Member Info for HeidHoncho

I have found this morning that if I don’t utilise the opinion drop down box my posts go through.

May just be a coincidence though.

I fear that the total lack of feedback received from any of the attendees speaks volumes for how successful and informative that the event was.

“The AIM-traded firm said the subscription was for 393,000,000 shares at 0.275p each - a premium of 10% to the closing bid price on 19 September.”

But that’s not entirely reflective of the actual conditions of the placement, even though it has been portrayed in that manner, now is it ?

Let’s break it down shall we.

Yes, it is correct that a fixed number of shares have been placed with RiverFort, and that is not subject to change no matter what the sp will be over the 12 month period.

However, although the sp of 0.275p has been utilised to form the basis of the sum raised in the placement, what that fails to accurately reflect that the funds ultimately received may be significantly less than the stated £1.08 million, as the ultimate sum raised is not fixed, it is variable based upon the prevailing average monthly sp during any given month.

With regards to the placement being conducted at a 10% premium to the sp on the 19th September, intimating that this is reflected in the sum being raised, isn’t exactly true.
Reason being, utilising that higher sp of 0.275p makes it even harder to company to recover the full £1.08 million, because the benchmark rate that the sp needs to maintain to achieve recovering the full stated £1.08 million is 0.3025p, as a 10% premium has been added to the base sp rate of 0.275p to arrive at the benchmark rate, so in effect the stated 10% premium to the sp on the 19th September is more detrimental than if the placement had been conducted at 0.250p (the benefit of 10% on 0.250p = 0.025p, whereas the negative impact that will be witnessed by requiring to hit the benchmark rate of 0.3025p = 0.0275p).
To better emphasise that is if we look at the sp mid point today for example, as the mid sp today is 0.225p which is 0.0775p below the benchmark rate, with the effect being that the company would receive 26% less (.0775/0.3025 as a percentage), meaning that instead of the company receiving £1.08 million they would only receive £803,306.
Obviously today’s sp is not reflective of the average sp through the entirety of the 12 months, as it is reasonably conceivable that it may be less which means the company would receive even less funds and that exposure is entirely on the company, but if the sp were to remain constantly above 0.3025p on average throughout the 12 month duration it may receive more than the £1.08 million, but only by 50% of the incremental benefit of the sp being above 0.3025p as the other 50% is retained by the placee.

And were the sp to manage to significantly exceed the sp that existed when the placement was drawn up then the placee also benefits by having circa 40 million warrants at a rate only slightly above that figure which they can dump into any rise beyond that diluting shareholders further, and this benefit is at zero risk to them in relation to the £1.08 million that they took in the placement.

As always, the devil is in the detail.

IMHO

Didn’t the BoD state previously (I think it was in an RNS somewhere) that they had an insurance policy that covered them as directors against negligence ?Maybe we should press them to put in a claim against that policy.Mind you, it may be hard to claim against it, as it may only be for negligence, and the insurers would argue that incompetence isn’t covered.

“now” AST has a significant driver to raise the sp ?

What, they didn’t have a reason for ensuring they were doing their best to increase the sp ?

Seriously, think about what you are saying before you say it.

IMHO

Come on, don’t be gilding the lily there.

You failed to mention the impact if the sp doesn’t perform, which it currently isn’t.

With the benchmark rate being 0.3025p, and the current quoted mid price sp being 0.225p, that would equate to the company receiving 26% less in the way of funds.

So in effect, only receiving circa £799,000 instead of the headlined circa £1,080,000, yet the shares issued to achieve that remain the same, at a little short of 400 million.

Yes, the company may gain a little more money if the sp exceeds 0.3025p per share throughout the month, but more importantly there is no limit to the reduction in funding that it may receive if the sp fails to perform, as it currently is.

IMHO

But would they have been offered the loan on the terms that they were if the placee hadn’t been also rewarded with the “winner, winner, chicken dinner” placement gift that they blagged ?

Only circa £10,000 of purchases this morning, and there is a 50% increase in the SP.

Just goes to show how easily this SP can be manipulated on such pitiful sums of money.

Absolutely no volume what so ever.

The flip side to this is, the way that an SP can go up on such ludicrously low volumes, and at the rate at which it did, is equally mirrorable by the speed and scale that the drop will occur.

IMHO

Even allowing for the standby costs being slightly less than the full operating rate they are still likely to be considerable, as the high cost items (rig, vessels, helicopters, and a large proportion of the overall manpower/cost, etc.) cannot merely be down manned to the beach temporarily.

Given the limited budget that there was for this campaign, and given the increased commercial exposure associated with future down time allied to adverse weather conditions as we progress through autumn into winter, I am starting to be concerned that we may now only see the Serenity well being the only other well drilled in this year’s campaign.

Due to the increasing likelihood of cost/time over runs, and the onset of greater exposure to adverse weather cost implications as the year progresses, I would not be surprised to see the other Liberator well slip onto another campaign to be drilled at a later date.

Having said that, if the company have a larger than normal buffer in the AFE, and are willing to take on the increased exposure to adverse weather, then it is not inconceivable that the campaign may go on as planned, culminating in all 3 planned wells being completed in direct continuity in this year’s campaign.

Coldjoe, do you know, is that internal management estimated CoS a geological CoS, or a commercial CoS ?

The placee subscribes for almost 400 million shares at 0.275p per share.

Company receives almost £1.1 million from that placement.

Company then gives that circa £1.1 million back to the placee, who will then sell one twelfth of the circa 400 million shares each month and give the company the proceeds from those share sales.

Simple financing arrangement at first glance, however, unless the SP manages to hold the equity at the issued SP plus 10% (the benchmark SP) throughout the entire 12 month period then the company will not receive the circa £1.1 million back.

Granted, IF the average monthly SP is above 0.303p (issue SP plus 10%) then the company could also benefit by 50% of the incremental SP increase.
However, IF the average monthly SP is below 0.303p (issue SP plus 10%) then the company in isolation must pick up the entire deficit, the consequence being that it is possible/likely that the company will not have benefited by the entire circa £1.1 million headlined in the fund raise, but the number of shares issued to achieve that will remain unchanged at circa 400 million.

The bottom line is, the dilution (shares issued) will remain unchanged, but the headline figure utilised in the RNS of ultimate funds received of circa £1.1 million is variable, and could conceivably be less, but could also less likely be partially more.

The company takes the exposure of being solely responsible for the loss in any sales revenue each month if the SP is below the 0.303p benchmark price, yet would benefit by only 50% of the incremental benefit were the average monthly SP to be above the benchmark rate.

Additionally, the placee has also been awarded circa 40 million warrants with a conversion rate only slightly higher than the benchmark rate, to benefit from IF the SP manages to stabilise significantly above the benchmark rate.

Seems like a win:win for the placee, he has zero exposure if the SP fails to perform, yet he gets icing on the cake if it does, with a little cherry on top with the warrants if there is a significant SP increase above the benchmark rate.
Yet, IF the SP does not meet the average benchmark rate throughout the 12 month period then that entire shortfall is borne by the company (for “company” read ultimately the shareholders), yet only partially benefits IF the SP exceeds the benchmark rate throughout the 12 month period.

Clearly, if the company require the full circa £1.1 million to meet their planned expenditure over that 12 month period, and IF the SP does not exceed the o.303p benchmark figure throughout the period, then they will require to have yet a further placement within that period to meet their expenditure needs.

All the above IMHO.

A liquidity event for a placee would be advance notification of a guaranteed allocation at a discounted sp, which they could forward sell.

And don’t insult everyone’s intelligence that such a situation is illegal/immoral, as it is common practice, and you know it.

Or if the company had assured them that a placing was to be made to raise the funds necessary for the following 12 moths, perhaps.

Jiffy, yup, that’s my source for the current weather conditions.

“demob” ops, not “demon” ops.

Bloody autocorrect.

Does anyone readily have to hand the location of WW in relation to the current rig location on Lincoln.

If it is directly west of the current rig location, then review of the past track of the Njord Viking may indicate that it is currently buoying off the pre laid moorings on WW in preparation for the rig move from Lincoln.

They wouldn’t conduct that much in advance of the rig’s intended move (24 hours should be ample time) from starting demon ops from Lincoln.

IMHO

Current weather from the rig would certainly indicate there to currently be suitable weather to do so if indeed they have completed all ops on Lincoln.

Significant wave height 1.4m, maximum wave height 2.1m, and winds of 18 knots gusting 20 knots at the helideck level.

Mind you, that is only the weather being experienced currently, I don’t have access to an accurate forecast for the location, but given that it is only a short hope to WW then a sustained period of suitable weather of only circa 48 hours would likely be necessary.

Look at the vessel tracks in the morning, as that will indicate if demobilisation activities on Lincoln has commenced.

IMHO

“spud is likely to be announced tomorrow or Thursday” ?

And just how do you propose that this is achievable, given that the rig has neither been moved, or even anchor handlers secured to facilitate the rig move.

From time of the anchor handler requirement hitting the market to the time that the next well has been spudded will be 5 days at best, with 7 days being the median.
And if adverse weather impacts the rig move then that timeline will extend even further.

MO, you seem to be quoting factual data there, so what was the GOR on A5 if you would be so kind.

Genghis, hence my utilisation of the word currently.

“I see any surplus (producible daily volume from Lincoln that may not be currently accommodatable on the AM) production from Lincoln as a big positive”.

Currently, the upgrade has not occurred.

Granted, come the time that the line to the Lincoln well, and presumably the tree and completion having been installed on Lincoln (as none have been run to date), the upgrade will have been completed.

The devil is in the detail. .......... “currently” ;-)

IMHO