The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Thanks Scott... and since Hurricane is being delisted, that's a no.
Actually I take it back, your numbers are still off by a factor of 2... consider that by the end of 2024:
- 2p from Lancaster (Production averaging at about 7k bopd until end of 2024)
- Just under 4.5p from other sources... So still another 15k bopd needed which I would call double your 5-10k estimate (As the average of those two numbers is 7.5k bopd)
- You're also assuming Prax will buy other assets within a month of buying Hurricane... I suppose not impossible, but quite a big assumption
Again, not saying Prax won't honour the payment - but my gut instinct is that they'll be buying much more production (Somewhere closer to 30k bopd).
Ah yeah, fair point...
"based on say an extra 5000-10000 barrels a day production then the full dcu (6.48p) could be paid within 18 months"
you're off by a factor of 2. the board stated in their presentation that 5000 barrels per day of oil at $80pb would equate to about 1p per share per year. even taking 10k barrels per day, we should expect the payment to be about 2p per year - that would equate to 3p in 18 months.
to pay back within 18 months, assuming $80pb oil prices, you would need around 20k-25k bopd. which don't get me wrong, i still assume prax will eventually work up to and go beyond.
as always, the deal was never inherently shifty to me (tax issues aside), it was more just that it was a **** deal. how many deals do you know where the buyer will have made their money back after 2 months?
Based on the uncertainty surrounding ISA payments, I have for now decided to sell all my shares in my ISA for Hurricane - instead I'm taking a punt on the Qataris buying Man Utd, which would see a similar 50-60% upside in a much shorter timeframe provided the Glazers sell.
To me, the risks feel very similar except I know I can keep any successful Qatari bid inside my ISA.
P.S. - I am a Liverpool fan, so this also hedges against any bitterness of seeing rivals get mega wealth.
Future acqusitions from Prax's point of view certainly make sense. Consider the following:
- A large part of Hurricane's appeal is the $300m in tax credits
- These will, to my knowledge, disappear once well 6 becomes uneconomical if no new fields are added under the Hurricane name
Therefore it makes sense that Prax will need to acquire new fields to make use of the tax credits. A real cynic may say "They only need 1 new well to keep the credits going", but I think when you look at their strategy - it's pretty clear hurricane is going to be their upstream arm, meaning it will give benefits to the rest of their business through further utilisation.
As always, the only real problem I have with this deal is the price. We were sold INCREDIBLY cheap.
My thinking is that they would be happy even with a return of just the Lancaster well over 3 years.
According to the presentation, Lancaster alone should return 8.98p to DCU holders...
I'm guessing the Dutch are the ones buying in at 7.5p, meaning they have a minimum expected return of about 20% over the next 3 years, provided oil prices stay buoyant. That's... okay... returns, given the apparent lack of risk.
Thanks Kever - do you have the email address so I can ask about ISAs?
@broomtree - but then when you account for the fact that literal family members of the board were buying shares, who would also be included in those 88... the question then becomes, how many of those who voted had some affiliation with the board and bought in shortly before the vote?
Seems very crooked to me?
I think in fact, there only being 128 votes shows it is far too small a sample of the voters to make a meaningful statement about the wishes of the shareholders. Surely there must be thousands of people who own hurricane stocks via proxy?
Perhaps we could ask brokers for the number of shareholders voting for versus against (not individual names, but instead the outcome by vote number)?
@Oldman - the total number of votes cast at the scheme approval was only 128 (40 against, 88 for). The majority of these were not PIs, but instead IIs for the simple reason that PIs tend to work through a proxy rather than through physical shares, meaning their names would not be on the company register despite them effectively owning the company.
I believe this would make the grounds for an unfair vote on the scheme, as most PIs may have voted against the scheme if they had had the knowledge of how to do so.
Something that has been bugging me... only 128 companies/individuals voted on the scheme? With such a small sample size, and need to personally own paper shares, is this really representative of the company's shareholders as a whole?
Well, you can lead a horse to water...
Or as @asimpleinvestor might say: "You can lead a 🐎 to 💦..."
Sorry, that last paragraph should read you are responsible for any taxes to be paid to HMRC*
Directly from Hargreaves & Lansdown Services Terms & Conditions document, section A39 (Can be found here: https://www.hl.co.uk/__data/assets/pdf_file/0015/37122/Online-Ts-and-Cs.pdf)
"A39 – tax
You remain entirely responsible for the management of your tax
affairs, including making any applicable returns and payments
and complying with any applicable laws and regulations.
You are
also responsible for ensuring you obtain all applicable
information to complete any returns and acknowledge and
agree that you shall be responsible for complying with any
reporting requirements.
In particular in relation to offshore Funds you will be responsible
for complying with HMRC guidance and any reporting
requirements relating to excess reportable income. It is your
responsibility to ensure you make yourself aware of any
reporting requirements applying to those Funds and any
changes made to them from time to time.
Any gains made or income received in respect of your
investments may be subject to tax. It is your responsibility to
report this information to HMRC and to pay any tax liability that
arises. We are not responsible for your personal tax liability
which may arise on any transaction.
Where fees charged by us are expressly stated as exclusive of any
tax duty or levy which may arise on them (and in particular
exclusive of Value Added Tax), we will add these taxes, duties or
levies to the balance of fees as appropriate. All payments made to
you related to income arising from investment and all money and
assets contained in your Account shall be subject to deduction of
any applicable taxes.
We may be required to provide to HMRC, or any other relevant
tax authority, particulars of your Account which they may
reasonably request. This information may then be transferred to
the government of another country in accordance with a
relevant agreement."
So as the section states, YOU are responsible for any taxes to be paid to H&L, and therefore you should not take their word as gospel... because if they are wrong, thanks to these T&Cs they are liable for diddly squat.
I am in the same boat for the record - both SIPP and ISA money involved. Basing my decision to hold/sell based on guidance from the HMRC (If it ever comes).
Let's hope so. Otherwise you're going to be forced to either sell them before the DCUs are issued or get taxed 55%.
Well, barring something the courts don't like it will be sold and used as an upstream investment vehicle by Prax.
I've just bought more into my SIPP. I still think it's being sold at a vastly undervalued price... but meh, I also think (perhaps rather controversially) that the DCUs are guaranteed.
I wouldn't be surprised if by the end of the year Prax announce further acquisitions, and suddenly the DCUs will look healthy.
@broomtree:
I'm at an average of 7.8p, so I'm not losing too much sleep over whether or not the deal goes through. It's just a poor deal - Prax seem to be getting around a 50% discount on hurricane's true value - and that's without Hurricane investing further.
If both votes go through I agree with you, I don't see the courts stopping it.
I'm not sure what goalposts I'm moving (nor even where they began), just setting out the assumptions of both sides along with some value based figures (which are based in fact and which you can find in RNSs).