The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
No prob Geordie. The doubts/psychology is the hardest part of investing I think. I'm confident re, a good return here, LOG position included, but still get doubts. If I was ever "concerned" though then I'd sell out. What I'm interested in in the 10yr production profile (2019-2029), inc. Harvey, which averages out at around 100MMscf/d. Or 1million therms per day. At an average therm price of 45p per them (here's a link to the live / future gas prices, approaching 58p per therm today but you can see the forward curve too https://www.teletrader.com/natural-gas/index/details/tts-28546898) that's gross revenues of �450k per day (at 45p), assuming 90% uptime on the facilities that's over �140million (gross) per annum. With a break even <25p, you can forecast (emphasis on forecast) an average profit per annum of c.�65million. Applying typical p/e ratios to the forecast figures gives, imo, the potential for very nice returns. It's not for everyone though...
Geordie - he means: What is IOGs MCap likely to be in the future when compared with NPV, and consider that c.30% of that will be attributable to current holders subject to LOGs loans being converted into shares. So - 2P NPV (exc. Harvey) is C.£320MM. Harvey potentially adds around £120MM to that but of course needs appraised. Excluding any further develops altogether as we don't know about new license areas. The question is how much does/will that relate to in terms of MCap in the proportion that current holders will be attributed to (the 32% ish rough calc percent). Do you think IOG market cap will be £100mill when all developed and producing - i.e. IOG start to realise the NPV in cold hard cash (consider "peak" production rates c. 30k boe/d but sustained forecast c.10k boe/d for a number of years, more if Harvey is a success)? £200mill? £300mill? £400mill? More? The individual should review other companies and establish how similar would be valued. I always viewed Ithaca as a decent analogue in terms of reserves and production rates but need to make allowance for oil/gas ratio difference. How much will the refurbished pipeline be worth to IOG? Will other parties want access? Tariff value? How are Ineos going to export Clipper South gas once Theddlethorpe / LOGGS closes? (example only). So - decide what future market cap you think is reasonable and take a third of it then divide that by 120mill (current number of shares). Then you've a forecast for potential future share price. Once you have that, decide if you think the potential return is worth the risk. E.g. future MCap £300mill, a third of the value to current holders is £100mill, amongst 120mill shares is 83p per share. Will the MCap be more or less? Is it worth the risk? The eternal questions of the stock market!!
Long time no see "Only" - I think your last post on here was you telling us that you foresaw IOG issuing 1billion+ shares in a placing at <10p. Remember that? :-(
80%? Let's see. Original LOG debt 2016 CLN �12.5MM, 9%+ with max interest accrual period of 3 years (maturity can extend but not interest accruing then). Assuming all of facility drawn down immediately, �12.5MM + 3yrs Int at 9.5% = �15.8MM, convert at 8p = 198MM shares. Of course not all the debt was drawn down immediately (as it's still being used now three years later) but you get the gist. The new facility, �10MM + 3yrs int at 10% = �13MM, convert at 19p = 52.6MM shares (same as above, assumes all amount drawn down immediately - not the actual case but illustrative). New Max. shares to LOG c.250MM shares. Shares in circulation. today 120MM shares. New total shares in issue post conversion c.370MM shares. LOG %, 250/370 = 68%. Current holders % = 32%. Current holders were already diluted by the existing LOG CLN, since 2016, to below 50% anyway. I've said before that if LOG don't convert then something very bad will have happened.
Zero shares, all locked up in CLNs.
30% is the threshold.
Well not at any time as, of course, IOG haven't drawn down the �10MM (soon to be) available. Quite what it is we should be thinking about when looking at the MCap is anyone's guess. Perhaps you'd like to elaborate? A cornerstone investor willing to underpin the business to the tune of (another) �10MM at a conversion price more than 100% of their current investment - sounds reasonable to me when the AIM tradition is fast money high discount placings or good old death spiral financing.
AH is ex-Sound so I'm sure he was there for some gratis hospitality! Good to hear that he was spreading the IOG word somewhat though. Fast_ted - indeed, I expect a large update to the presentation to coincide with the promised funding update and hopefully some more guidance on the pipeline inspection and roadmap to FID. The contractors agreements so far referred to pre-FID deferrals for payments but given FID was previously expected in Q1 but that's now looking like Q3 (ref. FDP approval) it will be interesting to hear if the contractors are simply extending their deferral period or some other arrangement. Lots of areas in play at the moment but, as ever, the structure of the finance package is all the really matters in terms of the future for the Co. and all the shareholders.
What information would you have liked dinsalas? - Maybe he hasn't enough time anymore to fulfil his role? - Maybe IOG weren't happy with his contribution and have decided to replace him? - Maybe IOG are going bust and he wanted to escape before it happens? - Maybe a new partner has asked to have presence on the board like LOG has and he's been asked to make way? You'll never get anything like that on an RNS announcing a departure though. Always typical British politeness regardless of the reasons behind it. He's a non-exec, prob spent a couple of days a month at most re. anything IOG. Would expect him to have had very little involvement in funding discussions unless the CFO/CEO sought his counsel.
You do realise that what you posted is an auto-generated page that has confused the American NFX(New field Exploration) with the AIM NFX? Unless you reckon the Alaskan Dept. of Revenue are buying a few hundred quid worth of shares in AIM companies? "Great research material" indeed.
Kin'ell it's like "my first share" here sometimes. Yes there's 100% chance that there will be an equity type fundraise - either as part of the overall development finance, to pay part/all of Skipper creditors or as part of funding a Harvey well. I'm on the edge of my seat waiting for the next nugget of scintillating share analysis. I hope it's from pipedragger though as his stuff is top notch. No offence "olderandwiser", you have your own strengths too. :D
The most interesting part of that podcast I think is him (MGW) talking about him having a recent conversation with LOG and what he takes away from that. Always a pinch of salt of course. Everyone has an angle (me too...!).
I know pipe dragger. If only IOG could demonstrate that they've got contractors willing to come onboard willing to defer money to i) FID, and ii) production. Heerema and Schlumberger would be ideal, maybe ODE too? But I doubt little critical IOG could ever negotiate deals with these guys when in such a perilous state. Well, we can dream I suppose. Damn you MR.
I should've waited before posting that, just checked at the guy works for the Evening Standard / Independent that I was thinking of. Decent publicity for the Co. but wouldn't expect a big reaction personally. I posted the below around September time... still feels relevant: It's a progression of "belief" I think boulevard. Currently the market is saying - "you've got some gas, submitted an FDP and acquired a pipeline - big deal. Show us how your going to develop it". If they submit the second FDP, update the CPRs and announce the contractor group (inc. some details on the terms of the finance?) then the beginning of the progression of enhanced market confidence should start. Off-take agreements announced - hmm, they've buyers for this gas. When FID is taken - so they're really doing it? When first steel is cut on the platforms - wait a minute, this is real. When vessels start installing flowlines - they're actually installing offshore?? Onshore terminal modifications completed - route to market confirmed. Platforms installed - what's the projected profits? First gas - arrived, that was quick! It's all about when people are comfortable buying the story - at the moment, market believes it won't happen. It's AIM and I don't blame them, it's full of little companies with big dreams. Is this one different? I think so but I also appreciate the risks of it failing. Give the AIM herd a company making progress to actually monetise a development ready asset and they're not interested until it's too late. Not as much excitement as the latest pumped drill... I'll hold until something makes me think the development won't happen. If it does progress then the price will take care of itself.
IOG's been in The Times before I think, when they Thames pipeline deal was announced. Wasn't their someone on twitter that worked at the times that once tweeted that he'd bought some?
I don't think there are any contractors with any shares to sell. Unless IOG have issued some without telling the market (doubt it). The last contractor to get share as far as I remember was Transocean in mid-2016, around $2million worth. I'd be amazed if they haven't sold all of those a long time ago. Similarly I can't see how it could be employees selling, as far as I know any share in lieu of salary payments made have been in the form of options so we'd see a conversion notice (Martin Roscoe converted some a few months back).