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Deemule,
Daybreak were required to step through a number of conditions before it purchased the Cali Assets via an Equity Exchange. Restructuring their capital was one condition, converting debt to equity, and raising US$2.5M was another. Portallion Capital Ltd were used to raise the US$2.5M. Therefore other than having the connections to Capital, looking at Portallion is a red herring. End.
RBD are now a major Shareholder in Daybreak (OTC traded), who are experienced in Cali, and are now funded to grow Daybreaks existing oil portfolio and the Cali assets transferred from RBD. Daybreak are also operating in a much better oil price environment.
It was obvious to me that Total was not the purchaser of Victory, as I stated a while back that Total had sold 20% of the GLA to Kistos. Didn't make any sense that Total would then go and buy Victory as that would have made a nonsense of their stated strategy.
Shell stepped up, which is good news, as they are partnering with Deltic with their impending drill of Pensacola. Deltic just raised £15.9M, so are all cashed up to develop their relationship with Shell and Cairn Energy in the SNS. Happy to have a holding in Deltic, awaiting action.
Anyway clearly RBD were successful in selling Corallian to Shell, and that's probably why RBD then purchased Simwell Resources (See they licenses in the SNS - P2332 partnered with, you guess it, Shell.
Not happy with the 60% return on Victory £32M less legal fees and transaction %age for H&P Advisory Ltd. However, at least it provides the capital to advance WN, so that RBD can command a much high value of the implied NPV of $448M.
Unless of course, someone moves quicker on RBD (?)
Jack
FY23 Interim Results
QinetiQ will publish its Q2 Trading Update on Wednesday 12th October and its full Interim Results on Thursday 10th November 2022.
In the meantime good to see QQ reviewing their portfolio and swapping out Space NV Belgium for Air Affairs Australia as part of their long term strategy to focus on six core offerings over the UK, US and Australian markets.
Roll on 12 Oct.
Jack
How about a Jack.
Nice "Open Market Offer" taken at 3.24. What's not to like.
Jack
No idea why this has dropped 60p from mid 380's, as I thought the defence market was a compelling proposition at present.
The acquisition of Avantus pulls in a large $ Revenue number and I would have thought that the loan facility would either have been in $ or hedged to $ pending payments made.
Interestingly QQ have faired well in my FTSE tracker, moving up 8 places from position 159.
Last years interims were out on 11 Nov, so waiting for a strong update.
Jack
Disappointing is the only word here, especially as it’s not an outright sale but with strings attached.
£3.20 was the minimum hurdle for the loan notes
WN CPR better be good
Jack
CB
It could be for a multitude of reasons, why it’s taken 4.5 months thus far.
For example, as far as I am aware NSTA have not approved the FDP for Victory, but it must being fast tracked now
I don’t believe the Purchaser is Total as they have sold 20% of the GLA to Kistos back in Jan 22, which was expected to take 6 months to complete.
Kistos might be the Strategic Investors(?) and they may be making a move on Corallian but have been busy lately with Serica offer and counter offer.
Looking at the Victory presentation it’s only in 160M of water, compared to 300-600m for the GLA, and an umbilical tie in to Edradour was mentioned.
Kistos in play, and makes more strategic sense to purchase Corallian rather than Total which has sold 20% of their interest.
Jack
PS worth mentioning the $40M gas price kicker, that must have been pretty much achieved in 2022
In the event the average day-ahead gas price at the National Balancing Point exceeds 150p/therm in 2022, further contingent cash payments include up to $40 million payable in January 2023.
Following the completion of the transaction, TotalEnergies will hold a 40 per cent operated interest in the Laggan, Tormore, Glenlivet, Edradour, and Glendronach fields, including infield facilities and the onshore Shetland Gas Plant, alongside partners Kistos Energy (20 per cent), Ineos E&P UK (20 per cent), and RockRose (20 per cent).
….and ready to rumble.
Lots of buys going through as sells. Very odd in these modern days
Jack
No mention of Victory in the June 2022 corporate presentation, obviously due to the RNS on 04th May 22 stating that Corallian Board were progressing a conditional, non-binding offer for Victory.
From the RNS dated 21 Dec 21, I would expect the potential Purchaser to take soundings from the OGA on the FDP, which they were reviewing during H1 2022. This would be part of the potential Purchasers ongoing due diligence.
I would imagine the previous 12 months gas prices, and credible forward assumptions, would also be a factor of discussions.
Without a shadow of a doubt, RBD would have to RNS if the potential Purchaser was walking away.
The reference to 31 Aug 22 concerned the 6 North Sea licenses that RBD were purchasing from Corallian, that gave both Companies the optionality to terminate the SPA transfer of the 6 North Sea licenses.
I have stated before that the date to really watch out for is 24 Nov 22, as unless a corporate action is achieved before that date, then the £1M (plus accrued interest) is converted at £1.50. This means that all Corallian Shareholders (other than RBD) would get roughly a 5.02% penalty on their Shareholding which transfers to the "Strategic Investors".
IMO - Until notified otherwise, the deal is still on and any SP movement around 31 Aug 22 I would be classing as an opportunity.
Jack
https://www.lse.co.uk/rns/RBD/victory-8211-submission-of-draft-fdp-1lnx6tel6fpl9pk.html
As communicated to its shareholders, Corallian has confirmed that it has submitted a draft Field Development Plan ("FDP") for the Victory gas field to the Oil and Gas Authority ("OGA"). The related Environmental Statement for Victory is expected to be finalised during Q1 2022 and will be issued to the department for Business, Energy and Industrial Strategy's ("BEIS") Offshore Petroleum Regulator for Environment & Decommissioning ("OPRED"), as part of the FDP approval process.
It is anticipated that the FDP will be reviewed by the OGA during H1 2022, and that approval will be sought towards the end of 2022, concurrent with the Final Investment Decision ("FID") for the project.
Dividend is paid today at 5p per share.
Despite a 20p drop in SP since post on 10 Aug, QQ still at position 160 in FTSE.
Lets hope that post the dividend the SP starts to climb again, in a very exciting market for QQ.
Jack
Deemule
And a corporate presentation……
https://www.otcmarkets.com/filing/html?id=16034525&guid=Va1-kqQeYTZLCVh
Jack
BarkingCrazy,
I'm not, its crucial that the progress of this deal is kept watertight until such times that the BOD can share info publicly.
Bear in mind that there are 57 Corallian Shareholders, or 58 if you count the "Strategic Investors" shareholding once the
Convertible Loan is crystallised to Shares.
50 Shareholders hold 21.73%, average 0.43 each.
6 Shareholders hold 28.28%, average 4.71% each.
RDB hold the remaining 49.99%.
Admittedly, there are family members, which if combined could show a larger holding.
I would have thought in a small company environment, all Shareholders would be bound by an NDA which would be in their interests to comply with. The "Walls have Ears", but maybe not in this case.
Jack
Deemule
I think it’s completely the opposite.
If “the lads” have found an opportunity to cash in on Victory and WN (?), then it makes sense to me to “clear the decks” of smaller portfolio opportunities.
Jack
Deemule
The price of gas rose above £1 in Sept 21 after no real changes in the previous 25 years.
As you say, currently £5.56 and the future looks like UK Natural Gas is expected to trade at 523.43 GBp/Thm by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 766.74 in 12 months time.
The rise in gas, is not a Russian phenomenon as the price was rising 6 months before Putin went into Ukraine.
Supply side and Demand side issues are all definitely in play.
Supply side:
1. Governments caught napping, especially in the EU, where the norm was to over rely on Russian gas.
2. Governments cut back on storage facilities as they thought that supply was guaranteed and did not warrant the storage costs. The Rough facility is being talked about to reopen, if Government subsidies are available.
3. Decline of fracking lead to firms shutting up, when the price was going south. Difficult to go back to burnt investors again, for second time around.
4. Decline of Oil and Gas investment generally, has lead to a large hole in exploration pipeline for new projects.
5. Moving from fossil fuels to green energy was over estimated in terms of time frame and available infrastructure.
6. Shortages of Supply have affected imports of gas, meaning that prices would rise as a result.
Demand side:
1. When will we be free of COVID and start to get sustained growth both in the UK 0.5% and worldwide. How will this growth be powered as countries compete for dominance.
2. We all know that an extremely harsh winter disproportionately affects demand, as German well know. Likewise the summer drought has required energy for air-con etc.
3. All Governments now (urgently) reassessing their energy strategy.
4. World wide demographics to outpace resources.
5. Prices of other fuels moving north, as gas substitutes coming under pressure. Coal for example.
Even at £1, it’s double the NPV 10 at 50p.
Even if Russia exited Ukraine tomorrow it will take years for gas prices to return to the new norm, which won’t be 50p. Much more like multiples of that number and everyone in the industry knows it.
Mind you, who uses historical NPV10 figures to cut a deal and it’s not like businesses are queuing up to out bid :)
Jack
Tygra
I would read my posts of 01 and 02 Aug, as there is no time scale to sell Victory but there is a penalty on Corallian Shareholders of c5% if its not completed by 24 Nov 2022.
Your comments on WN are interesting, especially with "Strategic Investors" on board, who may open doors at any time point to interested parties. Obviously loads of data, but I think we should hold out for a well that demo's flow before we get into WN any sales negotiations. Unless of course we get a good offer !!!
Interesting times.
Jack
itsawrap,
Great set of Rathlin numbers to Dec 21.
You can see in the Cash Flow that £4.8M (2020 £6.1M) was spent on Oil & Gas expenditures during a significant work program in 2021. The Cash Flow also shows that Creditors were paid down by £1M, leaving Debtors and Creditors on par at year end.
Cash costs for 2021 only increased by £77k, so they keep a tight control on their admin cost base.
Cash remaining at 31 Dec 21 = £5.3M less spent this year c£500k.
We have had 3 WN RNS this year. One on 17 Jan 22 regarding Flow rates, Successful planning application on 17 Mar 22 (Applied Oct 21) and the conceptual development plan on 21 Jun 22.
So with c£4.8M cash left as at now, not a desperate cash situation as some would have you believe. Maybe £2/3M at most needed to complete next horizontal development and maybe some contingency c £2M. Say £5M required to sustain work program out to H2 2023.
Even if the Victory sale was a paltry £15M net to RBD (£30M total) you can see that no cash raises would be required. In addition, RBD cash balance as at Dec 21 was stated as £4.9M.
So all to play for.
Jack
Smythery
Can I read ?
What all 24 of your slush posts.
“And Victory news will come by mid June - the buyer’s KYC on Corallian holders shouldn’t take more than a month or so.”
I think the only KFC you have any idea about is fried chicken.
Try to post something useful for a change.
Space cadet
Jack
RNST,
As you are aware, the oil industry use NPV10 to standardize value reporting of a particular proven reserve. Obviously to use this model, there would be a reasonable expectation of certainty that hydrocarbons can be recovered from the field.
The cost of capital is academic, and not intended to use individual WACC (Weighted Average Cost of Capital), as that would make NPV models non standard and not fit for the purpose they are intended. A Seller or Purchaser/s would all have differing WACC's, but NPV10 is a standard.
You quite rightly say that ANY NPV 10 is as good as the assumptions made. Slide 16 & 17 show the assumptions made back in 2020 by the Seller.
https://reabold.com/wp-content/uploads/2017/10/Reabold-Victory-Presentation-FINAL.pdf
Since then the modelled resource has increased, c93% tax breaks are available on the CAPEX and the price of gas has dramatically increased. All three of these variables would be in the mix with any perceived risk and uncertainty, the Purchasers WACC, Tax status, access to common infrastructure and available Markets.
Let's call the 2020 NPV10 a benchmark, where the main variables have moved in favour of the Seller. Anyone who argues against that is quite frankly nuts.
We are closing in on end time when all will be revealed. I personally think the PRICE will be based on the satisfaction of Shareholder returns on what they think is acceptable.
Nothing else matters....
Jack
Touched a nerve ?
"people taking the NPV and applying the current forward gas price or anything even close have absolutely no idea"
Basically rubbishing the NPV or anything close.
Not a clue........What a dick !!
Jack
Smythery
I think you are deluded stating that NPV is irrelevant in business transactions.
Victory is already at an advanced stage, as stated below, so I feel your comments are not correct.
“Victory is in relatively shallow water, close to pre-existing subsea infrastructure, allowing a cost-effective tie-back solution. It is fully appraised and requires no additional pre-development drilling. A recently compiled CPR has ascribed recoverable resources of 179bcf1 of dry gas to the field, which is situated in an area of significant infrastructure, meaning its development is expected to be simple whilst providing meaningful gas resource to the UK.“
We are not advocating swapping 50p a therm for £4.25 current but any business people would recognise that the value of the underlying asset has changed significantly.
https://d1ssu070pg2v9i.cloudfront.net/pex/kistos/2022/02/22095604/GLA-acquisition.pdf
Even looking back to Jan 22, when the price per therm was c£1.80, there was a 40million contingent gas price payment (See page 3 of attached)
These are definitely not the same assets, but the business metric was there to account for widely fluctuations in gas prices.
That is even more apparent today.
Jack
PS Nice to see the Corallian Victory field on the graphs, illustrating the closeness to infrastructure !
Victory presentation showed that a 15p increase in the gas price, from 50p to 65p, had a 85% increase in the NPV.
How times have changed
Jack
UK natural gas futures broke above the 400-pence-a-them mark, a level not seen since their March peak, underpinned by prospects of further supply disruptions and elevated demand from the EU. A historic drought triggered by an arid summer that set heat records across Europe threatens to halt energy shipments along the Rhine River, exacerbating concerns in an already tight market. On top of that, Russia's Gazprom reduced flows through the Nord Stream pipeline, citing issues with turbines, delivering only 33 million cubic meters daily, roughly 20% of its capacity, forcing European buyers to find replacements like LNG. Still, the channels linking Britain to the EU have been working at maximum capacity. The UK has been using its excess regasification capacity to import more LNG and resell it as natural gas to Europe.