RE: Aoka Mizu redeployment?19 Dec 2024 16:25
My observations:
The info in the Prax Annual Report is nothing new so no reason for the DCUs to suddenly be worth less than they were before. The ESTIMATED cessation date of Aug 2025 was already factored in from the CPR.
Important also to note that it is NOT part of an Operational review or an Outlook statement in the Report but actually falls under the financial statements “Note 3 – Accounting estimates and judgements”, and it’s for balance sheet date 29th Feb 2024. It’s just explaining the basis for an accounting estimate of reasonable asset and lease liability figures to be calculated and recognised in the accounts at that date. Those figures are not yet confirmed as a final outcome.
The Aug 2025 date used in their calculations was, necessarily, in line with the scheme document although the revised CPR also indicated Feb 2026 as a 2P Reserves Economic Limit. The scheme also implied a final DCU payment from P6 in March 2026, but all estimated back in Dec 22/Mar23. We have moved on since then, with production holding up better, so those dates could yet be pushed out further if considered still economical.
None of this is new. The Annual Report hasn’t changed anything.
Accounting estimates and judgements are just that; there is nothing to stop them changing in future and they do not imply firm decisions beyond the report date unless stated. Until Prax do state otherwise this is potentially just a note to comply with accounting conventions and basis of preparation.
Given the implications to DCU holders I am sure that Prax will issue a notice, in due course, once there is any firm resolution about the AM. The note in the annual report is not that.
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Separately, we have the media around the AM being lined up for the Falkland’s project and also Bluewater’s right to terminate at 6 month’s notice themselves, so there are obvious risks that we are aware of but the risks are not new, they haven’t brought the estimated timetable forward, and they have still to be confirmed.
We then have the Total deal announced in June, due to complete in Q1 2025, and other deals under consideration. The mid price of the DCUs had drifted down to c.1.6p earlier this year – understandably as we progress towards an end date and payments made reduce the remaining balance possible – but it then jumped to c.2p at the end of August perhaps as the estimate of what the Total deal could bring in was better assessed. There is still potential for payment up to the remaining 4.8p by March 2027, regardless of what happens with the AM next year.
As always – DYOR and consider your own R/R and timelines. Posted for balance only and no advice intended.
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