iii bb: BOR1 Feb 2018 14:29
Re: Buy before the stampede
Momentum09 2UP
I called this as a buy in September 17 at sub 2p. All of what I said still valid. Still looks cheap, wonder if farm in news imminent??
Sept 17 post:
Buy Borders before the stampede begins!
The oil price is recovering as supply and demand return gradually to balance. Large oil companies, having cut back drastically on exploration spend, will find themselves scrambling for new projects to secure growth.
Against this backdrop, interest is stirring once again in the Falklands. RKH has bounced strongly from recent lows as the odds shorten of Sealion being sanctioned in 2018.
However, Borders is still trading near all-time lows and now may be a great time to build a position before the herd moves in. Here's why:
1) Borders already has a high-quality find in its portfolio. Darwin contains 360m barrels of condensate and is potentially commercial at $40. Further, Borders has substantial exploration potential and many lookalike prospects including Sullivan, which has an AVO response very similar to Darwin and has the potential to contain 5.6tcf of gas in place with 473m barrels of recoverable condensate, according to management.
2) If Sealion is part-funded through UK export finance, it puts Borders in a good position to avail the same source of funding to appraise and develop Darwin, in conjunction with a farm-in partner.
3) Development of Sealion opens up the opportunity for a farm-in partner to share some of the infrastructure costs with PMO/RKH. Yes, it's a different basin but there would still be significant synergies allowing costs to be reduced and improving the marketability of the SFB.
4) Sealion sanction and development, particularly one supported by UK government funding, would allay any fears of perceived political risk. Suddenly, many potential farm-in partners, formerly put off by the political risk, would stand up and take notice.
5) Borders is very, very cheap. Trading at near cash-value, Darwin and the vast exploration potential are not priced in. At an option price of almost zero, this is a very high leverage play. A trebling of the market cap would still leave it worth less than �30m.
I recall that it was suggested previously by Borders' management (at an AGM, perhaps?) that they had been close to securing a farm-in partner but the deal fell through, not on commercial grounds, but because the potential partner took fright due to the threats emanating from Argentina at the time.
Sealion sanction (and the increasing likelihood of it) has the potential to be a game changer for Borders and the SFB, making it a very attractive proposition for a farm-in or even takeover.
As always DYOR.
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