RE: Saudi oil strategy/ opec plus07 Mar 2021 13:46
'So makes sense to sell lower volume at much higher price ...' ..and not just revenue. Higher price on lower volume can avoid incremental opex and capex costs for the additional volume. Let demand drive the decision to spend incremental opex and capex. Maximises underlying/ sustainable profit and ensures additional spend is profitable and demand driven
I guess the liquidity forecast gap in 2022 could be filled by a farmdown from kenya and concludes the $1Bn portfolio management action taken 2019/20. Legal form of the refi still to be agreed but bond prices have risen because the plan is being delivered based on the substance of Rahuls plan plus evidence of execution. Oil $10 more than the long run oil price in the impairment and, anyway, the liquidity gap is caclulated on the base case/ lower oi price. Its all tilting to the upside hence the SP is rising. Dont think we get the real value until the refi is complete end of Q2 or Kenya end of H2. Rahul options crystallise 2025 so I expect he wants maximum value then although could he get it earlier on a bid? High risk still but definitely worht persevering for higher SP imo
at the end of the tunnel. Tough couple of years for value investors but feels like the next few years could be less stressful. I got in and out from £5 and same from sub £2. Staying in now for £5. Div later this month. Div entitlement next month and I bet a cracking set of Q1 results to push us higher. GLA
Thank you Tony. I guess we shouldn't underestimate how the new management regulate news about their 'strategic' performance out to 2025. As debt is the stalking horse, the refi underpinned by a sustainable fcf with a layered capital reinvestment cycle linked to [$55] oil price will be incremental and progressive from here on in, imo!
Also, in Q1 we have Goliathberg-Voltzberg North prospect, block 47 offshore Suriname so plenty of excitement, tipping to the upside.
Busy reporting calendar now with capital markets day Nov 25, January 2021 voluntary redetermination, Goliathberg-Voltzberg North prospect in block 47 offshore Suriname in 1Q 2021, Financial Year end/ clean audit report, Kenya end of 2021 and $650m debt 2022 $650m.
Another sale from the remaining $425m portfolio management would be icing on the cake. Rahul is the man to negotiate that. All good imo.