Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Yes Optiva apparently taking investor inside for a potential placing in Feb. Optiva calls it "Project Target".
Vast has been struggling to get enough and stable funding for several years. In 2018 the company signed the Mercuria take-off facility, but in Jan 2019 Mercuria refused to payout the 2nd tranche of the facility. Vast made a CB deal with Bergen, but after a few months, Bergen pulled the facility as the stock traded below the SP threshold. In the spring of 2019 Vast sent out several RNS about a potential Swiss bank loan, which never happened. In Oct 2019 Vast announced that it had signed a $13.5m CB facility with Atlas Capital Markets. The facility was conditional on AGM approval, which was received, a standstill agreement with Mercuria which Vast hasn’t written clearly if it has been achieved or not. The 2-4 tranches are also dependent on receiving the Zimbabwe diamond concessions and certain progress. Vast has made several smaller placing to cover ongoing cash burn.
- 2 Jan 2020, Vast announced “the Company has submitted a drawdown request for the First Tranche Issuance to Atlas” this would clearly indicate that all conditions had been received and that the money would transfer in days.
- It's now 24 Jan, 22 days have passed since the drawdown request, it is starting to look like something has gone wrong with the drawdown or that Atlas is not willing to provide the funds.
- Based on Vast cash position as of 31 Oct 2019 and historical cash burn, Vast would need the Atlas money immediately.
- Cash situation:
- £1216k cash as of 31 Oct 2019 + £50k from warrants exercising
- £384k cash burn per month (H1 cash burn £1959k SG&A+£345k cash interest)
- £114k estimated cash as of 31 Jan 2020 (3 months of £384k in cash burn)
- This calculation assumed no capital expenditure, this is unrealistic as Vast spent £1184k in the past 6 months period on PP&E, and it’s fair to assume that there has been capital expenditure in the past three months as well.
The bottom line is that Vast will have at the end of the month around £114k in cash (estimated) which would cover less than 2 weeks of cash burn. If the company doesn’t receive the Atlas funds very soon, they will probably have to do equity raise.
I dont think so, WEN is assuming its first coming back mid 2020.
The stock is finally catching a bit of a bid. Maybe AXA cleaned out some overhang.
Wentworth will come with 2019 update and outlook for 2020 before the end of Jan. I guess it wont be any big surprises as usual.
No, I am not in London this week.
Regarding the dividend, I spoke recently to the company and they said, the $25m normal dividend should be a floor. They have a preference for share buyback over special dividend, esp. now when they think the stock is very cheap. Last year they paid the special dividend because the cash balance was to big due to the delay in the 55k bopd phase development.
I don’t think one should assume a special dividend in 2020, however if the 75k bopd phase isn’t approved by the KRG when its time to propose the dividend I think its likely that they will do a special as in that case there won’t be much capex in H2 of this year.
Ideally GKP want the approval for the 75k phase before the last well in the 55 kbopd phase is completed so they can keep the rig and start to drill the wells for the 75k bopd target. The bottleneck seem to be i) MNR is slow, ii) The MNR isn’t completely satisfied with the has injection plan.
Rafrider, I am Pareto client so I received a schedule for the conference and I spoke to GKP rep last week and he said that they are presenting at the Pareto conference and some conference in Norway next week.
Regarding Capital selling down, it shouldnt come as a surprise given it was Mark Denning who was resposible for the GKP at Capital. Capital seem to have dumped a number of his portfolio companies after he was sacked in end of Oct 2019. I think Capital selling out is putting pressure on the stock but it dosent mean anything really for the fundamental view.
GKP is presenting at the Pareto conference on Wednesday, They are also presenting at conference in Norway next week.
From @OilGasTracker
Tullow Oil Trading Update & Investor Call Oil & Gas Tracker
Tullow stock is trading up slightly after todays trading update. There was limited positive news in the update, but the stock is more likely holding up due to the lack incremental negative news. After looking into the details of todays RNS and listening to the investor call 2020 looks like a challenging year for Tullow Oil.
Key targets for 2020
? Production est. 2020: 75000 boepd down from 86700 boepd in 2019
? Expected free cash flow 2020: $150m down from $350m in 2019
? Total capex and decommissioning spend est. 2020: $450m down from $571m in 2019
Tullow is targeting $150m of free cash flow based on $60 Brent. Based on our model they need $50m of cost saving from SG&A and other cost to reach the free cash flow target, which seems optimistic.
Ghana
At Jubilee he J-54 water well has been tied-in and the company is currently planning for the maintenance period at the end of January to increase gas processing capacity. At TEN the drilling of the production well on the Ntomme field has commenced.
Uganda
The management was unclear on todays investor call if they are still looking to sell down Uganda. In the RNS the company wrote that FID is dependent on a reduction in Tullow equity stake. It looks like the Uganda asset will be in limbo during the next year. The Uganda sell down was also Tullow best option for debt and future capital expenditure reduction. The company is planning to spend $15m in Uganda during 2020.
Kenya
The operation in Kenya has been delayed due to severe damages to road caused by adverse weather. 2020 is likely to be another year of slow progress in Kenya. Tullow partner Africa Oil announced today that they have closed their Nigerian acquisition from Petrobras, which further shift Africa Oil focus away from the very delayed Kenya operation.
Exploration
Tullow didn’t specify how many exploration wells they are looking to drill in 2020. $75m of the capital expenditure budget of $350m is allocated to exploration down from 2019 budget of $140m.
Tullow Oil has been on path of debt reduction over the past years, 2018: $410m, 2019: $350m and now assumed $150m in 2020. With the weak operational development 2020 might be the last year at current commodity price when Tullow can reduce its debt. 2020 capex budget is all maintenance capex as it doesn’t increase the company production and going into producing assets. Unless Tullow can divest asset during 2020 it looks more and more likely that the company will have to raise equity to improve the balance sheet before 2021 when production will fall further. For us its difficult to see any reason to own the equity at this stage.
I doubt we will see any significant capex in 2020 or even 2021. With the reduced pressure I think they have pushed out the Madimba upgrade.
I think its hard to grow through acquisition or organically in the oil & gas industry. Sometime opportunistic acquisition works well, like for SQZ or RRE. But adding new asset in Africa is hard business. I think the dream deal is if they can acquire M&P stake or merge the Manzi Bay business in WEN and give M&P shares. It would make Wentworth big enough to attract a wider group of investors and that would be reflected in valuation.
I think that is already done by 2019 yr end. It has clearly had a positive impact on WEN cash balance.
More importantly I think its a very positive sign that WEN customers, basically only government department have paid down the payables, which is reducing the Tanzania/political risk.
The FCF is based on 85mmcf/d. Gives $24m in revenue. The Ziwani carry reduction had a signficant impact on revenue in 2018 and H1 2019, it could have been explained better by the company. I am assuing $4.7m of SG&A + $400k in share based compensation. $3.4m in cash operating costs. Depreciation of $7m but has no impact on FCF. Small positive finance income as debt will be repayed and they are sitting on a lot of cash from start of year. And $0.7m in capex. This gives me around $15m in FCF.
I have been a shareholder from the delisting in Oslo but I have followed the stock for probably 10 years. I thought the stock would perform better after the Olso delisting overhang had gone and the market would appreciate the stable operational performance and substantially better financials. But I have been wrong. This has resulted in that the stock has become silly cheap. I think the lack of share price performance is due to 1) E&P has been totally out of favour the last year due to environmental sentiment, which shouldn’t impact WEN which is a pure natural gas play which is probably the best combination with wind and solar power etc. But investor seem to have put WEN in the E&P category as any other oil pure play, 2) The mcap is so small that institutional investor has very little interest, the institution on the shareholder list has been in the stock for ages and there hasn’t been any new additions. 3) I think the stock still suffer from the challenging period the stock had in the past with slow ramp-up in production, debt issues and a few placing, 4) The management isnt promotional at all so the interest from retail is weak. AIM retail investor seem to prefer to invest in junk where the CEO is promising most. Katherine Roe isnt promising much but she is delivering real things.
Its 2020 now and the mcap is £35m and the company should have +£10m in net cash and no long-term liabilities. Based on my excel model where I conservative assume modest production growth in 2020, the company will generate $15m in FCF (£11.3m) in 2020. We have an enterprise value of £25m today and looking to generate £11.3m in FCF this year, this is crazy cheap.
Eskil Jersing left the company as he wanted to acquire asset in a larger geographical area while the board wanted to focus on East Africa. I think the BOD made the right decision, its hard to make accretive acquisition and with the current valuation the only thing the company should do in terms of investment is buying back their own share.
The decision to make Katherine CEO and keep the CFO role, was a good decision, it further shows that the company is purply focused on milking the current asset and keeping SG&A low.
I have increased my holding over the past few months as I think the stock is very cheap and it wont stay like this forever.
They should use a cheaper location.
It is what it is.
I think the appointment was only legal house keeping which had to be done before the year end.
The prospectus from 1 May 2019, explains all the detail of the purpose of Sirius Minerals Finance No.2 Limited. The company was set up for the $507m convertible bond, which was then reduced in September when the bond issue failed but a part of the convertible bond is still in the company.
From the old prospectus, page 52
"Sirius Minerals Finance No.2 Limited, a wholly-owned indirect subsidiary of the Company
incorporated in Jersey is issuing US$507 million of New Convertible Bonds that will be convertible
into redeemable preference shares of Sirius Minerals Finance No.2 Limited, which will be
automatically transferred to the Company (without any further action being required to be taken by
the relevant bondholder) on and as at the relevant conversion date, and in consideration therefor
exchanged into fully paid Ordinary Shares of the Company. T"
If you read the prospectus from 1 May 2019, it explains the purpose of SIRIUS MINERALS FINANCE NO.2 LIMITED.
This is old news.
Prospectus
https://siriusminerals.com/investors/stage-two-financing/protected-documents/prospectus/
SIRIUS MINERALS FINANCE LIMITED a corp registered with the same set-up as SIRIUS MINERALS FINANCE NO.2 LIMITED, was registered in 2013 but never used.
It dosent look like this means much.
Really like todays RNS, possible placing at or above the current share price. Why would any reasonable investor put in money at 26p when Chris Aker got in at 2.5p a few months back and since then there has been no progress for the company. This is really Concha 2.0 and everyone knows how that ended.