Re: For The First Time Ever5 Jan 2019 14:00
The core RNS to read is of 29th Nov - SNS Project and Hardvey Update.
In particular: 'The financing plan for the Core Project is expected to incorporate a senior secured bond issuance and the issue of new equity in IOG. Work with advisors on these transactions is substantially advanced and the Company believes the investment case is compelling. Current oil price volatility and capital market conditions are not conducive to deliver this financing plan before year end. However, the Company is fully ready to progress its funding plans as soon as markets stabilise. Therefore FID will not be taken in 2018, but the objective will be to secure the financing to deliver this key milestone in Q1 2019.'
The vast bulk of the monies will be secured bonds (The BOD have much skin in the game too, so don't want dilution from placing, and definitely not at this low SP - too, they might decide to do this part of the financing at a later stage). Put yourself in the place of a lender - it's long term. Are you looking at a $40 oil market or a $60 oil market going forward? Yes, IOG is a gas business, but oil becomes more competitive if cheaper - so in long-term low oil price environment IOG may not produce the returns it expects. This increases the risk of IOG having difficulty paying the loan payments. Thus the lender wants to add a risk premium for the loan.
So IOG want the Oil price to stabilise in the $60 region before signing up imo, and thus not paying the additional risk premium. I think it will stabilise at this level after the Sino/US trade talks in early March - although it may stabilise even in the next few weeks? That's what we're waiting for imo; and nothing to do with financiers being unwilling to lend to us - it is just on what terms. So, this will get financed, (with only a very small part being an equity placing.) - but probably not until March/April. It's for the best.
That's my take on it 600T. Fingers crossed
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