Member Info for InJamesweTrust

AdUK
It is splitting hairs - I mentioned comparison/conformity to the model in an earlier post.
It could be binary in the very unlikely case the reservoir peters out but the testing against model, interference testing and bottom hole pressures should if it performs give all the data needed on Lancaster.

Further point, the BoD has a defence doc for a reason and some fairly major shareholders who if things are going well may wait for the jam tomorrow. This defence doc would one presume include the plans for drilling and potential value creation arising as a result of the proposed activities.
In 8-10 weeks we should know if the taps work and another 3 months or so how the reservoir does or doesn't perform.

Jaykay1
Think in your analogy that values the whole of the ridge at approx £5bn or £2.00 a share. My feeling is the BoD want to get further up the value curve than that and hence the desire to drill as soon as they reasonably can.
If Warwick is drilled successfully, we are talking 3.5bn barrels and your scenario indicates value of about $1.75 per barrel.
A successful Lancaster (potentially with Halifax tie back at some.point in 2019) flips the GLA into or very close to 2P territory. That alone gets past the kind of value level you allude to even using fairly conservative metrics of $4-5 per 2P barrel.
We are a long way from those kind of numbers but RT mentioned he doesn't want to see corporate activity until at least 12 months after FOIL (as I mentioned he may not be in control of it).
In those 12 months we can expect HUR to produce (if EPS functions) around $240M of free cash. That's alot of drilling and sub-sea budget.
I dare say, HUR has quite specific plans in place already for what it would like to drill, when and any sub sea work that may follow.
If EPS comes online successfully, there is already a handy contingency from being funded to end H1-19 as well as any likely contingency built into EPS funding. So they maybe have $300m plus to play with in those 12 months and were very clear at AGM in their desire to pursue a strategy that gets the assets up the value curve as quickly as they are able before any bid activity.
Obviously the above presumes the EPS is successful.

AdUK
Not sure there is any certainty to the outcome for HUR and not even necessarily HUR who will be the deciding party.

Biffa
Around th timeline being discussed with regard to a special divi then the kind of cash involved is likely to be greater than HUR can shave a big ****ty exploration stick at so what is the point of having it sit for multiple years unproductively.
Let's use £4 a share as a metric it would fund around 200-300 drills. How long do you think that would take HUR to execute.
I would argue the divi/buyback it top of mind for HUR how often do they talk about realising the value for shareholders.
If drilling then it should be a virtuous circle you leave some cash and trust them to generate further value with successful drilling.
By your estimation they would sit on an ever larger pile of cash arising from unlimited successful drilling which they can never return to shareholders.

Wellwell
Bobby Ball is looking good on the left......

Africa Oil has an option to take 20% (first refusal I presume) of blocks ECO are selling down. Presumably matching terms in the market. They have c.$400m in cash (Q2 presentation) and if they like the CPR who knows but think it is probably the wrong continent for them. Imagine they will be bigger players when Namibia kicks off - carrying ECO for subsequent drills and initial ones where carry not in place in return for sell down.

Biffa
As one who has mentioned the potential of the SP to be above £5 at some point in the future I'm one of the mindless rampers probably.

However, as mentioned eaier paying need to where we are on the value creation/exploration journey of HUR as it relates to the barrels is quite important in understanding your own view of value.

A 25yr NPV-10 producing 50m barrels p.a. (150k bopd) with $5bn CapEx sunk at outset (inc interest until repaid) and OpEx of $850k per day equates to about $23.4bn. This is $9.00 per share or £7.00 using $1.30/£.
Let's say we drill Warwick and this is successful that gives us 3.5bn barrels or almost 3x the oil in the above NPV-10. Many say that is pessimistic for actual oil recoverable.
However, let's presume a tie back of Lincoln and Halifax are achieved and disregard Warwick that keeps us at 2.5bn barrels of 2C and the value of the 2P EPS.
Based on above in a production scenario one gets £14.00 a share from the NPV-10 and probably 80p a share on a 10yr EPS calc.
Stranded oil is a concern for many as DSPP alludes to and I think is an influence in how Exxon/Hess are moving their Orinduik field to large scale production more quickly with 260,000 bopd FPSO's that SBM have just chopped a year off the development timeline with the 2nd FEED. The industry is nothing if not inventive and will find ways to monetise assets quickly while the betting is good but risk remains.
At the back end of the NPV revenues are net <$500m p.a. due to discounting so knock $7.5bn off to get to a 15yr field life and you are down to $16bn. Multiply by 2 (for 2 fields) and add a $1bn for EPS to be conservative. $33bn.
What else to discount - time to FFD, risks in achieving FFD, risk of stranded assets, oil price risk, input costs rising etc. So discount by another 60% and you get $13.3bn or about $5 a barrel. Or £4 per share.
That is not our value today, possibly never but the longer HUR can hold out and the better the performance of the EPS to the model developed then the closer we may get and who knows beyond it even.
Structure of a sale full, partial, buy some now and pay more later to name a few will all impact potential valuation. However, the stated strategy is well known and the potential for this to move the 2C up the value curve is also known.
When investors (the market) starts to feel this is more likely to happen the SP should move from current levels. At what speed and to what ultimate level - who knows.
I've quoted Maynard Keynes before but it is always worth remembering, "the market can remain irrational for much longer than you can remain solvent."
This is where I think the BoD should have a plan B for IFD of some sort but the fact they have not and how they spoke at AGM indicates that a performing EPS will see players start to bid and they will either trigger defence doc and remain private for a short period longer, recommend a deal or succumb to a hostile TO.
Or have a dry hole after 3 days/weeks/months and see

Wellwell
Think he is basing the billion barrels on LanFax sale or Lancaster if the EPS proves up potential for greater volumes being extracted. The company model and performance against this is key and currently unpredictable. There is definitely potential for partial sale and working on remaining assets.
Malcy I think indicates in excess of a pound near term (around FOIL) and has said significantly in excess. While it may be considered by some a fools errand to predict a price, working out what a range of volume assumptions might mean across multiple value metrics depending on where these assets are in the curve of being proven up can serve one well when deciding a point to realise value or hold on.
The end game has too many potential drivers to accurately predict now how SP will perform to any level of confidence but doesn't mean you shouldn't game certain scenarios.

https://mobile.offshoreenergytoday.com/third-drillship-to-reach-guyana-in-4q-theres-room-for-5-fpsos-in-stabroek-block

This and the ordering of 2 FPSO's already by Hess/Exxon shows the kind of investment required to take these fields by the scruff of the neck (if the oil is there). Consequently, can see the desire to make the field a dual play between TOTAL and Tullow quite strong.

Muppetaloha
Being insiders does notmpreclude them from bidding. It can preclude them from trading the stock but making a bid is public and doing so at the same time the CPR is released puts a clear market expectation on price - particularly if recommended by management. Price movement otherwise depending on What is in CPR is out with their control.
Just my own thoughts about how it would allow them and Tullow to accelerate field development together in event it is a monster.

Muppetalpha
Don't think Africa Oil would be upset with a major return in Guyana that cashed ECO up to accelerate drilling in Namibia. Depends on price which obviously depends on CPR

Given the application for drilling permits it is unlikely the delay is a result of anything negative contained within the report. From Gil' s very clear previous messaging perhaps there is double checking before Tullow announces the potential size of the fields. If the uplift is of the magnitude widely expected, TOTAL and/or Tullow may be delaying for purposes of reviewing options for corporate activity that would take ECO share off its hands before the market would re-rate and make such an.option prohibitively expensive when drilling is imminent. Say Gil announced we have this and are recommending on offer of 60p/75p/100p from Y on basis of resource report.

Ifonly1 I'd say the best approach is to read the latest presentation and then the presentation from annual results day also. When doing so take some questions and ping them up on the board and am sure various folk will answer.

Biffa You misunderstood. In a TO situation, bondholders who had not yet converted to equity would likely do so quickly. As waiting to convert may result in HUR having cash at hand and the BH's being redeemed instead of being allowed to convert. If the mechanism for HUR redeeming is at park then they lose out if SP has moved on TO news (it may be they are redeemed at prevailing share value).

Divecentre RT gas 1% post bond conversion. Think Kerogen are currently 21-23% so will drop to 16-18% post bond conversion. The VCP is worth around 3.5-4.0% post bond conversion. If bonds convert. When they do it is.notifiable. Ironically post EPS they have something of a Hobsons choice. Keep the income and be caught out by a TO, whereby they can be redeemed instead of converting or convert and lose their rights from sitting higher in structure. Any TO is likely to give them time to convert without HUR having cash at bank to redeem.

Extrader Not an expert in this area but there are myriad ways lawyers can word things - although much has been tightened up. Once agreed it is.absolutely a.concert play but whether it needs to be declared is a good question - I think not. However, if looking to secure them and paying a participation fee on the basis of a future purchase at an agreed price contingent on securing sufficient commitments from bondholders. Even if they got half they could look to secure the remainder in shares. Price of which would indeed jump at such news when announced. Don't think anything happening until EPS performance is known, officiallynor unofficially. Interested parties don't need to wait on company drilling though.

Biffa The BoD through VCP and RT existing holding will have about 5%. Taken in conjunction with Kerogen this stops a party gaining 25% and being able to fully control or get to 90% and compel holders to sell. While stake building is possible I think most will wait to see how EPS is performing. The analysis of this to model BoD willkeep quite close to chest until they can drill but barrels coming out of the ground will be known by some within industry before BoD make public as will amount of choking the wells and testing to give parties a clue about performance. The prize at stake (with advance info) is pretty sizable.

Ricfle You are most likely right on absence of TO but with bonds in play it is possible to stake build through II's via letters of intent and then usurp the stakes of BoD/Kerogen. This puts a bidder in similar position to Delek with Ithaca where a near zero premium TO then occurs but price would rise in meantime as stake was built. Rumours of activity might flush out others but it is early in the phase of EPS and info to show field performance.

Jesus I wish people would get of their high horses. The share has a strong chance of success but is not guaranteed or we would be at levels above current price. This risk is partly what is discounting EPS value with remaining value attributed to upside from 2C. Wellwell is looking to get this.point across and doing so perfectly reasonably. Descending yo name calling on either side cheapens the board.