SOU equity interest and Schlumberger deal3 Mar 2024 14:19
Some posters here seem to think that, because of the deal made with Schlumberger back in 2021, SOU´s equity interest in the project has been reduced to 26% (after taking account for Schlumberger´s 11% share of profits)
I don´t think that´s right.
Press released on June 21, 2021:
"Under the principal terms of the PSD (Profit Sharing Deed), the Group will pay to the Seller an amount equivalent to between 8% and 11% of total net profits (after costs, taxes and other applicable deductions) arising from the Concession over a period of 12 years from first commercial production from the Concession."
The press release talked about of "total net profits". I think it was referring to SOU´s NET profit, along the whole (TOTAL) life of the production concession.
The other possible interpretation (that Schlumberger will have the right to receive between 8% and 11% of gross profits from Tendrara), will obligate SOU to pay a 10% on average of profits atributed to its parners (including ONHYM, that was already a partner when the deal with Schlumberger was cut). It doesnt make any sense.
In such a case, it would have used the words "total gross profits" (or simply "total profits") instead of "total net profits".
For those thinking that the word "net" was referring to the fact that, in order to calculate the "net profit", some items should be substracted (as operating costs, amortization, etc) I think this is not a valid interpretation either. It would be a redundancy, since, for the calculation of profits, it´s always necessary to substract these concepts.
The only possible interpretation for the "NET PROFITS" words used in the press release, is that they are referring to SOU´s net equity interest in the project.
Then, SOU´s equity interest in Tendrara, after considering Schlumberger´s share in profits, will be circa 31,5% (35% X (1-10% on average))
Regards
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