RE: Here we go...wooosh soon13 Sep 2018 14:49
Here's the comment,
Ok...lets break this down. If all 32 million performance rights are vested as a result of meeting the various performance criteria, then 32 million shares are issued. On a base of 5.6b undiluted shares or 5.9b fully diluted shares, this represents a fraction over 0.5% dilution. In other words...bugger all.
However, it is prudent (IMO) as shareholders that we know what we are potentially getting for the dilution (albeit limited) that we are being asked to approve:
60% of the performance rights (19.2m) is based on hitting shareprice growth targets. It looks like this tranche is split into 3 x 20% lots (i.e. 6.4m share lots) over the first 3 years. Each sub-section of this tranch vests on a pro-rata basis according to the shareprice growth achieved - fair enough IMO. So if the SP is around 2.1c at time of performance rights being issued (if approved next month), SP needs to triple to 6.3c within the first 12 months for the first 6.4m shares to fully vest. What is not clear to me, are the metrics for the full vesting of the second and third lots of 6.4m shares each in this shareprice growth tranche: is it to maintain 6.3c SP at second and third anniversary of issue date or is it to triple (ie 200% growth) in each year? If the former, then it is an DP maintenance incentive, not a SP growth incentive. If the latter, then illustrative SP targets for full vesting are 18.9c at second anniversary and 56.7c at third anniversary. Any clarity that any London meeting attendees could get on this would be wonderful.
20% of the performance rights (6.4m shares) are dependent on amount of proven+probable reserves (2P), net to 88e, achieved by the first anniversary and determined by an independent audit. Sliding scale with 150 mmbbls required to get 100% of this trance vested. I do not believe 2P reserves can be achieved other than through the end of a drill bit, and given the time required to also get an independent reserves audit...and the likely anniversary being Oct/Nov 2019, this is a hugely positive indicator of the timing, urgency and confidence of Winx. IMO. But why rush the upcoming General Meeting and (subject to approval) set the 12 month clock running on this reserves tranche? Delaying till early in the new year, prior to Winx spud, could be a 'safer' bet to provide more time to hit the reserves target. Unless of course, the above SP growth target (which is 60% after all), would be better served for the recipient of the performance right if the clock was started earlier...and in particular, prior to any farm-in announcement and its expected boost value. If so, nothing wrong with that, IMO as all shareholders benefit if there vesting triggers are met.
10% (3.2m shares) are based on the 2C (best estimate) contingent resources trance, again on a sliding scale with the 100% trigger being 400 mmbbls of 2C resource - again, by the first year anniversary of rights award. While I suspect that in theory, 2C resources could be 'ev
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