Member Info for G_G_G

Not sure what your point is HeresHopin...? Obviously no-one could see the Qataris were going to pick up a huge stake in the company from Softbank alongside Moulding taking more. This is the only reason the sp bounced, unless you're going to point me to improving fundamentals...?

As for HBR, well anyone who knows what the government did with the WFT understands why that went the other way. Sometimes you get lucky with unknown external factors. And sometimes you don't. I also have over £1m in i3e and a few hundred k still sitting in hzm if you want to look into some of my other investments...? Fact remains the only thing valuing THG at the moment is based largely on 'what if's'. And because of this I see the sp slowly dropping back to the 40p level until something a little more concrete lands. Fwiw I think there's still a lot of money to be made here and I'll re-visit when the sp gets back to the levels I've mentioned. But unless a t/o offer lands I see the sp going down from this level before it goes up. AIMHO

Can't see any good news here for a little while and fully expect it to re-test the £500m mcap level (circa 40p). The inevitable further rate hikes in H1 and worsening economic environment that will accompany means THG has a little more to drop before hopefully the turnaround begins in 2024. The company is still a money-pit and until it can prove it can operate in a cash neutral manner it won't be getting anywhere near 100p. My thinking is early 2024 if all goes according to plan, which let's face it would be a first.

Also, what's the current situation with the golden share. This being taken private is of course the scenario that will yield +100p, but I'm unsure whether it's set in stone the share will expire later in the year - can anyone confirm?

Absolutely mind-boggling that we're still down here with poo climbing and ex-divi tomorrow. Silver lining is we get to re-invest our divis at a lower level, but would be nice to have us back in the 24-25p channel at the very least. Tony, it would be good to get your thoughts on near-term catalysts. You mentioned reserves upgrades - when do you expect this to land? Only others I can think of (minus commodity prices soaring) involve Canadian f/o or asset sales. On the latter I'd like to see us bin off the Nth Sea assets if there's a willing buyer. It feels like they're a side-show that are unlikely to go anywhere over the next couple of years. I'd rather we get some cash now and pump into Canada where we know oil / gas is in abundance and can pay back within 6-9 months at current prices. Thoughts welcome. AIMHO GLA

Thanks for the info everyone. Decline rates are ok at 20%, so I agree that $125m is unlikely as an on-going spend to maintain 20kbopd. And the warrant exercise price I agree is also helpful in knowing they can cancel these out and still purchase another 6-7% of float (at current sp) and pay a divi yield of 10% (at current sp), whilst maintaining $50m in cash. So to my mind the biggest issue is whether they can hit production guidance given recent history, as I believe Brent will stay near their $84 average for 2023. It may not be that amount, but I'd be surprised if it's lower than $80 so not too much of a hit. If these things happen then I think 60p is realistic in H2. It's the 'if' that's the issue here. AIMHO GLA

Agree King, but would be good to know estimated decline rates. It's quite important as knowing what $100m supports allows one to assess sensitivity to lower production and/or lower Brent prices. What are the warrant prices btw?

Thanks King. So we're talking about 6.5% warrants outstanding. Issue with this is they can probably pay a 10% dividend and buy-back 10% of shares with the circa $100m they'll have in cash (not inclusive of maintaining a $50m cash position). So almost 2/3rd of the BB is cancelled out by warrants. The dividend will be very good, but you can get close to this level in other stocks without the same risks.

Anyone know the decline rates for the wells? I've heard people throwing around some quite large numbers but assumed that production has been curtailed (not due to decline rates) as to why well performance drops so quickly from initial flow rates. Does anyone have any info on this? If the decline rates aren't too bad then it really just comes down to getting the oil in barges or in the long overdue pipeline re-start. But if the declines are significant then you're always having to spend +$100m annually just to stand still. This puts pressure on the fcf buffer (and in turn dividend payments and buybacks) if poo drops below $80. Would be great to know if someone has the info to hand.

Thanks King. Some q's for the board:

- Does anyone know the average decline rates of the wells?
- What is the number of outstanding warrants?

Yeah I noticed the difference on fcf. I can't quite get my head around how it can have $250m NOI and such a low fcf figure. Even with UK style taxes it should be higher. My post was to highlight that although PTAL is grossly under-valued it holds company with i3e on the same metrics. It's really a risk play between the two. If things go according to PTAL's 2023 forecast I can definitely see this 50% higher by year-end. I think i3e is probably more the 25-35% range without a sale or f/o of assets, but it's pretty rock solid and low risk (and pays a 9% yield). What I can say for sure is 130-150p is pie in the sky stuff. No investor will be paying that amount in the next 12 or even 24 months. Not with the production and country risks here. With all going well and Brent averaging +$90 then I'd go with 65-75p. This is still 50-75% gain so certainly not to be sneezed at. AIMHO GLA

Still leering at this one. It's tough as most of my pf is in i3e. It's equally under-valued (in a head scratching way), but weirdly in-line with the valuations here. PTAL with fairly decent assumptions (14.5kbopd & Brent $84) will generate circa $250m. In comparison i3e will generate around US$165m NOI at WTI $80 and gas CAD$5. So the valuation of both companies on NOI multiples is almost identical. There's a few big differences though. For instance, PTAL will have circa $100m to return to shareholders in 2023 in buy-backs and dividends and still have a net cash position of $50m. Whereas i3e will be cash neutral as it pumps all excess cash into increasing production. However i3e currently has a 9% yield with a guaranteed minimum 2023 dividend policy, plus expected production growth of circa 10% to 24kboepd. So all in all they're similarly under-valued. PTAL definitely has more sp appreciation torque providing it can meet the forecast production numbers and the country risk abates. If they hit their guidance they can pay a similar yield, but also buyback 10% of stock in issue. Having said this there's a lot of warrants that dampens the buy-back. Tough one really. But as much as PTAL is one of the 3 most under-valued Canadian stocks on fcf, NOI multiples etc., it sits right alongside i3e on these measures. I can understand PTAL being under-valued for now (due to inconsistent production and country risk), but not i3e given it's very safe on all measures. Either way both companies are ridiculously under-valued. Have a feeling PTAL will jump the highest if all the **** can be sorted out in 2023. AIMHO GLA

Repsol might be investing in an offshore field DM. And if they are we should sell for whatever is a good deal for both parties. If it's $20m then so be it. They can use it to drill more in Canada, or even buy some stock off IIs who wish to rebalance their portfolios. Either way it will make a lot more difference to our sp then sitting on the assets and doing nothing with them for a few years. Payback on Canadian wells is 6-9 months at current prices. We should focus on short-term drivers.

As for us being an income stock, this only applied if poo and gas sit at levels below those used in 2023 forecasts. I imagine if WTI averages $90 and gas $5.50 then we'll probably end up adding circa 20% to 2022 production levels by year-end. That's 4-5kboepd added production and an exit rate of circa 28kboepd. Tony is best placed to comment on this back of *** calculations but I'm hard pressed to find a company that is paying 9% divi at current sp, and has the very realistic potential to grow production between 10-20% depending on commodity prices. There's also little to zero risk to our portfolio. Not from government windfall taxes, country risk, natural disasters etc. Having said all this, I would like them to investigate asset sales. We're simply sitting on too much to take advantage of the next 12-24 months of elevated commodity prices. AIMHO GLA

As a reminder I do agree with the Nth Sea assets being sold and the money being pumped into near-immediate Canadian production. The question is what value could realistically be ascribed to +15m 2P Brent.

I think our undeveloped reserves are perhaps worth more than what you guys think. The windfall tax will disappear in 2028 and you get a 95% benefit on development costs up until that point. If Repsol are looking to develop Tain this would be a bolt-on to those plans and there would no doubt be lots of cost efficiencies to be had (as well as tax breaks). The Nth Sea is f@cked for producers, not so much for developers.

Awesome news on the dividend. I was really hoping they would do something like this. Just one more week for another monthly payment. And we'll have £4m being distributed amongst all parties. Even if 25% gets reinvested that's over 4m shares of upward pressure in the space of 2 weeks. And I get another 70k with the sp at this level :)

Regarding 2023 NOI projections, I'm happy with the gas prices used in their assumptions for the year. The poo is perhaps the one that could make a bigger difference at WTI$80. Fwiw I feel confident that we'll average this level (or more) due to SPR stopping releases and needing to be re-filled, alongside China definitely re-opening in Q2 / H2, Russian production decline, plus a proactive OPEC who want to keep prices at the $80 level. But I'm not sure we can bank on it. The China point is a big one. The government will want to put the bad news of Covid deaths and the weakened economy in the rearview mirror and one way to do this is to really push industry. As Nuttall has pointed out that will more than make up for a 2008 style demand destruction scenario. Either way there's definitely a floor of $72.

Spike, what value do you place on our Nth Sea assets then? This means Liberator, Serenity and surrounding acreage. Majid used $10pb for Serenity alone, so I don't think $35-40m is a stretch. It cost more to drill the areas over the years and there's over 15m barrels in both Lib / Serenity. Given current poo and the fact it will be incremental production to Repsol (providing they progress Tain development) then I don't see this estimate as being a stretch, rather a good deal for both parties. Welcome everyone's thoughts on the matter.

Meanwhile WTI is $76 and climbing whilst we're going backwards. I'm wondering when the next big sell print and rns is going to land. Could be a few more weeks of this. At least divi reinvestment will help to mop up some of the shares being offloaded at the end of the month.

I'd be happier if they sell all our Nth Sea assets. Reckon we should pick up $35-40m for them, which amounts to quite a bit of incremental drilling for Canada. We're talking a similar spend to this year and having us at 27-28kboepd by end Q1 2024 providing a sale happens in H1. Our Nth Sea assets are literally worth nothing to the company and we'd put on at least 20% in a sale. I'm also hoping they bring in a partner for Clearwater / Simonette. Short of a total company sale I think these moves would make a material difference to the sp. Total sale would be my preferred option though. AIMHO GLA

Asset sale. Farm-out. Debt driven acquisition. Happy with all of these options providing they're solely designed to add immediate value to the share price, which in theory all of them should.

I think they made the right move with the dividend increase, which we saw in the share price as it moved to 25p in the days following. Unfortunately softer commodity prices alongside a fund reducing has thrown a spanner in our momentum and we're now back down at 22p and struggling to move upwards. A few dividend payments and I'm sure we'll edge back to the mid 20's again, but this is hardly fair value for a company like ours. Given this I also believe we're far more likely to be a target whilst the share price sits in the 20's. Based on the White Tundra link (thanks Tony) our fcf/EV % is almost double the peer group being followed. Even if Shubham's numbers aren't entirely accurate it shows we have circa 90% upside from 22p to be at the average peer multiple. In other words an offer could be made for double the current share price and the buyer wouldn't even be paying a premium to the market multiple average. So 44p would represent a bargain for a buyer, but also a hell of a lot of money for us investors. To put that in perspective, Cairn and PM would make over £100m PROFIT on the back of such a bid. Hard to believe they wouldn't take it. Perhaps we should be writing to their fund managers and asking them to speak to some interested buyers... AIMHO GLA

Agree Jolly on mgt potentially setting aside a few million £ to pick up shares from IIs looking to offload. Sort of like a buy-back, but better as it puts a floor under the sp and our money goes further i.e. the company isn't driving the sp higher (and the cost to buy-back shares) only for it to drop when the money runs out. This way is a far more strategic use of cash if / when needed and provides less trading opps. Alternative is to find a willing buyer like last time. Either way I like the plan going forward. I like the fact they're talking about Serenity value. If we can get $20m for our acreage it would be amazing. That's an incremental 1.5-2kboepd to production levels with a pay-back within 9 months. I like even more they're open to selling the company :)

That's great, thanks Tony! Points 2, 3, and 9 are particularly interesting for added value this year.

On the II front (point 7) I'd rather they focus on getting one or two more institutional investors on-board rather than added coverage. Every little helps on the PR front of course, but convincing IIs or pension funds to buy for the yield alone would generate far greater returns for shareholders, and of course be very good for them. As always I'm hoping for an opportunistic bid above 40p. In the meantime I'll happily take my divis. Reckon we'll see a run on oil again in Q2 as well. I have a feeling that OPEC production will remain unchanged in Q1 and China re-opening will push us back toward a 'bull' outlook. This combined with news of interest rate increases slowing (or stopping) in H2 should be quite +ve for oil, regardless of an economic slowdown this year. AIMHO GLA

Trueinvest, very nicely played on VLE. Feel free to share your future tips (before they take off :))

Hi folks, sadly I couldn't make yesterday's presentation - did anyone anyone attend? Anything of note to mention?