Member Info for DRB83

Hamster, given your longevity here. Do you mind sharing your SWOT analysis. It would be appreciated by the newbies.

Looks like it was printed incorrectly. 2.58 instead of 2.258. amateurs.

Saint, Me too. Did some very quick skim research over the weekend but concerned now about the hedging constraints. Long term the company is worth a lot more than £60m but until they are producing in excess of 3m therms a month they won't benefit from the gas prices like other companies will. I'm only in for a swing trade but hoping to hear some good news this week.

Hey Hamster. Are you in here or just watching?

So hopefully in September Angs will be producing 50k therms per day so 1.5m but at a measly price of 42p per therm. Ball and chain hedge. A hedge that will last 3 years. Upto March23 Angs are obliged to deliver c 12.5m therms at a measly 52p per therm. B2 won't be able to deliver this on its own so when will the A4 well be up and running and the side track?

Anything over 12.5m therms will be sold unhedged at spot price possibly 600p per therm. That's where the real money is made.

Hopefully Q223 results will help boost H123 results but they need A4 and the side track flowing asap. When?

What flows after these 2?

The hedge was necessary but it's a ball and chain for the next 3 years.

Angs won't benefit from the huge gas prices until next year most likely.

Toptramp, if that is the case then it is a contractual issue as I'm sure I've seen it written that Novacyt had the discretion to provide replacement products. DHSC did not have the option of a full refund unless Ncyt offered it to them. If this is the case then DHSC have not followed the contract hence why ncyt feel they have strong grounds.

I believe ncyt and DHSC may agree that the products were not suitable although I don't quite understand how it can take £156m worth before realising. Strange

Trump, You attack me based on what you know if Porky. This is really no concern of mine.

If you want to engage with me in a stimulating debate going forward then please acknowledge me for who I am DRB. Porky as I advised over a year ago and will continue to advise, is a completely different user.

Regards the LTIP. For sure the payments to GM and co should be postponed until a resolution is reached. If we end up paying back £135m then it's because the contract wasn't water tight or that the product faults were that shocking that the contract becomes null and void and therefore a replacement is not an option. If that's the case then both scenarios happened under GM's watch and he certainly shouldn't be getting a huge bonus for it.

If we win fair do's. If we pay it him though then we can forget about getting it back.

Thanks again Exmex. I have reviewed them all but nothing significant new to learn really. Bod still insisting that the £20m warranty should be used to replace any products not a full refund.

There are 2 parts to this dispute.

1. Are the products faulty? If so how come it took DHSC £135m and several months to realise. Have ncyt accepted responsiblity for faulty products (hence warranty provision) but DHSC aren't interested in replacement they want full reimbursement.

2. Assuming both parties agree that products were faulty then it all comes down to the wording in the contract. If it is Novacyts discretion to replace faulty products then I can't see how DHSC have a case.

Assuming above then DHSC have nothing to lose as even if they do lose the case they will still get a s h I t load of Covid tests. Are the DHSC dragging their feet hoping that Covid testing becomes obsolete and then they are more likely to get the cash back. If the contract holds up then the judge should still allow Novacyt to replace the products even if it is for a different assay completely.

Is this why it took over 12 months for the case to be taken to court? Were ncyt trying to negotiate a replacement product but DHSC weren't interested. DHSC drew it out as long as they could with every intention of going to court just to drag it out even longer with the hope that they get the cash. They didn't need replacement tests because they had different options and probably much cheaper.

In summary, DHSC may just be taking Ncyt to court on the off chance they get £135m back. If they lose they still get £135m of tests. Maybe this indicates that DHSC don't necessarily need a strong legal position. They have nothing to lose and £135m cash to gain.

On the other hand, Ncyt have £135m cash to lose or £20m cash to replace products.

If DHSC don't have strong grounds then worse case for them is they get £135m of tests + a minor legal cost

If Ncyt don't have strong grounds then worse case we lose £135m in cash + a significant legal cost, huge reputational damage and 90% off our mcap whilst trying to operate with one arm and one leg tied behind your back.

Ncyt wouldn't have wanted to go to court if they didn't have strong grounds so the fact that they did tells me they believe they have very strong grounds.

Sorry SQZ

I'm getting the EV's of both to be very similar. Between £500-600m.

SQZ produce close to 30kboed Vs Kist 13kboed
Kist have lower production costs per unit
SQZ 20% hedged Vs Kist 0% hedged
Kist have TTF and UK gas price Vs SQZ just in UK gas price

What other arguments are their for SQZ to be a better buy than Kist?

I'm getting the EV's of both to be very similar. Between £500-600m.

SQX produce close to 30kboed Vs Kist 13kboed
Kist have lower production costs per unit
SQX 20% hedged Vs Kist 0% hedged
Kist have TTF and UK gas price Vs SQX just in UK gas price

What other arguments are their for Kist to be a better buy than SQX.

If DHSC win they still owe us the £49m so the initial cash outlay is likely to be £135m - £49m = £86m. This we can afford today but it's likely how cash balance will reduce below this number over the next 12 months meaning we'll need a payment plan or a raise. Imo a short term payment plan would be agreed as Ncyt would be due 2 significant tax credits from HMRC. One for VAT and one for corporation tax.

Thanks tidd

You are quite amunro. Although we would have received December's in January. I don't exactly know what the payment terms are on our invoices but given we had €40m in receivables in December it's likely at least 60-90 days. Given the recent price rise in Q2 22 Vs q4 21 then I suspect the missing €37m is in trade receivables.

What's the significance of the effective transaction date of GLA being 1st January even though the acquisition completed in July.

I'm assuming we don't get our 20% of profits until July but just not sure why January is significant?

Quick question. Playing devil's advocate

At Dec 31 we had €77m cash.
At May 31 we had €129m cash
We bought €28m of our bonds back in Feb so add that on
Cash generated in 5 months = €129m + €28m - €77m = €80m

The average TTF price for the 5 months was approx €100 (not exact just an estimate but looks there and there abouts). If we can produce 10,200mwh per day then that's €1m cash per day which I'll treat as all profit for simplicity. So in 152 days we should have generated €152m less admin and other expenses (€30m pa so €13m for Months) so net cash generated in 5 months = c€140m.

Now 100,000mwh were hedged until end of March at €25 so if my understanding is correct we would lose out on 300,000mwh @ €75 each so €23m

So take this off the € 140m leaves you with €117m which is still €37m more than what we actually generated.

So either we
1. are nowhere near the 10,200 target
2. have spent considerably more cash than normal on development etc
3. Not getting the €100 market price.

Has anyone any thoughts on the cash flow and why we appear to have less cash at May31 than we should?

I get the Benriach prospect to potentially cost us $160m based on current expected reserves so $325m in total.

Also, the Shetland Gas Plant has a capacity of between approx 60-80kboedp depending on pressure. Using the lower end, at full capacity (60k) our 20% should deliver 12k per day but we are told 6k per day. Therefore the SGP is only currently operating at approx 50%.

Glendronach will utilise some of that spare capacity. Does anyone know the latest on Glendronach. Last I could see was in Nov21 where TotalEnergies put out some tenders for a Gas Mercury Removal Unit and a connection pipe to the main flowpipe back to SGP. £50m in total. Seems pittance considering it holds close to 100m boe.

Also, according to this article 20% of GLA was almost sold for $1bn back in 2019. We picked it up for $165m + depending on Benriach reserves.

https://www.energyvoice.com/oilandgas/north-sea/191881/totals-sale-of-laggan-tormore-stake-expected-this-week-report-says/

Given what is happening to gas prices we got a pretty amazing deal or am I missing something?

Thanks. What do you get the 6000boe/d to be worth - top line. I'm thinking close to £2m per day. Not sure on cost but if £1.50 per therm was profitable then £5 is clearly generating huge profits.

TTF worth close to €3m per day. Very little cost so 95% profit.