focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
When a company has a slightest chance to sin the message towards positive sentiment for the share price, they alway use such opportunity. Last RNS had no positive spin re progress with the negotiation with the major (only potential for asset based financial Nan ING with third parties)
Why hurt the share price by vague wording? Would it be better to reconfirm the progress in negotiation though w/out exclusivity?
They are required to inform the market about price se sensitive info. But they also have some flexibility in phrasing it and it is the job of the market to interpret it. Possibly they decided to state the fact of the notice of the termination of exclusivity. Giving up a partial info and knowing the likely reaction of the share price they may possibly thought to buy shares at 2p for them, friends or family b4 the deal is announced?
If it is just the end of the exclusivity part of negotiation but the deal arrangements continue with the major, why not to mention this - saying the negations are proceeding but without exclusivity. Instead they mention other third parties with whom the want to re - engage with the help of M
Barnaby, thank you for your M&A Insights prospective. It seems to me that there is a fair degree of non-professionalism from the BPC side, given how the handle the exclusivity agreement and the communication with the market. I hope that if there is still a value in the licence MACQUARIE will steer the process in a more professional manner
Given the end of exclusivity, how would you interpret the change in CEO comp: 1. We (BPC) need the money for MACQUARIE to find us a rescue solution, as the major doesn’t like the data they saw. 2. It is my (CEO) real chance to make real money thru the appreciation on the share price. There is a real interest from the major but the e al they offer is not good enough and there are other potential bidders. I better give up my salary and pension nd finance the better deal by hiring MACQUARIE
Edgar, very logical conclusions from the share price movement and RNS yesterday. Could it be thoughm that because BPC felt they are in the very strong position given the interest from other oil cos (and potentialy BG granting EA) and asked for unacceptable WI from the Major. So the Major decided to walk away (as opposite to your view that geo and AE aer dodgy)?
BPC is one off deal and is not multi bullion one (not yet), while spoling the relationship with the major because of BPC could cost then dear
1. The best estimate of the probability to finding oil is the expert opinion by Moyes and Scott R. Say it is 25% 2. The probability that BPC will benefit from the finding the oill is not 100% as the licence could not be renewed or they fail to strike a deal, say 50%/50% So total probbility of success is 12.5% What is success: min 8bn of barrels. If we do NPV estimates at current oil price and $40 break even and 25% farm out deal and 25% cost od licence than the stock is worth £4.75 So will you accept a game where you pay 2p for a 12.5% chance of getting £4.75 and 87,5% getting 0p The prob weigheted outcome is 60p So this a good gamble to accept. Clearly the key is wether the estimayes of prob of finding oil, prob of strinking a deal and NPV of cash flow from a farm oit deal is properly done given all info available 2p price telling me: 1. Eithet I am wrong on my NPV cal or prob estimates Or we have a massive opportunity. but in the games with very uncertail outcome sI suggets to use Kelly criterion to decide upon the position size.
Are there any precedents, when an oil company by passed licence holders to avoid farn in deal and delt directly with government?
Mono, You believe that major’s “highly paid geos” have a better process of judging whether there is or threre is no oil baesd on the same data that was given to Moye’s and Scott Ryder? Hence they walked away? Can oil major do better due dilidgence than consultants?
They would said so: the terms of the deal offered by major was not nferiior to what our advisor M thinks we can get with outher partners - then no SP drop, may be even a jump to 8p
What is the impact(s) on the value of the share price? 1. The probability of discovery and the amount of commercial oil have reduced. No 2. The ability of CEO to strike a deal with a major is not as strong as what PIs belived. Yes 3. The probability of loosing the licence on the June 2019 has increased. Yes Do these warrant 70% share drop today? Next data point is Sep 13th AGM and I hope that some of us will be there asking all the relevant Qs, which we may want to prepare in advance and than dissiminate the answers
So, the BG is a black swan here: there is a potential commercial oil, major is ready for the deal, but one cannot drill without EA. Why, than the BG issues licences at all if they wont allow to drill?
Read: “adequately funded to develop well financing options” we have received $1mn and asked CEO for the reduction of his cash comp, so we can pay MACQUARIE advisory fee for a chance to find another deal (or sell the co)
I agree with somm: we are back to the debate if there is commercial amount of oil. The major”s walk away casts the doubt about the existence of oil rather than the terms (WI) of the farm out deal.
Ollie, Why would BPC appointed M to look for other options when the deal with a major is advancing?
Maq is hired as a last chance to resque BPC before the lincece is lost - $1m form NDA will go to bankers, while CEO gave up his comp for a final punt on the share price. The next opp is to sell BPC for the highest bidder
It takes on average 120 days to prepare off shore rig for a drill, meaning that BPC has Sep-Jan ie 5 months to strike a deal before the it risks to lose the renewal of the licence next June. The next know data point and news flow is Sep 13 AGM
Major has walked away, otherwise wh6 would BPC want to talk to other parties, if the deal i being negotiated?