Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I have been paying a lot less attention to VOG since progressively reducing exposure last year. so perhaps have missed bits.
nevertheless I thought VOG had 2 producing wells and another with a stuck unrecovered drill bit. While it may be an uncharitable notion, could there be other reasons 108 is not a producing well? If reserves are being proven by pressure and production levels, shareholders can not really know the potential of 108, and the VOG record on whole truth is not great. On the other hand the management may know its real potential and is ready to be uncorked
when it can sell it and have production facility adequate to meet higher sales levels. It would be reasonable for the directors to put this information in the public domain.
It is obvious that if VOG can sell lots more gas ( and catch up with its spreadsheet predictions ) - market capitalisation could rocket. In the meantime investors can only guess whether the 108 was a failed black hole or whether it is huge as was implied during the drilling process.
Mel in lost a packet so far mode..
Does V have enough gas ( 10 yrs) to supply Dibambe ? If I was in conversion mode I rather think I would want 10 yrs assured gas first.
On the other hand I understand D has World bank finance and one of the conditions is a ( small) reduction in finance cost if there is converson to gas.
Mel
Smokey
Not the baw but the bawbees !
Mel
Ah Annual clear out time.
To Vog or not to Vog?
Vog should be a goer from here if it could sell a lot more gas. It is however difficult to forget
1. that it has essentially been operating with one ( + a near enough failed well without telling us) over the last few years
2. the huge sucess in Kazakstan and sale plan for WM
3. Drilling 2 wells which cost twice as much as shareholders were told and really only produced 1 well( twice) and some real unanswred questions about the drilling company.
4. Gensets dont seem to have lit up the heather
5. Our JV pardner ain't no sprightly teenager and has offspring who just want some cash sometime.
6. The obvious emerging bull market glimmering on the horizon
7. Production limits and the itsy bitsy small question of gearing to be refinanced one day.
Despite all that, bought some yesterday, just in case. You never know.
Mel in should know better happy mode
I have been having one of my thinks about VOG. I have lost a fair bit on VOG . I tend to invest and wait and the main reason I headed for the hills was because VOG now seems to be overgeared and without ENEO, cash flow negative. Sage is right. One day there should be a lot of gas sold. The questions ......how soon and whether the banks will allow VOG to be geared up with negative cash flow. ....
The big question is the proven gas reserves . VOG has oddly provided very little detail on the viability of 108 ( with its stuck drill. ). That there is a pile of gas at 108 seems believeable but the lack of detail is discouraging , especially since , for years we were made to believe that VOG had 2 viable wells - but actually one was failing.
So - does VOG have 3 viable wells when the suck bit is unstuck and how does the investor value the self certified gas reserves? VOG is in a tight spot cash wise ...but clarity on the viability of 108 and why 109 was the justifcation for the recent dilution would help me / others and probably the VOG big picture masterplan. .
Is VOG good value now? Don't know but with ENEO cash flow - quite possibly. There is mist about a series of VOG questions and I don't yet have the courage to get back in - but may if ENEO cash flow arrives. Will it?
Mel
3 card
Best is "Bridge to profirs"
Mel
Methinks will rise early on the morn - just to make sure the dawn is OK.
Mel
Malbrun
Ah ...but but when Gazprom buys WM for £100M and Olga hands our well back ?
My monacle would .........
Mel
3 Card
They would say cost control is difficult wouldnt they? We were given estimated cost . The nearly obvious outcome at the outset would be 2 slices of dilution - share issue and shares to Savannah. The placing kept the company afloat ... but the second unexpected ( by me) masks the degree by which costs over ran.
My notes show that I had at the back of my mind the broad notion that it would take 1 year - possibly 2 before gas take up at new volume gas to power generators. With heads of agreement(s) in place that is bridgeable........and then VOG would be cash positive. The drill dragged on for months beyond my expectations .....and still not a slither , ripple sniff or brush of a tail on actual supply contracts ( dangled a lot).
I dont believe that costs could not have been controlled and while it is obvious that proving up gas reserves helps prove supply ability........running out of cash is not on. Whatever the downside they should have conserved cash or sought an additional JV partner.
Excessive dilution and a plan which ensures running out of cash is highly likely is definitely not in the interests of equity holders.
Milk is however spilt and there is a pattern . The group can and should seek assurances that the company should conserve cash until there is an actual large supply contract and bridging finance to enable a Vog spend.
Mel ( Taken my losses on the chin mode)
MT
Convenient answer. Is it not correct that there has been lowered demand for prospective drilling in the last 6 years.?
.........putting Vog in a stronger position.?
So the drill company has no incentive to complete within a timescale and within a budget. Slower the better from their standpoint.
Mel
Enshried in the Companies Acts is the need for directors to act in the interests of shareholders.<br /><br />In a case like this it is difficult to show that it is not the case so far. The Fox Davis dilution speaks for itself and lack of cap on latest drill cost takes VOG possibly to the point that Vog might not be a going concern, despite its apparent new proven reserves. A competent Finance Director could have set finite limits on cost and applied brakes on the drill costs. The Excessive drill cost may, or may not eventually prove to be in the shareholders interests. I think it unlikely but am listening.<br /><br />One two or three volume contracts to power gas powered electricity generation would rocket the SP but considerable capex would be needed to put it all in place. The company has appeared to hint that it is all just over the horizon - but it has not got the finance or self generated cash flow to get there , without material new finance or a JV partner financing the next phases. <br /><br />I don't envy the directors. I do not doubt they are trying - BUT if there is a question of them going for volume rather than earnings then Kevin's conflict of interest looms large. I have heard him fend off questions about this at 2 agm's . If the company is to gain equity investor confidence - then I believe that he wont be able to do it without addressing that issue head on and coming up with a way to align his interests fully with equity holders.<br /><br />Mel<br /><br />
Pshepp
Did you get to know anything about the stuck drill or the value of what is in the hole , whether stuck drill is smokescreen for collapsed well and whether 109 talk is because 108 is as bad as 106 . It took a very long time to learn that 106 wasn't tickety boo?
Mel
Best wishes MT. Do your best.
Mel
3cardbrag
Give blood play rugby. The joke might be reversed next October in japan?
Mel ( in its coming home to Murrayfield mode)
PS Well done England and good luck in the semis.
Thebrancher
Perhaps I am missing something but don't the runes say " Regarding the 450 megawatts, Eneo,Altaaqa,Grennor will be hopefully connected over the next couple of years, ".......that that level of supply can not be achieved without more drilling/ capex/ pipelaying/ plant capacity expansion?
Cash generation isnt in happy bunny state......new gearing at uncomfortable level .......so it is difficult to see capex spend for the future being funded from VOG generated cash. It is difficult not to believe that VOG is boxed in with new equity injection needed. It is difficult not to wonder who on earth are the new bedfellows who put up the last dilution dosh.
Boxed in ?
Mel ( hoping am missing something mode)
PS Nobody has properly given an explanation as to whether ENEO can pay its o/s creditors and whether it is likely to pay on time for future supplies.
PS2 .....as MT points out he has lost a 6 fig sum , the degree of poor SP performance has been horrendous and it is very difficult to believe any of us will see our money back unless we get lucky trading the share. .
Thank you to all who have commented on the AGM
I am in the lost a material amount as a result of my faith that VOG would get to volume sales and material profits.
I think MT has really put his finger on the mark. I struggle to see how VOG could possibly wholly reverse the effect of the dilutions and consolidation even if the promised land of volume sales comes about in the next 2-3 years. I dont see how Vog could get there without material capital spend. Large Capex, and indeed exploration, is fine if the cash flow forecast allows it. By my calculations ( which I admit are possibly wide of the mark) ... it does not without even greater gearing or more dilution.
The questions about the previously unknown Savannah , who owns it ... and drill cost over run/// have not been answered . Unless I have missed something, we are none the wiser about the validity of the insurance claim. A successful claim settled in the early course is not something I expect..
All that said , Vog gas sales to 3 volume gas consumers should help the VOG market capitalisation materially.
Not enough to deliver investment returns to LT shareholders.
Do I believe VOG can get to volume sales without dilution. Not yet and I certainly need more information before I am persuaded.
Mel ( in listening mode)
In ouch mode.
Mel
I wonder why such an agreement has taken 6 years since it was first mooted.
I wonder too at 109. I wonder if there is more to the stuck bit in 108 , just as there was for 106 , which with collapsed well was not really a fully operating gas well.
I have reduced my holding again.
Mel
..................and there was a Virtual Pipeline " in it. Mel
ENEO back in July? ( at least the ops update refers to the possibility) 10 - 1 odds ( or is it a "Bridge to profits?") Mel ( in anyone seen Soc Gen skulking about recently mode ?)