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AB,
But it’s not a trade for 20% growth. You are getting equal if not more growth from TXP assets.
We all need to put the stronger together lens on this deal. The fact that both sides are unhappy seems to indicate it’s a fair deal.
It’s a good deal because you’re getting TXP paper at a very low price. Think about that and the doubling of TXP production by year end before saying the TRIN takeover is poor value.
If someone else came in and offered you 75-100p cash, I would say TXP with imminent growth is a much better way for you to recover losses and make upside profit on both TXP and TRIN assets
Selling at the 3 year low.
Not sure why you think they might be fund raising, they never said that. They said they are increasing their revolving credit facility (which is non-dilutive) from 7m to 20m dollars. Any responsible company does that.
It’s the same as someone increasing their credit card limit. It simply allows them to - with certainty - fund their exploration expenditure next year.
They have clearly and succinctly said that they will spend 33m dollars whilst at the same time saying that they would generate 32m dollars from funds flow from operations. So massive increase in capital spend is covered by massive increase in cash flow next year. They are very prudently and conservatively balancing expenditure with cash flow I.e. their debt won’t be increasing next year and their resulting net debt to annual funds flow from operations ratio falls to 0.78 times. This is extremely conservative for them to do this!
Another way to look at current company valuation: if we were to stop all exploration, we would be throwing off 32m dollars a year - current P/E is 3!
Or another rather silly illustration - we could pay 11p dividend (25% dividend yield) if company did no exploration from here and just paid out dividends from cash flow (at current fire sale share price).
But yet… they say they expect to increase production to 14,500 boepd by end of next year.
And upside triggers - licence swops, new licensing, increase in gas, optimisation of wells all could be announced.
Look at slides 15 thru 21 of this months presentation of the prospects:
htTps://www.touchstoneexploration.com/wp-content/uploads/2023/12/Corporate-Presentation-December-2023-.pdf
House broker update today has 140p target, I think this is reasonable 12 month target.
Bonkers to be selling now unless you need the money of course.
Me - I'm excitedly adding and pinching myself that I'm able to at 30% of what I deem is fair value.
PS: sorry, maybe I should be posting here more, I'm extremely bullish on making money at these prices, those posting on fund raisings yesterday and negativity are simply helping me buy more cheaply - added 4789 shares first thing this morning. Plenty other bulls secretly adding here and happy to do so, E.g. Jesper Olsen - he knows a bargain when he see it:
hTtps://x.com/jesper_m_olsen/status/1737208711871856898?s=61&t=ICgQ6rQ0ajxkV_I7RgAloA
Cheers
Anyone see a pattern here on Naira devaluation? This is not new, or a one off, so to me SAVE should have mitigated this issue a long time ago:
2023 Half year:
“ Foreign Exchange loss
Foreign exchange losses amounted to US$54.0 million (H1 2022: US$0.8 million). These losses are unrealised losses which occurred following the harmonisation of the various exchange rates which was implemented by the Central Bank of Nigeria in June. The impact of this decision saw the official Naira/US$ exchange rate move from approximately 460 to 755 at 30 June 2023 and this required Savannah to revalue its Naira denominated assets and liabilities at this new rate when preparing US$ denominated financial statements.”
2022 Half Year Results
“ The interest cover ratio, on an Adjusted EBITDA(2) basis is 3.1 times (H1 2021: 2.9 times).
Foreign Exchange loss
Foreign exchange losses amounted to US$0.8 million (H1 2021: US$10.9 million). These losses were realised losses arising from US Dollar gas sales invoices which are settled in local currency, and from the translation of Naira into US Dollars to service US Dollar denominated obligations. Realised foreign exchange losses can be recovered through the "true up" mechanism in the Calabar GSA
In order to purchase US dollars to service US dollar obligations, Savannah accesses foreign exchange at market rates and there is typically a differential between this rate and the Central Bank of Nigeria exchange rate. The majority of these losses are recoverable through a foreign exchange "true-up" clause in the Calabar GSA.”
2021 Half year results
“ Foreign exchange losses amounted to US$10.9 million (H1 2020: US$7.1 million).
An unrealised loss of US$7.0 million (H1 2020 gain: US$1.7 million) was mainly a result of revaluation of monetary items held in Nigerian Naira following the devaluation of the Naira from approximately 380 Naira/US$ to 410 Naira/US$ in May 2021. The realised losses of US$4.0 million (H1 2020: US$8.8 million) arise mainly from US dollar gas sales invoices which are collected in local currency and then converted at the Central Bank of Nigeria ("CBN") official rate to settle US dollar invoices. In order to purchase US dollars to service US dollar obligations, Savannah accesses foreign exchange at market rate and there is typically a differential between this rate and the CBN rate. The majority of these losses are recoverable through a foreign exchange "true-up" clause in the Calabar GSA.”
2020 Half year results
“ Foreign Translation Loss
The net foreign exchange loss of US$7.1 million (H1 2019: nil) comprises a realised loss of US$8.8 million and an unrealised gain of US$1.7 million. The realised loss arises mainly from the fact that US dollar denominated gas sales are collected in local currency converted at the Central Bank of Nigeria ("CBN") official rate. In order to purchase US dollars to service US dollar obligations, Savannah is obliged to use the Nigerian Autonomous Fore
The going concern statement was also made in last years accounts.
The Nigeria devaluation has happened every year around May/June for the last few years, and there’s claw back mechanisms.
Agree with Zengas, we need a presentation and Webinar - the company I think is now hiding behind these suspensions and not being forthright with shareholders.
We do have £45m from Cotco sale to come through, not received yet from these results.
Going to be an interesting speech in light of the news this week:
https://www.zawya.com/en/press-release/africa-press-releases/advancing-sustainable-oil-and-gas-og-investments-savannah-energy-joins-african-energy-week-aew-2023-as-bronze-jwwv7jix
Just to spell out, there are very, very strict rules for any bribes by any US or UK company, UK rules are here:
https://www.gov.uk/guidance/bribery-and-corruption-in-trade-reducing-the-risk
Thanks Agadem,
Some good details there. Would like to here details from company asap.
I’ve been in contact with the company.
They say that they need to get back to drilling and that they don’t have enough funds to do both cascadura and drilling.
They also say Cascadura is still on schedule for Q 1 even with the record rains in Trinidad but that they “need to start drilling to start developing the resource. “This accelerates the drill by at least six months which is going to be beneficial to all of us. “
They also state that this is “accretive to cash flow per share” and that they had been holding off doin a fund raise until Coho came online as they expected the share price to rise on the back of that but it did the opposite.
“We also don’t want to take on anymore debt to drill.
Appreciate your comment but I strongly believe this is best for the corporation and the shareholders”
All,
I’m saddened to read the pain and losses here, I wanted to make a few points as honestly as I can.
I have been in the same situation as those who have lost / been wiped out, probably 5 times in my life. Each time it has happened, I felt numb and found it difficult to cope.
Don’t be hard on yourself, the reasons why you invested here were built upon best evidence and knowledge you had, unfortunately it just wasn't accurate.
Here is what I would say/do.
1. Don’t do anything rash, this is hard, but think of the blessings you have. You have others that need you in their life, you have family friends, you are special and valuable to them.
2. Tell your other half, though painful and maybe angry, share what has happened, it will be better to do it, don’t bottle it up.
2. If you have faith, pray and ask for help.
3. You will be an emotional wreck right now, so don’t make stupid decisions/any decisions on a whim.
There is a thing called brain fog, where you won’t be able to logically work through the actual facts you have found yourself in, wait and let your emotions calm down.
2. On ADV.
I lost 5% of my portfolio here, it was always higher risk, higher reward and with painful lessons in the past, I limited my exposure, but still painful. All shareholders are in some pain and feel duped to some degree.
ADV have limited ways forward, so I sold out immediately because of that on the first chance, regardless of the price, because I didn’t see any options that would recover my capital, only dilution ahead.
They might have other deals lined up, but chances of shareholders recouping losses here are slim at best. Don’t be hoping against hope for a miracle here (they sometimes happen, but unlikely).
Don’t be adding to a loss here if you’re in that situation, either hold and write it off in your mind or sell is what I would do.
Don’t hope against hope that you will get your money back, you will likely add to the pain.
If you absolutely can’t bear selling, just forget it - but don’t add to a losing situation.
A few reasons I see as negative:
1. Buffalo was set up so that if it was successful, we had 100s of millions of cash flow and the well would produce most of that upfront. That would have been straightforward to monetise without dilution.
2. Now, if company is to survive, they will need to raise cash, most likely as a heavy share dilution - current capital and recovery is going to take further hits. The wages they are paying themselves is excessive to me too.
3. They have lost credibility, market will not forget this failure of a 95% chance of success on geological probability.
4. If you must invest elsewhere, don’t go for Minnows with a higher upside but high risk, you won’t make the capital back fast, don’t try it.
Go for safer companies - although no company risk free.
Two I like are already producers, but undervalued - TXP and SAVE.
SAVE I expect will double from here in 12 months or less, TXP I value a
So, it seems confirmed it’s similar to Penal-Barrackpore Pool, both in oil and water cut.
It has been producing oil for 100 years, this is a BIGGY!
No wonder the statement wishes us a prosperous New Year at the end!!
Reply from company
Don’t think the focus should be on the water cut as this is the lower part of the over thrust sheet and we probably got a little aggressive and perforated to far down. The focus should be that we have a light oil charged column. The next test is the upper most part of the over thrust and should be done in ten days. We will configure it as a proper oil test. That will give us a better representation of what this sheet will produce.
Take a look at the presentation and it will show you the significant size of the structure BIG.
Confusing yes. Disappointing no.