Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Selling of each segment is definitely sensible but I had to downgrade my valuation estimates of trin co2 EOR segment given it's a service model with service fee, etc. per contract and value of the project on balance sheet doesn't seem significant and hard to gauge additional insight into other intangible value around it. Couldn't find any read across sales of such co2 EOR service businesses to estimate a value on our co2 EOR segment. Not sure if the old proposed Fram transaction of $1.7 mn was of any help to estimate the wider segments value. So my estimate for Co2 EOR segments disposable value currently, absent any news, is pretty low vs market cap. Morocco obviously is dependent on drill results. And I don't have much disposable value attributed to IE segment unless significant progress made, as value can only be determined by what someone might be willing to pay in an ideal world.
All IMO and could be wrong so always dyor
Agree. Big Twitter buyers already getting nervous and no one knows when or if they will bail out if they see profits eroding daily given their entries from 5-6p levels. Big profit booking on low volume days in micro caps can produce big swings, along with spreads eating into. If wider market is weak then there's more downside pressure. Hope placing price of 10.5p doesn't turn into an anchor level unless 3p-4p average holders decide to take all profits off the table pre drill. Hope it turns for us remaining holders as its hard to see profits evaporate daily and thinking, should have taken the 15-16p quote few days ago, especially before the possible market wide low volume period kicks in May pre drill.
All IMO and could be wrong so always dyor
MEM- What II are you referring to? IMO it was all placed with PIs as there has been no new TR1s or big II shareholder on the sh register lately.
I still think it was ISA related MM shuffling that caused big rise on no news recently. This also reminds of OMIs recent round trip after everyone was convinced it was the next GGP until the actual drill results reality set in.
We need real value creating news to sustain and build on rises rather than just our projections and chart targets. 10.5p was something PG seemed as a good level to take money off the table and it's been painful to see it drop back on no news just as it rose on news. As we've got big holders who have 3p-4p averages, not sure how many have already booked profits or are yet to? Any idea if Twitter buyers are still in? This profit evaporation is not great especially with wider market being down as well.
All IMO and could be wrong so always dyor
Mick - I agree, there is sizable potential in CO2 EOR business but feel it's more on contract scaling side, as we might have to value it as a service model business segment. Reading older PRD RNS' I recall there was mention of potential revenues that could be coming in from the EOR segment but recently couldn't find any reference to potential revenues from the segment neither in recent interviews nor in RNSs unless I missed something? Did references to revenues from trin segment always meant service fees/profit sharing?
Not sure how, even landing a big EOR contract might help us unless it's a financially significant contract along with scalable follow on opportunities ? News about Masseys tie up with PRD for the pilot didn't seem to have much effect on PRDs market value back when it was announced I think? I guess having a unique IP based EOR technology might be more valuable than a licensed generic EOR model? Of course, proof will be in the contract details whether it's significant or not.
All IMO and could be wrong so always dyor
Don't recall ever getting a sell quote for 200k+ even on 17p + days, so scaled out in chunks while going up. Now trying not to book profits at lower levels than 16-17p but hard to see profits evaporate, think might be because most other holders have been in since 3p-4p averages. And availability of quotes might also depend on choice of brokers.
All IMO and could be wrong so always dyor
Prd has more potential than 90% of micro cap E&Ps whether on AIM or otherwise. Of course to sustain and build on any rise we need actual value creating event I.e successful drill result and not just chart targets. I think a lot of holders are sitting on profits and PG raised capital at 10.5p, a level he seemed to suggest in the recent interview as a good one to get some money in by taking some money off the table while it's still there, by capitalizing on the sp rise, so holders might be booking profits as well while sp is above the placing price imo.
Market can give sp rises on no news and can just as well take it all back and more on no news. It's especially true on micro caps where round trips are pretty common if there's no actual news to sustain rises. As May approaches, volumes across the market might start going down and causing large swings on low free float micro caps like PRD. The low free float can be a blessing, as seen on the recent rise, as well as a curse when you want to offload sizeable volumes on low volume days or negative news days. Going into low volume days let's hope the chart target chasers and big Twitter buyers don't lose their cool and start offloading to protect capital as a lot might be in big profits. It's never good to see profit reducing but hoping to see it turn so can book some more pre drill.
All IMO and could be wrong so always dyor
Mick - don't think so as he is also involved in mining.
"Mr Castro is currently Executive Chairman of Orosur Mining Inc., and Non-Executive Director of The Stanley Gibbons Group plc, Tekcapital plc and Predator Oil & Gas Holdings plc."
All IMO and could be wrong so always dyor
Cash burn seems low but change in tone is visible - it's worded now "comfortably funded" from "fully funded"?
"With well costs and timings being firmed up, Deltic remains comfortably funded for its 30% share of well costs."
All IMO and could be wrong so always dyor
Mossma- not fully, but aiming to be out fully pre drill results, ideally reducing exposure as we move up. Need to have substantial news to hold through and add on current big rises above certain market cap levels, according to my analysis. Of course, I could be wrong and we could move much higher and that'd still give a good opportunity to scale out pre spud. Insecure mainly of big rises in micro caps in short span of time without significant value creating news that could sustain such rises, and having round tripped the gain to loss scenario multiple times. Hence, skeptical enough of all good micro cap stories until proven otherwise. Let's hope PRD delivers as it's too good of a story with strong management.
All IMO and could be wrong so always dyor
Cheers Sefton. That's exactly what I meant, maybe I didn't put it as succinctly as you did but it's all about challenging ones thesis as that's how conviction builds to hold, add or reduce/sell. And the point about selling high and buying back cheaper was a trading example and would be surprised if anyone can time it exactly like that but it was hypothetical to show that mean reversion does happen and above or below that mean can provide opportunities irrespective of who the market participant is.
We all have confidence in PG and given that PG thought it as a reasonable level to get some capital in at 10.5p levels and market has valued us higher than that level ever since is a testament to PRDs management. PG himself in the video interview suggested, if there is money on the table, take it, as it might not be available when it might be needed, so can't really fault the holders who have made 100s% + profit by placing their confidence in PG, earlier than the market did. Of course we still wait for actual value catalyst events to play out one way or other to get us to higher mcap levels imo.
All IMO and could be wrong so always dyor
Zebra - it's all about +ves/-ves from a given price level. Imo sub 20 mn market cap PRD was attractive and undervalued for the 3 segments( mainly Morocco), at 45mn+ proper news flow might be needed to sustain hold and build on rises. I have always said we need proper news to sustain any rises, not just chart targets. Everyone does their own research and make their own decisions and the point of bbs such as this is to see if views about a specific Co. are correct or not by getting insights from other posters IMO.
I could be wrong about my current fair value and sp keeps going up as that's what I'm hoping for my holding, going into spud, but drop off in volumes across market going into May is what I'd wanted to check if other posters had similar or different views on? Nothing to make anyone doubt, it's just bouncing views/ ideas to see if there's a flaw in my argument which is what all my posts are about. One obviously should not be taking any advice or suggestions from a bb but do their own research, and conviction doesn't go down that quickly just because someone mentioned their view on a bb, it's all about your own research and read on the price and value.
PRD we know has great potential but delivery of the potential via actual news is what will help us hold and build on our gains, not just speculation of great value that we all see in PRD, as markets are non linear. And been pretty clear that ideally will not be staying in for the drill results unless some substantial news changes view. I would have hoped someone would challenge my thinking about holding tight with rational arguments but been less and less confident with the challenges received to the points raised on the bb, especially when profits get smaller and smaller as others choose to take theirs and run with it, going into drill.
All IMO and could be wrong so always dyor
Zebra - Day to day price movements don't matter much unless the up or down movement is based off on news but curious to understand how you define traders vs investors? Both have an aim of making profits irrespective of labels but IMO a trader is someone who buys in for a very short duration of say less than a day or few days only to exit with a target profit within that time frame irrespective of fundamentals. Just because a holder books profits at levels someone doesn't agree with, are they traders?
We all can look at our holdings and can think what if we sold all or part of PRD holdings at 18p after its 400% rise in few months and buy back at 14p in a few days with the sale capital, and we'd have 25%+ more shares? Hypothetically same goes if we sell at 14p and buy back at 10-11p and so on... When we get a buy or sell quote, the MMs don't ask if we are a investor or trader to get any specific discount/premium prices, market is market, it doesn't distinguish between investor or trader imo.
We had profit booking given the 1000% + rise from yearly bottom and 400% + from last few months. Given that we might be entering low volume period where some might follow the adage of "sell in May, go away " volatility obviously increases a lot more in micro caps so up/down movements without news might not be accurate representative of our perceived value pre spud hence alpha dislocation is higher giving opportunities to investors and traders alike.
Mcap jump from any successful drill results in June or July etc. could be from 90mn mcap or 25 mn mcap levels or anywhere else, no one knows, hence we choose our entry and profit booking points depending on if one choses to hold through drill results. Don't feel Trinidad news will add much value unless financials of the deal for PRD are brilliant rather than just some tie up contracts and optics around it IMO as it's economics all lie in scaling up the contracts given a service and profit sharing model where the actual producer might want to keep the majority of bopd net backs? I could be wrong on the above points but always welcome any corrections /challenges to above from usual contributors?
All IMO and could be wrong so always dyor
P.s. What I meant by possibility of PRD turning into SDX was that, I hope PRD doesn't turn into a development / production company as SDX is, but rather stay in the exciting and high value creating exploration bit mainly.
And to add to the point regarding being able to realize gains - Given PRDs small free float, have realized that buying can be difficult but selling can be just as difficult, as was the case today even for small 50k chunks later in the day all going NT. Low free float works both ways, as in if PRDs drill disappoints, selling even 50k + holding at the open would be impossible without going to NT imo.
All IMO and could be wrong so always dyor
Zebra - the post might not be composed well enough but the point was that, will drill, testing/flow rates that decide if a discovery is commercial enough be done together or divided into two parts?
SDX is targeting 2bcf? They have already derisked 18 BCF in Morocco and some of their drills are targeting upto 9 BCF, small but still significant as their development, production and cash flow scenario is straightforward.
Mick- a healthy dose of paranoia is always good. I always want someone to challenge my investment thesis and point out flaws as it builds conviction in holding/investing. Paper profits have come and gone and have round tripped so many times on micro caps, hence it's more important to fool proof your investment thesis as much as you can imo.
Afterall, the secret to making profits is being able to realize them.
All IMO and could be wrong so always dyor
Mick - you think SDX with a market cap of £34mn will have the capital? PRDs current market cap is bigger than SDXs. Doubt SDX will have the firepower?
All IMO and could be wrong so always dyor
NH- that's more or less clear that follow on program hinges on the first drill being successful although not sure if it's success or commerciality will be dependent on proper testing being undertaken for days/weeks? Does anyone on here know if PRD would be releasing news of drill results of whether there's gas encountered, along with testing or will drill results follow on after the discovery result but commerciality dependent on follow on testing?
Even'L - my guess is market might not be impressed if it's a closed off 30 -50 BCF discovery with no more follow on prospectivity for further drilling. It will definitely be valuable to PRD but a one off 30-50 BCF limited prospect might see us developing it via RBL as mentioned in the pilot CNG Morocco development scenario RNS. Not sure how much appetite there would be in building infrastructure, haulage etc. For a 30-50 BCF closed off prospect and might be a bit more tricky to monetize it and so PRD might end up choosing to develop it? PG also mentions his excitement regarding potential revenues and profits from development. But if it's only a 30-50 BCF discovery that PRD chooses to develop, that might see us turning into another SDX which will not be exciting at all, if there's not much follow on exploration upside in Morocco?
MEM / others - any news on flight resumptions to, and full lifting of lockdowns in Morocco yet? Not sure if Morocco has already lifted full lockdown?
All IMO and could be wrong so always dyor
Cheers MEM. I was more keen to understand why the other reservoir targets (tgb1, 1a, 2,2b)were not estimated by SLR to come up with a CoS if the prospects were resources estimated already by SLR?
Vegas - couldn't find an SLR updated CoS estimate in that RNS you referred to? It's only got RF factor in it?
All IMO and could be wrong so always dyor
Well summarized kalinit. Few points/corrections IMO.
Firstly, PRD is not AIM listed. It's standard listed with JE incorporated possibly the reason why there's no stamp duty on share purchase.
Morocco - we have 6 reservoir targets but the COS might have to be classed independent and dependent I.e. Probabilities. SLR as a third party have only given a cos no. For One reservoir target of 34% while rest are management estimates. This has been a bit of confusion for me that if SLR updated CPR in 2020 why they didn't include these other targets that PG included in the ppt in July 20? Don't think anyone here knows the reason for it? So the probabilities might need to be taken on the 4 zones and given that we'd be drilling one well, probabilities might have to be classed as dependent rather than independent events? And sou/char are getting their gas projects off the ground so export pipeline capacity might be limited. And given Morocco pays top price for the gas, they'd expect that local supply from sou,char and other potential prospects/developments like PRDs will actually get the high local gas prices down in line with other countries.
T&t - is best co2 EOR project in the world? Co2 EOR is upcoming but common globally but trin is where the opportunity lies for PRD. Scaling is where the hard work lies as every contract value would be dependent on the service fee and any potential profit sharing that the producer might want to share with the service provider rather than the actual bopd a given field produces? Green credentials of course should help us get traction with green investor cohort but might be dependent on how each contract might be framed. Given that heritage might be short on cash they'd want developments like TXPs to boost revenues along side EOR. Project economics are obviously dependent on the most important factor IMO which is cost of co2 injected.
IE is definitely a wild card until further news confirmed. Pvr reg. experience has left a bad taste for current and potential IE E&Ps IMO.
Corrections to above points welcome from serious contributors?
The potential value in PRD is immense, we just need PG and team to derisk the prospects so the word "potential" is dropped off and our mcap grows substantially and sustainably.
All IMO and could be wrong so always dyor
Looking back and remembering Davis ' appointment mid Mar RNS and the share price action at the opening, it was obvious that the journey here is going to be long and strong. When you have such a big weight as a holder willing to put more capital in at 70p+ levels giving weight to possible valuations at those levels, it was a slam dunk not to increase exposure.
Still remember well, for the first half of the day on 21st Mar after Davis strategic investment RNS was released, share price was stuck around 14p, when I bought in, but sadly didn't increase exposure as it stayed around that level for a day or two. With micro caps, markets and analysts always digest news slowly and with a lag, giving PIs amazing opportunity to load up before the IIs do. Should have loaded up a lot more at 14p opening price, I'm guessing we all feel the same. Have a decent exposure but not as big as should have been from 14p levels, given the kind of RNS that was released and the price action at open on the day.
All IMO and could be wrong so always dyor
Yes, we do need IIs to take us to higher mcaps. £10 mn to £50 mn market cap journey different from £50 to £ 200 mn. PRD should get there sustainably provided we get our appropriate news flow which can attract those IIs. I'd be surprised if IIs will take note of Zaks price targets and pile in?. Would have thought we'd see a new sizable shareholder coming on the books but still waiting to see.
All IMO dyor