Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
The Kistos situation is interesting now. I would agree that something in the region of 300p would be enough to be considered. If you remember AA took RockRose from 50p to around £20, but then once it lost all share price momentum, it went from £20 to £6, which was at the height of Covid admittedly. Then I think it was maybe £9-ish when a deal was done at £18. So you could say he has a history of selling up and moving on when the market conditions are not right and therefore the share price gets hammered. See Covid and the EPL.
I had high hopes for this leading to an easing of the EPL aswell as it would back up all the things he has rolled back. I would love to see it, but I have my doubts. The stuff he has rowed back on is an easier sell to the man on the street to distinguish themselves from Labour. Vote greener and it will cost you more money, vote for more carbon sensible ideas and it will be cheaper for you. That is all they care about ofcourse, something that will appeal to voters.
I am not sure how you can make the simple case for a reduction of the EPL being good for the casual voter, especially with oil now approaching $100 again and energy bills are still high for most just as we approach winter. It would just be fodder to allow Labour to attack them and tell us about a 'proper windfall' tax. Ofcourse we all know reducing the EPL will be good for everyone in the long run as it will encourage investment, secure jobs, stop us importing much more carbon intensive energy, provide us with energy security and make our energy cheaper etc....but that is the more complicated case which sadly doesn't translate to a simple 3 word slogan which they deem the electorate are only capable of understanding. "Long term decisons - for a brighter future." Roughly translated as short term decisions for a boost in the polls.
As I suspected the production guidance was on the negative side. Results are ok, but an over reaction with the big drop. I had hoped there would be something in there to excite the market, especially now Tailwind are on board to push the case. But it is same old Serica, can anyone remember an RNS or results update that the market didn't hammer? Any RNS to do with the tailwind deal, the North Eigg duster RNS, the last 3 or 4 sets of results before that have all been tanked by the market? Feels like the BKR deal was the last positive one.
Yes, tomorrow is the big one where we finally need to see the direction we are going in and carry the momentum forward. One thing I have heard is that some of the summer shutdowns for maintenance over ran by a few weeks as there was a few more things than expected needed done. I don't expect there to be any issues with this as it regularly happens, but I just wouldn't be expecting any revisions upwards or to be hitting the top end of the 40-47k full year guidance. Ofcourse I hope I am wrong and all wells are pumping at higher rates due to maintenance and Lwiv campaigns. :)
With the share price closing at 266p and with the 14p dividend received, Mercuria are finally in the money on the 278p price we had to issue our share capital at. It's only taken 6 months since the deal completed. Our new strategic partner still waiting to play some strategy.
Opec+ cutting production has probably been a greater catalyst than anything Mercuria have offered so far. That is not to say they won't offer up something that will move us forward in good time. But I can't hide my bitterness that we are still lumbered with these $58 hedges when the price has climbed to $94. Ever since the deal was announced it has been a slow drip feed of poor offerings...the timing....the 278p price...Mercuria's controlling interest...the awful hedges at $58. With a little bit of momentum on our side again, this has to be the time to show us and the market just how good this deal can potentially be with a solid update on Tuesday showing the first signs of us getting back to £4.
The hedging leaves a bad taste especially since we have spent years trying to get rid of our own. It was mentioned in previous documentation regarding the deal there was atleast 1/3 hedged at $58, as Visitor had mentioned earlier. I was expecting maybe 8k hedged, not 11k. It also begs the question the hedges were done quite a while ago to get a price that low, what was Tailwinds expected production back then? Their production was pretty low wasn't it, until they ramped it up a few months before this deal. So how have they been required to hedge, which I assume is most of their production at that time? Or can they hedge out anticipated future production? ie I am producing 10k barrels today but expect to be producing 20k barrels in a years time so I want to hedge 15k of those 20k barrels in a years time?
The dividend news is welcomed and yielding close to 10% is a boost as is the 60k production for some periods, which can hopefully lead to meeting the upper end of the yearly estimates.
Serica Energy, where exploration wells and hedging go to die.
This is welcome news. In terms of the share price all it has done is repair some of the damage done in the last 2 or 3 sessions. So there is still some way to go yet before I am convinced the deal was better than no deal. Get us back above 278p for start. The Boepd numbers do look good though, IF everything can be executed perfectly.
Interesting point NKOTB on a North Eigg update within the completion RNS. If it was to become viable right after the merger, does this anger shareholders even more that we have given 30% of it away? Or is it better for us to have 70% of something than 100% of nothing?
I do fear the worst with Labour though but I hold out hope it might not be so bad. But all this talk is just cheap political points scoring at the moment. They will have to look at it more closely when they get in. My hope would be that they get in and do change the WFT as, I would agree with him it isn't working. But they might look favourably on the smaller independent producers in terms of energy security and see that they are trying to supply our country with oil and gas in the most carbon efficient way possible and making modest profits along the way and tailor a WFT to truely go after the majors that are making billions.
I would think Labour would be more likely to listen to the industry and see the EPL hits the smaller co's harder and that it doesn't have that much of an impact on Shell/BP. The tories don't want to listen as they don't want to **** off the majors too much. 75% tax is great PR, hits a load of small co's nobody cares about, but perception is they are going after shell and BP without actually going after shell and BP. I just can't see Labour using the existing Tory EPL they have criticised and putting it up to say 78-85% and scrapping the allowance, I reckon they scrap the whole thing and come up with something of their own. As I say, I hope this would be more targeted at the majors and less penal for the likes of Serica.
It's a nice idea NKOTB. How would you see BP selling their 5% stake when they did as regards your plan? Would they not want to retain that stake as another back door to gaining value from Serica having the assets? Or would they need to sell it to stop any types of conflicts regarding the future masterplan of deals?
It is just so exhaustingly relentless being a PI in O&G. I have always thought at some point common sense would prevail and they would see the merits in it and sentiment would change and have held tight for years with this thinking. With a war and being blackmailed over energy security and prices being sky high I felt sentiment was sure to turn at that point and they would realise how important O&G is to a just transition. But no, it just breeds more and more hate for O&G co's and I now realise that sentiment will never change. They will be hated until the end. All these moronic decisions which will push up prices in the long run, which will just mean more taxes.
It is such a shame as Serica are a great company and they do a lot to reduce their carbon footprint with ESG compliance and reducing flaring etc... but nobody cares. Is there any premium paid for their lower carbon gas than there is for LNG imported from half way across the world at a crippling carbon footprint, ofcourse not.
All of this I feel has forced them into this, yet to be determined good or bad deal, with Mercuria. Which is going to require a bucket load of patience to see if this can lead to all the promise and accretion that the yes voters seem to believe. However my bucket runs low after holding through a trading range of 120-140 for 3 years before getting a glimmer of what might have been.
I can't remember exactly, but weren't the shares suspended when the BKR deal was announced via RNS? The share price was in the 20's. Then they were unsuspended which I think was a good few months later, and opened in the 50's? I don't remember a chance to buy the shares in the 20's post announcement of the BKR deal.
48 million shares held voted against the deal. Even if only 10% of those decide to throw in the towel now, it will keep the share price depressed for quite a while. I would envisage the number would be higher than 10%. Either way, by the time the selling has concluded, I would hope we have stopped arguing about lock boxes and can see what the future outlook is going to be and that the share price can re-rate a bit.
With a turnout of 68% and 139 Million votes in favour, which is about 51% of the total shares. 49% of shareholders didn't vote for the deal. Either way the board have won, and I hope the risks that the 26% who voted no have feared do not come to pass and that the share price can now move forward from here.
Seen a couple of people say it has passed now, so perhaps they are at the meeting? Oh well, we tried our best and if it is correct and over 25% have voted no then atleast it has made some sort of statement to the board.
For the previous few months before the deal announcement the market was discounting the cash we had by 20-30% due to the expectation of poor capital allocation by the BOD.
So whilst now, we might be close to the market cap in cash, the BOD have proved to probably be even worse than the market anticipated in capital allocation and also now show no signs of returning cash to shareholders, so on the back of this deal I expect the market will apply a 40-50% discount to that cash until proven otherwise.
Yep...it was our own cash and they were going to give it to us......not give it away to someone else or set fire to it.
One of the interesting points he makes across both videos is that some larger investors were given the impression the company would pay out some 100p to shareholders if they didn't entertain the Kistos deal. I find that hard to believe, but if it were true, then surely thinking you are getting 100p and instead getting this deal? It would be another reason for larger holders to vote against it.
Mommur, I don't aim to disparage management. I said they have been remarkable. I just wanted to give it a wider context as people want to cherry pick where management has taken the share price to suit their narrative that all management have ever done is create amazing shareholder value. If you don't cherry pick, then it is 95p to 265p in 18 years, just a statement of fact.
Whether you want to get into what constitutes a mistake or bad decision, I am sure all their decisions where made in good faith for the good of the company, but surely you must accept in hindsight that some of the decisions were bad over the last 18 years? Don't go all Boris Johnson on me in telling me they got all the big calls right?
You say Erskine was a 'sorry' from BP, what if BP had not given us that sorry? Where would the share price be without it? And do you really want to be relying on sorry's from companies to help generate shareholder value? Will Mercuria throw us a 'sorry' bone in 5 years time after they have decimated the company and we should all sit up and be grateful.
BP sold their 5% stake at 365p in April 2022, wonder how that coincides with this Lawson fellow and any potential negotiaties with Tailwind that may have started at the time?
I am sure the board may be entering into this transaction in good faith, that is me giving them the benefit of the doubt. It may turn out to be a good decision, but on the face it for me it is going to be a bad decision.
Regarding the board, I have seen a lot of musings in other places about the board taking the share price from 3p to 250p and that the board have delivered amazing shareholder value over the last few years and they are pretty much untouchable and we should have trust and faith and loyalty in them, they know what they are doing etc..... A lot of people against the deal have short memories etc....
The board have been remarkable, but some people need to have longer memories. They also took the share price from 100p to 3p. I remember having faith in the board at the share placing at 18p in 2013 and within 12 months it was trading at 3p. The Hardy's through luck or judgement bought in at 3p and 4p, but whoever sold those shares to them would have been crystalising a massive loss thanks to the management.
In theory since being admitted to AIM in 2005. In the ensuing 18 years, the management have taken the share price from 95p to 265p. Hardly earth shattering. It just goes to show there have been awful decisions and mistakes made, alongside the good ones to get us to where we are. Those that wish to suggest management are untouchable because of previous successes and could never possibly make a bad decision that would incinerate shareholder value clearly haven't been here since day 1.
General Levy, your main purpose on this board seems to be to antagonise and provide no substance, but never the less I will indulge you.
I would guess the reason people have not sold is because the vote hasn't happened yet. Why would we sell, when the vote could be no and we then see appreciation in the share price? Some shareholders perhaps have sold because they assume a yes vote and this is why the shareprice has fallen so much since the deal announcement. You mention people posting on this BB specifically and from what I can see we seem to be a lot of long term shareholders that are motivated to speak up because of how bad this deal is. If the outcome is a Yes vote, as Banbury boy says, a lot of us will then head for the exits and you will see a proper crash in the share price.