Member Info for Cheapskater

I'm hoping it's in anticipation of the gas revenue RNS coming in Monday with 4 weeks of flow. If so Next week could be interesting

For those that want to know how the maths works based on my experience of being invested in a company that had convertible loans it work like this:

We all agree the mcap is shares in issue * sp (9p * 434m = 39m)
We should all agree that the first repayment is £12 + £3m (£15m)
The loan repayment is equivalent to 38.4% of the mcap = 15m/39m
Mcap is not calculated to be changed by having the extra cash so the 434m shares left will become 100-38.4% of the numbers of shares in issue. It's slightly worse than that as there new issued share are calculated at a 10% discount to the average closing sp, which for the purposes of this calculation is 9p. I will add on and subtract the 10% discount and impact at the end.

So if the current shares in issue (434m) is 61.6% of the total after the issue for $15m then the 38.4% for the £15m is 270m shares at a price of 5.54p each (£15m / 270m)

The 10% discount would be 5p and that means 300m shares to raise £15m.

Feel free to disagree. I don't care. I sold up once the RNS on the convertible loan was released because I didn't sell an investment which had good prospects but no funds issued a convertible loan and I lost 90% of my investment as each instalment was for more and more shares to cover the same tranche size for a company whose market cap stayed about the same the whole time. Like I wrote earlier if good news happens that affects the sp then the effect will be much less, but if confidence goes while the CL is still in play then then the impact will get worse. HEMO has a strong portolio but they are so early in the trails process that it may take 2-3 years before they have a product and in that time if nothing dramatically shift the mcap up then the impact of paying a third of the mcap every future tranche will add 50% to the number of shares in issue every time they dilute. Doesn't bear thinking about. HEMO as an investment is about to become very risky now the loan approved.

You need to ignore the naysayers who will point out that 38.4% of the company is outside the maximum stake MINT are allowed to hold. They will probably forward sell just about every share they know they are going to get and you will likely never see a holding RNS for them as they will transit straight through to others. That's what happened for my 90% loss.

Averaging down is also a mistake unless you expect imminent news because the loan agreement says they can exercise tranches every 90 days. It just lowers your % loss but it increases the amount you lose.

Like I said I might be off but the principle I outlined in the calculations is correct. You are praying for good news to move the mcap up to minimise the dilutive effect. It has a much better chance of happening here than in the one I lost so much on but think double the mcap prior to the CL tranche share issue and the number of shares issued halves to pay the loan.

Good luck if you stay invested. It might beat the odds but too risky for me.

On what planet do you think there's no dilution? Today they approved a convertible loan note facility of up to £60m you really need to check the terms of that in the RNS on 18th Nov. The first tranche of that CL is £12m to be paid in shares with the 5% (of £60m) arrangement fee, so £15m.

The calculations of a convertible loan share issue do no change the mcap of a company so the calculated price of the issue, if the 3 days of previous market close the sp is about 9p, will result in something near 300m shares issued at a price of around 5p. That's not no dilution. Pray that the price goes up a lot before that first tranche is paid in shares as an average sp of 20p will result in about 100m new shares to pay off £15m at about 15p each.

Convertible loans on small mcap companies are sp killers. I might have read the terms wrong but if I'm right you have been warned.

There's always the chance some good news will multi-bag it and it will stick the sp much higher for the 3 days before the cash is taken leading to less dilution, but dilution is definitely coming and to suggest otherwise is either naive or misleading.

Barely. It's not an unknown one either. Not a fund raise. It's been in the news feed for months. It was supposed to be decided at an EGM in August snd the details were released in an RNS more than once including the list of resolutions being voted on at the AGM so don't sound surprised. Nobody else is.

No news other than more details on when the shares will be issued. Expected 30/12. Perhaps we can move forward after that.

They can announce but they have to RNS the info in time for market opening. Usually RNS hits as market closes but due to them being in Australian, so long as the news is logged it can post at 7am tomorrow. There won't be any unplanned news at the AGM. There are no shareholders present other than board members so I wouldn't expect anything to be announced as they will already know it and there's no live streaming but there's always hope.

Without any positive statement and just a vote on the resolutions then the SP will not rise tomorrow and may drop a tad (unless it's priced in) as they will have approved the issue of 104m shares in lieu of directors fees and the corresponding 104m in warrants (52m@0.15p and 52m@0.23p) I'm hoping the issue is priced in and that we'll see the news on sales/flow early next year, perhaps close to a spudding RB for Galaxie1. The sales volume will be the positive one, especially if they highlight the uplift to the companies deliveries in % terms.

That would be nice. AGM is tomorrow @10:30am AEDT which is between market close tonight and before market opens tomorrow so there will be an RNS before 8am tomorrow even if it just says all resolutions approved. If any other news is going to hit the AGM and you would expect a statement by the board, even if they are the only ones present, then it will have to be included, either in the same AGM RNS or another one. Let's hope it's bigger than the minimum and the news is good referencing up to 10 days worth of gas delivery or flow rates @F1. Something positive and unexpected would also be very nice.

Not sure why anyone expected amazing results for Duf workovers other than to maintain previous production numbers. These are in the Greater Stanley area. I don't think the existing wells there were drilled to the depth of the other Stanley wells. This is a project for the future to re-interpret seismic or do more to establish they have the same underlying multilayer zones as the other Stanleys and when funds allow drill to those depths to get out the stuff that sells at a premium to WTI.

It costs a lot of money to drill every thing and it the extract all at once. It's much better to have a rolling stream of assets where as you can bring new wells online while others drop down to maintain overall output or tune it to demand and oil prices to maximise profit margins. This was a workout to maintain the permit status as alluded to in the RNS. It's a longer term strategy. I think MSMN only holds 20% stake there so it

I would expect a statement RNS just before next weeks AGM which will release forward projections for what is expected to done with all current assets along with the sweeping looking for other assets to (re)develop.

@Safy - Pretty sure they won't sell them at these prices. If it goes beyond warrant prices with revenue news they might flog a few to exercise the warrants but that all come back to the company coffers, if it's not a closed period. They know better than us where this should be going next year with F1 and if G1 is good. Add to that more widespread vaccines and Australia/China trade de-escalation then we could see the much anticipated JV for EP145 being talked about again. There's more going on than that too with Greater Stanley and more drills that can be done at Champion to consolidate the revenue generation. No idea about Challenger and sales of Arkoma and Welch but there is much to like about the potential future.

Might not get that data even in the 6 monthly production reports. They only contain figures that are Total Project and Net to MSMN in boe terms. I seriously doubt they will publish the contract details. Unless there are publish pipeline access costs to Henry Hub, then as a commercial contract they are almost certainly subject to an NDA as I would expect different suppliers to be able to negotiate different agreements. In the half year results you will see Sales and Cost of Sales columns but no breakdown what cost of sales are. This started commercial production 20 days before the end of financial period so you'll need to be patient for anything meaningful.

Flow rates change and prices are subject to market fluctuation so estimates are what we make our investment decisions on.
I did post what I considered were conservative calculations some weeks ago. I'm not reposting so you can search my posting history for them. In summary though, given the unknowns of royalties and access costs estimated the gas asset could contribute about $3,000 a day if operating at close to the flow rates in the test and at the then price at Henry Hub which was slightly higher than today at $2.70/mBTU. I didn't factor in the Oil sales which are more likely to ease. Just said they should be offsetting the variables on the gas income to maintain that level as an average over the year and called it a US$1m pa asset. If it's half that, and I'm fairly sure it's not, then it's still a massive boost on previous levels. It might be higher but I just used it as a guide to make my investment decision.

If I'm wrong then I will lose money but if I'm right, or it's better, then the market will wake up sooner or later and I will be smiling from ear to ear as it looks likely to be commercially very successful for MSMN. So far the market doesn't seem to agree with me and I don't claim any guru investor status. I have yet to make any profit here but I've been following MSMN for more than 5 years and they are now in the best place I have seen them.

Used the opportunity to get another 2m. The RNS just reinforces my conviction that this will be moving up significantly at some point. The suspense is a little stressful though as I don't want to miss it when it finally comes,

Where are the "Boomers" is MSMN really off the radar. This is a pre-market RNS and it's like radio silence. Oh well 8am, let's see....

My reasoning was that the BoD stated in interviews that Galaxie wasn't close to a pipeline. They have stated to the contrary that it is close to Falcon though. I therefore say I'm not expecting in q1 to not factor it into my estimations. I do expect it by early q2 and for that to be announced in q1. There just hasn't been any statement about what is required to get it connected. It may have been considered but they may also be waiting for the drill to be a success. If it's close to Falcon then it should be possible to connect to there and onto the pipeline which would require no further agreement with the pipeline provider. It might require negotiations with a land owner. What happens to excess gas if they produce oil? That would depend on flow testing and the volume and ratios of oil and gas. They shouldn't flare a lot of gas but they can't store it either without infrastructure. So total production might be dialled back pending pipeline connection via some route. I really have no idea, it's just speculation and solutions are probably being worked on and we might see it connected. That would be a bonus to me whereas others might see it as an expectation. I prefer caution over optimism.

15p & 25p. You mean 0.15p, 0.23p and 0.25p. Also directors shares in lieu of pay 104m which will be approved at AGM on 22nd. I estimate about 3.2 to 3.3bn shares in issue by the time that lot get exercised. Mcap is your calculator for company value. G1 I don't expect to be producing gas into a pipe in Q1 due to distance from pipeline. Something will need to be run and that takes time. Perhaps they can connect it to F1 and onto the pipeline from there but I don't know the geography/logistics. F1 might be break even at corporate level. With poo recovery next year they could be quite profitable. You may have to wait until next full year results to be sure though. However, if they do make a quarterly profit in the mean time I would expect it to be declared as it's price sensitive information and that sort of news is hard to keep quiet as they get asked when in brr media/proactive interviews.

Good reminder, Sweatysock. I think the longer term plan for Greater Stanley is to drill to a similar depth as Stanley to reach the same target zones. I don't think they will rush though. F1 and a successful Galaxie drill could fund any number of drills at Great Stanley, one at a time without the need to go to market. In the meantime workovers might generate a slight increase but probably only for a short while as they did with Strawn and Welch but on that expectation I am not expecting them to really lift the price. If they do better than than a modest uplift in production then it should add to growing confidence. Can't really see what's holding this back though, even without all the side shows. Hopefully we will get the rise on the news of connection to and pushing CH4 into the pipeline and associated income as we know it should be substantial compared to everything currently coming in. Topped up another 1m yesterday after releasing another slow performer. I'm ready for when it happens. it should go well north of here, even if it drops in the meantime.

That's okay but thanks for the apology but I wasn't referring to voting rights I was referring to the level of dilution 104m shares paid to directors is 4% of the current issued stock. 104m share + 104m exercised warrants is only 6% dilution of the fully diluted shares (i.e. if all warrants were exercised and because normal shares. That's 208m of 3.6bn shares (current + unexercised) Those figures are why I didn't consider it to be much of a dilution.

It's still better that they take cash as it exists and by the time the AGM happens 3 days before Christmas day we should hear that F1 is connected to the gas pipeline infrastructure and delivering plenty of gas. That should raise the price and then 52m of the granted shares would be rated at 0.08p and the other 52m at 0.15p In other words the shares should be worth a lot more on the open market than than the calculated price and they are granting themselves massive bonuses. I don't see why they shouldn't be granted like most companies do options , i.e. something like 10,15 ,20% discount to the average closing price over the previous 5,7 or 10 trading days before the AGM. That would be fair to shareholders and allow them to offload on the spread and get their money. giving themselves shares that instantly multibag is a kick in the teeth to investors, many of whom already see them as greedy AIM lifestylers. This will do nothing to dispel that opinion among those people whether they have an equity interest in MSMN or not. I am more ambivalent about them as I think they have done a good job in the last 2-3 years and don't care that much so long as we see it move forward to profitability from here and have an mcap to match.

Forgote the link
https://www.mosmanoilandgas.com/sites/default/files/201124%20-%20Mosman%20Oil%20and%20Gas%20Limited%20-%20AGM%20%20Notice%20of%20Meeting%20-%20with%20cove..._0.pdf

You can download the proxy form at the bottom of the PDF on the website. I'll put the link at the bottom but sometimes links get removed. However, as protect.scot posted, it's unlikely that anyone here is holding shares under anything other than a nominee account, so you won't be able to do it. The number of shares they will get when the resolution is passed represents an extra 4% of the current issue and with warrants assume all other warrants are exercised too then that represents 6% of the fully diluted value of MSMN. It's not enough for me to talk to HL about voting down the options. Frankly if this company succeeds as looks likely next year then I don't begrudge the people that took it there even if they were at the helm when it went all the way down. Oil prices have been massively volatile in the past few years. They often are but it's more so than usual of late and that does impact their ability to raise funds and do deals. It's been pretty good since they tied up with Baja, and even the Blackstone thing wasn't a failure, just a limited success. So I am going to sit back and hope the revenue from F1 gas is going to be reported before the AGM and send the sp to above the main warrant prices. If it's high enough and I'm quick enough I may try to top slice or unload everything in the expectation of it dropping towards the warrant prices and reload. Good luck with whatever your strategy, stay or leave lets hope we all turn into big winners in 2021.

It's worth pointing out that there is a gerrymandered AGM coming up where shareholders can only give proxy votes to the people there i.e. the BoD. One thing being voted on is giving the BoD shares in lieu of 50% pay. The details are in the RNS on 15th September but basically 52m shares @ 0.08p + 52m shares @ 0.15p and 52mm warrants @ 0.15p + 52m warrants @ 0.23p. These which are the same terms as earlier placings and not the last one in October. Or AU$150k instead. I hope they will be responsible and take cash but I doubt it given where the company looks to be heading as they are granting themselves 100% interest on the earliest cut. This might be part of the reason the price is being held back and not just the October placing shares. In the grand scheme of things 104m extra shares is a drop in the ocean on 2..6bn and the 104m warrants will bring in about another £200k on top of the £1.36m for the other 560m warrants @ 0.23/0.25p when exercised so that's £1.5m in new funding at known price points only 52m of which are at the current ask. I'm therefore surprised if it is affecting the sp in any significant way but who knows how other people think. They might just look on it as potential dilution. Technically it is but most of it at prices nicely above were we are now so I just don;t understans why the buyers aren't here pushing this up unless they are trying to time the market. I don't have the minerals to play that game. It still looks cheap to me where it is give what should be coming.

Might have done well to get some funds back but it's the same person who decided to invest in a different kind of business in the first place. After the failure of the STEP purchase left all that cash in the bank. That was not a good time for MSMN. It took another failed deal before they first started producing with Strawn. Things have been generally positive for MSMN since then. It hasn't yet translated through to shareholders but corporate profitability is in sight now. The market hasn't got the whiff of it yet but it's more a case of when rather than if now.