Member Info for Jimbob67

I hope you are bots because if you are real you need help

Lots of posts re hedging impact on what we make as POO rises. Here is what I hope is a helpful summary of how I see it (upside only - for now the likelihood of oil dropping to $50 is low enough to ignore IMHO):
Per trading statement 2022 production is 55k-61k boepd - I’ll assume midpoint 58k - of which 75% is hedged at $78 max
That leaves 25% unhedged and selling today at $92
The $100m free cash in the trading statement assumed $75 so the upside on the hedged 75% after the premium of $1.8 is $78-$1.8-$75 x 58k x 75% = $52.2k per day
The upside on the unhedged at $92 is $92-$75 x 58k x 25% = $246.5k per day
Total upside at $92 is $298.7k per day. All pre-tax and gross of any extra costs of course.
Every extra $1 is worth another $14.5k per day gross.
So if oil stays at $92 all year we will have about an extra $100m gross FCF.
That’s my take, but happy for others to correct if I’ve missed something.

Personally I think a sale would be a shame as the long term potential here is huge. I’m invested for large long term gains not a short term profit, even if at £2.85 it would be a very nice one!

Buy backs have their place, but agree it seems more sensible for Arix to invest if they have/can find suitable targets. My concern with the buy back was less that it happened and more that the shares are not being cancelled but being held in treasury, so overall share capital isn’t reduced. The temptation for mgt to then allocate those shares as part of share based incentives mean we may only be seeing money spent on future expenses. Anyway, glad it’s stopped and agree that the discount to NAV looks daft IMHO

Thanks both, that’s helpful

Hello all, new to this board and long on KAV as I think it has great potential if the stars align. Considering adding more but have been burnt before by dilution just as things get going when the co needs cash to deliver on the early promise. My read of KAV is that there is so much potential that if things come good dilution won’t be an issue but any thoughts or reassurance welcome!

@BB
They can’t just buy 51%, takeover rules won’t allow it. Once over 30% they have to offer for the lot.

Takeover rules mean you (the buyer) have to pay everyone the highest price paid in the prior period (not sure off the top of my head how long that is but it’s long enough that GF couldn’t treat M&G better than the rest of us)