The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
jimb1 - that's how i see it also
Note:
PE ratio of this company selling oil at $70 = 4.1 on a forward basis
Strip out SPT = 2.5
M@naca, for someone who has often said you are clueless about all things share related...you certainly have an emphatic view below. What you are not factoring in is that this placing was restricted (exclusive) and scaled back at the price...you may be right, let's see.
*SPT is the step tax that kicks in when oil is sold at 50.01 or above for a 3 month period. Tax is 22% and is visible in the numbers stated above. Why may this get overhauled? T&T have said they intend to. T&T now levy 12.5% against gas (89% of T&T Barrel of oil equiv output). This started on 1st January. Now that it is in place it paves way for politicians to overhaul SPT as advised by the IMF last year. The SPT overhaul should see an increase in productivity from Oil producers in the region, which in turn helps Petrotrin (who produce 45,000 BOPD). This oil is then put through their refinery. Capacity is 140,000 BOPD through this refinery (Trinidad producing circa 70,000 BOPD) and therefore Petrotrin imports Oil to make this worthwhile, WHICH has a negative knock on effect on Trinidad's currency. Management stated position on SPT is that it is not a question of if, but when...
Risks:
Oil Price
Operational setbacks – drilling
Known Price Targets:
Whitman Howard 32p
Everyone is entitled to their opinions...the nature of a public forum and we have discussed this before:
Here is a summary of what one or two of us think:
2017 Numbers:
Operating Profit: $11 mln
Operating Margin: 24.3%
Consolidated Breakeven for 2017: $30.9 a barrel
Losses carried forward mitigating corporation tax: circa $200mln
Reserves:
“As a result of this renewed focus, the Company's total 2P reserves (Onshore and Offshore) increased to 23.21 mmstb (9% increase vs 2016: 21.25 mmstb), despite total production of 0.92 mmstb, and our 2C reserves increased to 23.98 mmstb (14% increase vs 2016: 21.06 mmstb)
Taking our total reserves and resources to 47.18 mmstb at 31 December 2017 (12% increase vs 2016: 42.31 mmstb).”
Core NAV as calculated by Whitman Howard: 29P
Risked Exploration NAV (RENAV): 33P
31/03/2018
Last known Company announced BOPD: 2,721
Cash at Bank: TBC in July
This is the Forecast profitability profile of TRIN at 3500 BOPD:
Main unknown is the Petrotrin discount applied.
Management incentive scheme where key management will be awarded shares in the company if, a share price target is met, repayment of BIR debt and the CLN’s are paid off prior to their conversion date. The earliest they can be vested is June 2020, please see RNS for more detail. Number of shares available is fixed.
The numbers are forward looking to 2019 in terms of production:
OIL PRICE / PROFITABILITY (Millions) / P.E. RATIO (***16 Pence share price***)
49 / $18.2 / 4.6
50 / $9.3 / 9.1
51 / $10 / 8.5
52 / $10.7 / 7.9
53 / $11.4 / 7.4
---
64 / $17.9 / 4.7
65 / $18.3 / 4.6
---
69 / $20.2 / 4.2
70 / $20.7 / 4.1
71 / $21.1 / 4
72 / $21.6 / 3.9
73 / $22.1 / 3.8
---
75 / $23 / 3.7
80 / $25.3 / 3.3
NB These numbers imply drilling of wells and DO NOT take into account consequent reliefs on ORR etc
Catalysts:
i) A revised FDP for East Galeota, expected H1 19
ii) Possible SPT reform, update potentially around October*
iii) quarterly production updates which should start to show the results of the onshore drilling campaign in 2019+
iv) M&A and new license awards, bid round expected Q318
v) sale of WC assets
vi) reserves upgrades as new drilling locations are booked and budgeted for.
vii) Oil market ongoing undersupply
*SPT is the step tax that kicks in when oil is sold at 50.01 or above for a 3 month period. Tax is 22% and is visible in the numbers stated above. Why may this get overhauled? T&T have said they intend to. T&T now levy 12.5% against gas (89% of T&T Barrel of oil equiv output). This started on 1st January. Now that it is in place it paves way for politicians to overhaul SPT as advised by the IMF last year. The SPT overhaul should see an increase in productivity from Oil producers in the region, which in turn helps Petrotrin (who produce 45,000 BOPD). This oil is then put through their refinery. Capacity is 140,000 BOPD through this refinery (Trinidad producing circa 70,000 BOPD) and there
Libya: 2 rival gov't, 9 militias & 800,000 BOPD offline
As far as I know that is the sum of it (for certain acreages).
GO
Pipe... I disagree...it was a little more touch and go than everyone thinks, not least because in order to maintain certain licenses TRIN needed to drill more wells than we had on the old program. Given the planning involved in the placing and getting the timing right I think the company has done really well to get this over the line. Short term target for me: 20p is logical. GO
So, A> If it is an institution taking part in placing: Spivy institution receives notice of allocation of fresh shares in a placing. Placing is announced (meaning legal docs have been signed). Spivy institution does not have shares yet but wants to sell its holding in advance / race to the bottom against the future shares it will receive. Holding sold at ~16p (1.4% = ~5mln or so shares) Net short position reported to FCA and publicised. Institution is then short stock until it gets the shares in the placing at 15p that it delivers to cover the short. Profit £50,000. Cash outlay zero. Risk: shares fall below placing price before house has chance to sell. View on stock: doesn’t give a $hit as long as it can sell above placing price before having to pay for shares. To tell if the “institution” is doing this watch for the short to close after the end of the Institutional placing wraps up. B> If it is an unrelated short (dangerous in a value play like TRIN but each to his own) to the placing then the position will persist until closed. GO
https://shorttracker.co.uk/company/GB00B8JG4R91/
Trium Capital management gone short TRIN: 1.42%
Trium Capital,Trium Credere,CRT System,Trium Synrex,Westray Capital Management,Quantitative Strategic Investments or QSI,Cress Capital Mangement,Africa Merchant Capital,Ganymede Partners LLP,Serene Asset Management,Future Value Capital,Trium Multi-Strategy,Trium UCITS,Trium Investment Management LLP,QLO Capital
I suspect Shorting TRIN with a view of putting the short against the 15p placing...
GO
Good weekend all... https://m.youtube.com/watch?feature=youtu.be&v=ZWTaARWBfYc
Value of Business £60 mln
At these levels of oil IF the company can deliver we will be on a fully paid up PE of less than 4 within a year (4.5 now)
Debt Free
A pile of money in the bank
A backdrop of oil that is looking under-supplied
A fiscal regime that is ripe for an overhaul
ORR Holiday and SPT mitigation(?) with the drilling of mature land
$16.6 break even constantly eroding down the $29 advertised fully paid up costings
Ambition to improve reserves
An FDP for the next stage early next year...
Rare on the hurricane front
Errr, anyone?
Hi Just to clarify...the LTIP (remuneration package for employees/management) was for a fixed number of shares... Essentially this means that their impact is reduced against the enlarged share base. GO
Reboot is what it is... It’s a blow...and feels like a pruning. The Company would have had the right to decline this raise (and then legally have to announce that they tried and were not happy with the price.) This tells me they know where they would like to go and they consider this move beneficial enough to make. Some on other chat citing board all benefit etc but I am not so sure. Now long term holders have to dig deep and let the flippers (as CRL cites) and shorters, short termers etc work things out... Question for those that can: do you want to apply for shares at 15p? If yes then apply. If no, then sell at 16.x p and move on. What feels like fair value right now? Working on it myself... Anchor levels: Old co 100mln = 35p~ What would it have taken to get the company there? No CLN No meei Successful drilling showing bopd increases SPT overhaul Asset revision Company showing forward momentum towards bigger projects. Strong oil price New co 100mln ~26p... What needs to be done to get there now? The above Successful and meaningful drilling that Has an ORR holiday Strong oil price Pointing towards bigger projects. Not SPT overhaul. For me SPT overhaul is coming and here is why: state refinery can take 140,000 Bopd. Trinidad produces 70,000 and imports the rest which puts its currency under pressure significantly (importing from Venezuela!? Doubt it!!) and is affecting the country’s credit rating. Gas now paying royalty. Gas is 89% of equivalent oil production...the plan is unfolding. Oil needs a break. Give it a proper SPT overhaul and all company’s affected get a 35% uplift overnight. That’s well on to 32.5 p in new guise for me...looking 6 months out! I hope Jeremy goes to work showing how that SPT has caused a serious company headwind. Right now we are dirt cheap on any metric; if you are selling in disgust today then your emotions and the long term buyer won. GO
What’s a reasonable level?
There it is...capital raise. What’s the value of this business? Some thought £77mln (~27p) when oil was at 72 bucks. Now, there are 101 mln extra shares to factor in. ~383,000,000 shares Which equates to a new high share price of 20.1p (the old 27p) So....with oil back at 70 ish, no CLN, money in the bank, no debt and a future that is mobilised by the capital raise...what should the value be? I would think more than 20.1P but the market will react angrily - particularly those who have purchased recently and have nothing further to put into the placing. There will be a curious tension between selling above 15p with the hope of getting shares in the placing...but will it be over-subscribed at 15p meaning you ultimately lose out? GO
Hiya C When the share price goes quiet and lists...these are the times to remember that the company is working really hard and banking profitability every month. The market then splutters to life and plays catch up as we have just seen... So, a repitition: patience...let the management do their thing and grow the company from here...under the radar Or obvious...it is still growing and strengthening. GO
Dear CRL, If I had told you 6 months ago that the shares would be 23p with a recent high of 27p...you would be over the moon. If I told you that the shares in 6 months time would be in the 30’s...would that make you feel better? I don’t think this is unreasonable... GO
Laugh out loud... “I’m pretty unbalanced...heavily unbalanced too” Aren’t we all!
Market will push all over the place...watch the fundamentals and watch oil. This is a great story and it is getting better all the time...GO