Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Canetoad; I totally agree with your thinking re bond.
It's non payment would warrant collapse of the Company. I personally see it being morphed into one of the ABSs being extended in amount/tenure/rate.
My provider doesn't allow me to buy the bond, but I'd buy tommorow if I could.
Another 3c on the way making 9 for the year. And I think, any possible capital returns in winddowm aside, there's probably another year left of that dividend.
Staying in throughout, what I think will be an elongated wind down, as I think there is value coming back to us here.
Dropped in here, as a holder, to get a feel for how holders feel about EVR, and bar the post immediately below, see, a suffering of posts not remotely related to EVR, just posts about poster's societal views on the validity of various nations treatment of others.
Can such posters just go to a voicepoint they feel appropriate to such, and just leave us, that want views, and news on EVR to such. Give me your view on EVR - stop clogging this place about matters affecting EVR with matters affecting you, so I don't have to go through 200 posts to sort the wheat from the chaff. Thank you. And f e c k off.
Further to my previous post, and maintaining the same presumptions, here's some more back of the envelope calculations:
To clear debt, maintain dividends, and capp all wells, (to an end/close down/liquidation) DEC requires the following price :
$3.73 for 8 years (DEC's advised debt clearance period)
$3.59 for 11 years (DEC's actual ABS contractual debt clearance period)
$3.33 for 15 years (my belief of decent production volumes)
For context, the current average Henry Hub price for the next 18 months is $3.01
Wigan warriors; totally agree with your thoughts. You mention Birkenstock, who ultimately are owned by LVMH - as you say luxury brands, nurture the provenance of product for long term gain, not a quick profit. I'd be happy with that long term vision.
Ps, I use that $2.46 purposely, as I believe that is the inflection point at which DEC can retire it's debt at it's contractual maturity date rather than its currently more aggressive projected date - just - if it doesn't pay dividends or cap before contractual expiry.
Seems a fair bit of conjecture today on DEC's viability, concerns over ARO costs, debt cost etc and as everyone is running the numbers, so do I.
DEC make assumptions, so I'll make a few, for ease here, namely that production, dividends, unit cost and a well plug cost of $21k remain static, and no new debt/refinancing/acquisitions: -
804 mmcfepd () x $3.46= $1,015,371,600
Unit cost @$1.46 = $478,339,800, leaving $537,031,800
(On an annualised basis from the 3Q results)
Dividend cost $143,000,000
Amortising and interest at 6.1% on $1.56 billion ($2.2 billion divided by 8 years the period to 2031 that DEC use for debt clearance) =$282,360,000
ARO of 70,000 wells @21k ($1.47 billion divided by the same 8 year timeframe) = $183,750,000
So you have annual post production/admin income of $531,031,800 and annual costs to retire debt, maintain dividend, and cap all wells (i.e. the business/production ends in 8 years) of $609,110,000, a shortfall of $78,078,200
I would suggest this isn't the basket case people are suggesting it is - I mean on an extremely aggressive view of including all ARO costs, no more production (and disregarding that the ABS debt has contractual end dates averaging 11 years,), if you just halved the dividend, you would meet all your obligations within 8 years. I'd suggest that would be quite a pretty place to be sitting as a long term shareholder.
Not least because it ignores future production beyond year 8 - DEC intimates 50 years worth, gains on economies of scale from NextLVL, and the total debt cost I've used is overstated as I've used a straight line interest rather than a reducing interest.
Of course, if the realised price is $2.46 and not $3.46, well, DEC's going to need them wells producing for 20 years (and halve the dividend, and stop all capping until 2031) just to meet the debt. But then that's what DEC has pretty much always projected. And if the production volume doesn't fall of a cliff, I think they are right.
A breakdown of the horizontal/vertical well proportion would be useful, alas DEC doesn't disclose such (maybe a trawl of previous EQT results/updates would shine light on this).
Just taking the suggestion on here that only 10% of DEC's wells are of the dearer end horizontal variety, that takes the average cost to $31,000 so at an average of $21k DEC really are waving their SAM wand....
Not really a fan of buybacks generally, and whilst happy to wait patiently for the value here to be realised, I do note they have stopped, which concerns me. Why are buybacks viable at 90 or 93p because you think they are accretive/the business is undervalued, but then not at 80p?
Says to me, they are either being used to massage perception.....or they are struggling for cash. If it's neither of these, it doesn't instill confidence in me with regards to the ability of management.
An unexciting update today; volumes and prices slightly down, which does suggest there is no growth and/or oversupply in the local market currently.
That said, no surprises either and I pencil in about £13.5m in profit for the year. If we disregard plant, the £16m of inventory provides quite a back stop against current mkt cap. 2022 was quite a heavy expenditure year so lower 2023 expense may feed through to a little more profit. There is no doubt that a decent dividend will be forthcoming once the taxation/inter company structure is resolved.
Yes, one for the patient, but don't see either fireworks or anything to be concerned about here.
Canetoad; you make a fair point, and one that I consider with ALL stocks that have a large concentrated holding. It is a possibility, but actually FAIR has a concentrated (concert?l holding too. With the exception of BGLF which has the least concentrated and most diverse (mainstream) shareholders, I think it's part and parcel of this arena.
Most of these stocks to my mind are set up for primarily for high net worth individuals/family trusts etc, pursuing tax efficient income through the long term and the likes of you and me are merely riding the coat tails of that expertise/oppurtunity. So yes they could low ball us, but the counter balance is what is the incentive when the mandate (high income) is continually delivered and to buy out would merely concentrate their risk?
What advantage is there to the concentrated holders over the status quo? To capture the NAV discount? Well they could do that by using the Company's own money (aka the FAIR way) rather than using their own money.
Yes, it's a risk, and an important consideration, in a number of stocks in this arena. Personally I don't see it
I'm not guessing the cost, just questioning anyone taking Fool posts, their 'diligence' seriously. I've just calculated the average cost from what the Fool has reported, but didn't validate, explore or question.
When a Fool post appears to validate a viewpoint, things are desperate..
Their professionalism, and attention to detail can be seen in this snippet they didn't edit.........". DEC responded soon after saying it cost $2k to fix all the sampled wells"....
When I see a Fool post, it always reminds me, a fool and their money are soon parted.....