Member Info for dgdg1

Preska gives new deadline of 10th January to pledge YPF shares, and extends deadline for Argentina to request expedited appeal, Burford shares up as it's now more likely that the pledging will happen, as Milei will now have a chance to do this, as opposed to previously where the deadline was before Milei gets in, therefore he couldn't have pledged before the deadline.

If the share price decline is due to the decline in the lithium price, then what I find strange is that on the chart you reference the lithium price fell primarily from mid July to mid September, whereas the CTL share price did not fall in that time. The share price only fell from mid September during which time the lithium price only fell slightly.

IC comment: "Litigation funder Burford Capital (BUR) is on a winning streak. In September, it announced another court win in the case concerning the nationalisation of Argentine oil producer YPF, which could result in billions of dollars’ worth of damages. As always, however, there is a big question mark over how much money Burford will actually receive, and when it will arrive.

The group is certainly making tangible progress, though. In the first half of 2023, its cash receipts – a key metric in such an unpredictable sector – grew by 148 per cent to $247mn (£203mn), as court backlogs continued to clear. “Realised gains”, which refer to the total proceeds generated when a court case concludes minus the deployed cost, are also on the rise.

Litigation funding remains an inherently volatile industry, however, and the nature of lawsuits, together with the complexity of Burford’s accounts, make it difficult for investors to ever understand what is going on behind the scenes. Hold. "

In other words, they have absolutely no understanding of the company, so are just taking a middle view to play it safe.

Kipperman, much appreciated, extremely helpful write-up.

Could someone please clarify what exactly they said about what's happening with the financing, did they say any more than what they keep saying in the RNSs?

Mrmarroc, OK, but I am simply saying that the appeal judge would look at the legal arguments fresh from his own point of view so could potentially disagree with Preska; he doesn't need to grant her deference on her legal opinions, so there is some chance he could disagree. (If the main issue previously was a debate over facts and Preska had mainly decided based on her findings of fact then, yes, it would have been unlikely for the case to be overturned as the new judge would generally respect her findings of fact, but that's not what happened here, as the decision was not over determining facts, merely legal issues, so there is a higher chance of it being overturned than if the issue had been over facts.)

On what basis do you say that she is on the fence rather than fully supporting government policy?

I thought a summary judgment is more likely to be reversed on appeal as it's a de novo appeal meaning the appeal court look at everything from its own point of view and doesn't need to give any deference to the original judge as there are no facts in dispute, only legal questions which the appeal judges look at anew. As opposed to a normal judgment based on a trial where some elements of the original judgment are based on the determination of the facts which are decided at trial, and the appeal judges will generally accept that the facts are as originally decided, therefore if the case turns mainly on the facts then there will be less scope for the appeal to overturn the judgment.

"Argentina hits milestone on path to gas export bonanza" - https://www.ft.com/content/a3982bb1-75cb-4988-8677-07499337fbda - should help them settle their YPF liabilities.

"fair value accounting...."

I note Litigation Capital Management announce today with fanfare that they are moving today to fair value movements. Let's see if that leads to an outbreak of shorting and scaremongering from the FT and IC, Muddy Waters, etc. Or is it only when Burford does it that it's a problem?

It's nice news but only relevant if the Conservaties win the next election, otherwise Labour party is what is relevant....

No, Noel was entirely wrong to predict 1p from the charts. The charts could not predict that a part would fail in Morocco. You could make a guess that with QED's past record something was likely to go wrong somewhere or get delayed. That would have been a fair guess with a reasonable chance of coming right but clearly no certainty. He just struck "lucky" on something which had a fair chance of happening based on obvious fundamentals. The chart is irrelevant, however, and to claim that what happened was predictable from the chart is ridiculous.

Pennylots, the fact that some expenses "may" become more in 2024 as a result of a greater amount of successful wins, is not a reason to exaggerate the present operating expenses, and especially not to use it to demonstrate a supposed high operational gearing - given that these potential future higher expenses will only be as a result of greater revenue, and is thus the very opposite of a demonstration of high operational gearing. By the way, I agree with you in principle that there is high operational gearing and this is one of the points that I have focussed on for a long time and hopefully we will reap the benefits of this sooner rather than later when realised gains push up x% but due to them going past operating costs, this will suddenly strike as a big increase in profits - I am just objecting to your calculation of the size of "fixed" costs.

My issue is that this share was previously seen as a no-brainer deeply undervalued share. It may still be undervalued but it's certainly a lot less simple as the European price is much lower and could go lower, so it mainly comes down to trying to work out how much gas they could sell in Morocco and at what price. This requires an in-depth analysis of the Moroccan market to try to form a judgment on what long term sales price they could get and for how much volume, which in turn depends on all sorts of factors, like knowing what is happening in the power market and industrial market in Morocco with respect to both supply and demand - so basically it gets quite complex unless you have a deep understanding of those markets and how they could potentially interplay with the European price etc. We can dig up information about new demand like the new gas-powered station, but then again do we know how much more supply is expected over coming years etc and how all possible factors will ultimately determine price? I personally find it difficult to be confident that I have understood all the relevant factors here, so for me the share doesn't have the attraction that it originally did as an obviously deeply-undervalued share.

Jimmy, thanks, will look into this. What do you think about my valuation estimate?

Jimmy, when was this announcement made and where, and are you saying they can sell all 105 (and potentially more) to the power sector, and none to Europe or industry? On that basis they didn't need to do the JV with Vivo?

BDC, re the future European price I am simply saying that as I understand it before the Ukraine war the prices were 10-15 euros/MWh which is about $3.20-$4.80/mcf or say $4 on average. Now they are down to 29E/Mwh or $9.20. But who is to confidently say what they will be in 2-3 years with Russia - Putin could be deposed, or an agreement reached. Self-interest on both sides has a way of asserting itself eventually, one way or another. Nordstream could certainly be repaired if both sides wanted it. Yes it might not happen but it hardly seems sensible to count on it, it seems far more sensible to work on the basis that prices will normalise over the next few years, somehow.

Excess gas that can't be sold to Moroccan power or industry (because there's too much of it and not enough industrial demand or too much competition from other sellers, like Predator), will have to be sold to Europe at whatever the price is. So there isn't a lot of clarity on how much of the gas would have to be sold to Europe, or at what price. (And I suspect the Moroccan price may also come down with all the supply available from Chariot and Predator and anyone else.) The sale to industry in Morocco is also being done by a JV so the partner would take their share of the profit, presumably 50%, so a high achieved price there loses its shine. A GSA will presumably be set at the expected average spot price so unlikely to be much more. I suppose you could argue if someone signed one now they might base the price on the present, higher price, but does anyone have any proper experience or knowledge on this? I actually think that there wouldn't be a rush to sign for a large amount now for a multi-year period, with prices coming down. I don't have any deep knowledge of how these things are done but that's my layman's guess and would be happy if there is any information to clearly contradict any of this. Basically all these points chip away at this assumption that Chariot is worth £1 (as previously touted on this forum) or at least 50p (as valued by analysts previously).

Actually I thought Jimmy made some good points, particularly that I seem to have over-stated the cost of each extra mcf of gas, so having rejigged the capex and opex figures based on the 12.2022 presentation I now think the fair net present value is probably more than 13p, but I still don't think it's 50p - it may be about 30p, but in my (limited) experience the market does seem to have a tendency to knock off about a half from so called net present values, which means the present price is about what one would expect. (By the way in getting to that figure I allowed for half the extra value of the possible extra gas at Anchois, as they have given it a chance of success of 49-61%, but also assumed it would have to be sold at low European prices). I haven't allowed for the Rissana volumes as they have only about a 20% chance so it seems prudent not to count it, although there obviously is some value there in reali

Pennylots, in 2022 operating expenses were $125m, and finance expenses were $77m, so more like $200m (not $250m) surely?

Jimmy, yes you may be right re the incremental cost of the prospective resources, if so that's a fair point.

As mentioned, it's not clear how much could be sold to industrial users. In any case I do think that taking everything together the analysts should produce a new realistic valuation taking into account what exactly could be sold to who and at what price (and when), taking into account the total market demand in Morocco and the fact that Chariot will be in competition with Predator. Also, it would be nice to have a real calculation of the potential profitabilty of the prospective resources if European gas prices normalise. The bottom line is that Chariot may still be a buy but I don't think it's as underpriced as people (and myself previously) were assuming.