questions.

You point about RRL is well made. This was a company whose value was promulgated to go to 50p by Malky when his mate was given a NED position on their board. What are they now? The DI trade 20+ to the PENNY and their shares are limit down on ASX, Just goes to show what happens when debt gets out of control.

I do hope you are no longer invested in this company (RRL) as a read through of what the ghost writers wrote on their latest admission document seems to suggest the sun is setting on RRL and I doubt if they will be around to greet the Easter Bunny.

I will has some observations on Sound to post tomorrow hopefully when some of the anguish has dissipated.

GLA

BF

Hi Sundance,
I think the fur started to fly after that. The response to that question was
"Please note the current team joined post the decisions to drill te8 and Italy"

In other words it wisnae me mister, it was him. Finger pointing in JP's direction.

For those who do not participate in the FSC directly I would point out that questions are disposed of in one of 4 ways.

1) You get an answer to your question.
2) You get an acknowledgement of your question but a "we can't answer that due to ............"
3) The question will be passed over to JJ where he will stretch the English language to it's limits, re-imagine the question and give an answer completely unrelated to what was being asked.

The above dispositions are displayed on the Q&A screen for everyone to see.

Option 4 however is to censor the question. This is done by refusing to acknowledge the question in which case it does not appear on the Q&A screen.

I have had questions censored in each of the last 3 FSC including today. None were offensive, none were price sensitive. All were based on public information/company announcements.

I am going to post them here so you can judge for yourself whether they deserved to censored or not.

Today

"in two answers today you have indicated a desire to sell the portfolio. Is it no longer the case you will sell the company?"

This was censored. I do not know why. In all previous guidance JP has stated that it was more tax efficient to sell the company rather than the assets. He now appears to be rowing back from that position.

In every sale question today JP emphasised selling the portfolio not the company. The major difference I can see, apart from the tax question is that selling the portfolio leaves the CIP loan with the current investors.

I did ask today if JJ had any plans for refinancing the loan and he said there were none.
Now I think his mental arithmetic must have been on the blink as refinancing that loan falls within the 12-18 months guidance that SOU normally require to deliver anything - but I think that sailed over his head.

The previous FSC I asked for clarification of why the production license had been granted over an area far less that the area included in the certification report, was there any relinquishment of area involved?? -- This question was also censored.

The FSC before that I challenged JJ on the accounting treatment of the concept of "line of sight" especially with the unquantified liabilities taken on by SOU when the passed on some of their Italian assets to Coro.

How were these entered into the companies books of account?. Again this question was censored.

Fellrunner is correct the company is very,very selective on what it chooses to answer and is not nearly as transparent as it would like to appear. I would be interested to hear from other investors what experiences they have of having reasonable questions censored.

GLA
BF

Hi Guys,
Why all the brouhaha over the non appearance of the rig? The company told you where it would be back in August. My guess is it is parked up in the Ministry of Finance car park.

On the 31st of Aug the company announced the signing of the Greater Tendrara Petroleum Agreement.

A number of salient points are:

"The Greater Tendrara Petroleum Agreement, details of which are provided below, has been signed by L'Office National des Hydrocarbures et des Mines ("ONHYM"), the Moroccan State regulator for petroleum operations and it will come into force on approval of the Moroccan Energy and Finance Ministries."

Note when it comes into force

"The Greater Tendrara Petroleum Agreement will have a duration of 8 years from award and will be divided into 3 phases, with each phase having pre-agreed work commitments. The work commitments under the Greater Tendrara Petroleum Agreement will be:"

"Initial period of 4 years: 2 exploration wells with the minimum Triassic objective. It is expected that the approaching TE-9 and TE-10 wells will fulfil this commitment"

TE9+TE10 have a combined dry hole cost of $12m. That's if the are drilled outside the agreement.

Drilled inside the agreement they enhance the value of the agreement by fulfilling the drilling commitments for the first 4 years, kind of insurance on the dry hole cost if you like.

So I would expect the rig to appear once the Ministry of Finance have appended their signature to the paperwork.

GLA

BF