Member Info for longtermthinker

Hate to say it but this really will make Trump's case all the stronger; those that were turning from him will turn back once he starts spouting about how he beat Covid, no doubt he will pitch some drug that he took as his saviour and push for America's economy to open up and get moving again. IMHO

LTT

I think if ARCM haven't been able to exit (of course nobody knows for sure), then it really shows that the outcome will have be to do the deal and extend the debt out another 4.5 years and they all happily get their 8% return. I mean come on, where will anyone with cash get returns like that?

It's clear to see there is no reason to call in the debt and kill the company; it would be a fire sale and even thought PMO assets are lucrative and cash generative without the debt, who want to buy or have the money in these uncertain times. Also let's not forget the $4b in tax loses PMO have on North Sea production, hence buying the BP assets. Anyone breaking up the company would lose that $4b.

Way back when this all started, PMO stated they would end the year neutral at $35 a barrel, at time of this post we are at $41 for Brent. This means they can service their debt. Yes they have cut back on expenditure as everyone has, but they are weathering the storm so far.

The low oil price is not just an issue for PMO, the ramifications of not just this year but the past 4/5 years with a lack of investment are not being talked about; it's the elephant in the room people are imagining is not there! Yes there has been demand destruction; the economies of the world have been hit; yes companies will fold; sadly many jobs will be lost, but talk as if nobody will fly abroad again; people will stop going to pubs and football matches and live like hermits indoors is crazy!
The big producers like Saudi, Russia are in big trouble balancing the books; many smaller producers are just pumping to get what they can while they can, but no-one is materially developing and adding production and investing in exploration, the only reason nobody is talking about this is because demand is down, but this isn't an environmental drive to Electric cars and hydrogen (investment in these comes from higher oil prices), they demand will come back as soon as a vaccine becomes viable or scientists start showing a 2nd wave is far weaker and thus let's get back to work. It might not be next month, but 2021 will be very interesting for many reasons I think. Never mind what the results of US elections will do!

The companies that survive this will reap the rewards; gaps left by companies that have failed, will be filled.

Good luck whatever your plans.

LTT

Suppose no news is good news but can’t he’ll thinking it was a little foolish mentioning had talks with Chysor when debt holders had been agreeing with the deal to extend the debt out 4.5 years, accept the purchase of BP assets etc! Bit cheeky, they might be inclined to make PMO sweat a bit!

Suppose we should get some clarity today, maybe I missed in a previous RNS it might have said debtors agree to extend covenants until deal is done, rather than just end of Sept, then of course who knows when we get some clarity on our future!

LTT

So what are the other outcomes Devon? What is a more positive outcome? Look what we have just been through, look how we have been in courts about the deal, do you think they want to apply to the courts again to try and take the company?

You are a smart cookie for sure, you know your stuff, you should put your talents to something more positive and constructive.

LTT

But Happy why would they take such a risk? They are negotiating a new deal that will extend the debt for 4.5 years at a tad above 8%, for someone in the loan business, in the current climate, never mind the last few years of ultra low interest rates, 8% is a fantastic return, so why would they want to call in the debt they know PMO can service and risk a fire sale and possibly not get their debt returned, never mind interest they would earn over 4.5 years.

I realise you are playing devils advocate, but you have to add some reality instead of looking at the absolute worst case scenario. As for Chysaor they are more interested in the 4billion of tax losses so not so much the north sea assets, although if the BP deal goes through; debt sorted for 4.5 years; and more production online in first half of 2021, then someone might start sniffing around with 100K + of tax free production, well tax free to the tune of $4billion to claw back.

So to counter your absolute negative view, I say when the deals are done and PMO can look further than 6 months ahead, we will see some interest picking up, maybe a bid and a rising share price. If PMO can fight that off as oil rises to $50 range, then I see 50p+ in the share price in the New Year 1st Q.

So lets settle for somewhere in-between yours and mine as it is a more likely scenario.

Good luck LTT

I managed a little punt SK, but purely trading, can see a nice 10% by mid week. If Brent was around $35 then I wouldn't dream of it but this is pure knee jerk reaction, what's the worst that can happen to the banks with the FIN leak, slap on the wrist; naughty buys and girls, don't do it again; £15m fine (that will be passed on to customers) and that will be it. They won't dig in to it too deeply as the rabbit hole is too deep.

LTT

Was planning a very small top up to bring down my average whilst all shares a being punished, but HSBC market master won't even give me a option online to buy! Maybe they think i'm trying to money launder and making up a FIN as we speak!!!!!
LOL

Crazy times eh!

LTT

I think PMO will survive these strange times and issue new shares, raise the cash it needs and get into a good position with lots of headroom to 2024. My main concern is a predator, the tax loss must be enticing for anyone with big production in the NS, hence Chrysaor sniffing about . Yes they also have a lot of dept, but with 137k barrels a day, low average costs per barrel, they must be paying a hefty chunk to the tax man so it does make sense.

I see what people are saying about PMO and the NS, the tax losses against 100K production next year will help pay down their debt, but lets not forget, they also have to replace reserves and add production as natural decline takes place. The free cash-flow they will have has to go somewhere and SL will be a hefty addition down the line in a great fiscal regime.

SL is well and truly on the back burner though. PMO get taken out then all bets are off. PMO turn the page and possibly things start to move forward but we would have to be coming out of this Corona Virus and Brent oil would need to get in to a prolonged $45-$55 range for this to happen.

We keep hearing about a vaccine on the way, it will come, but scaling up to be like the annual flu vaccine isn't happening any time soon. To my mind, the Holy Grail will be this accurate 20/30min test with results. Get that sorted and suddenly lots of things open up.

It's a watch and wait now, nothing to see here for some time, move along.

LTT

you would have to question, why would creditors want the company to fail so they can take control in this environment! Take the company valued at $177m, take on the $2b debt, in such difficult times to do what, unlock value? It would be a fire sale and not worth it.

Even at this time, PMO is making money and paying down debt, the BP assets will produce tax free production as PMO can leverage it's tax credits, what is not to like about that. In these crazy times, PMO is weathering this storm for now better than many and trying to get itself in to a position to be ready for the inevitable rally in oil prices to pay down the debt and move forward. The debtors are wanting this to happen also, they want their 8% return.

Brent dropping below $35 for any period of time and all bets are off but for now it's the uncertainty that is crushing the share price not how the company is run and profitability. IMHO

LTT

one way to look at this is those taking debt for equity are also taking a further stake in the debt that will still be held against those shares, yes they may get shares for 20p or less and a lot of them, but they are also taking on the debt the company owes.

We just need some clarification as to the what, how and when, don't shareholders have to vote on this too?

LTT

thanks,

good luck whatever your plans.

LTT

Does anyone know where to find the current short position on PMO?
Thanks in advance.

LTT

All will turn around after the Summer, look at Spain, UK Gov announce they don't want us going and 14 day self isolation upon return, yet Spain Gov know they need tourism, everywhere needs a Summer. Yes numbers are increasing but they can't afford to do a 100% lockdown again, anywhere, it will be smaller areas to show they are being proactive but that will be about it IMHO.

I have friends working in the city, saving a fortune on commuting with companies talking about 3/4 day weeks at home becoming the norm. That saved money is going to buy a car so not relying on public transport too much going forward for trips away. This is going to be the new norm. I wouldn't want to be in London property or transportation in the future, but oil is going to be consumed for some time yet.

Shale is hanging on by it's finger nails, I just read that the frack spread is now 80 units working when over 400+ were working this time last year and 2018. US cannot sustain 11.1 million barrels a day relying on shale Opec + is not going to flood the market again any time soon, they need $60+. They seem to be playing it well though allowing the $40 WTI to stay around these levels despite their needs to nail the coffin lid shut, or at least kill so much that even with oil back to $60+ there will be fewer players left racing to flood the market with oil.

Anyway PMO should be adding approx. 17,000 barrels a day from Sept and even at these current oil price levels, the income will shore up their bank account and pay down debt, as to my mind, that is how to get through this; selling off family silver at rock bottom prices in this climate would be insane, but with the new production even at $40 we are earning so can't be all bad.

LTT

Not sure about this Apache thing, i mean PMO have a lot of debt, but they have a good amount of production with this new deal from BP, if it goes ahead they are getting close to 100k barrels a day, if not more. Anything above $35 a barrel is paying down debt and the Zama deal eventually will know another $300m + off the debt.

But saying all that, where does future growth come from? Tullow is in a similar boat, bit directionless (although there is hope the new guy will get them in the right direction). PMO have firmly tied their flag to Sealion development, yes they have projects where they can drill and tie in further production, but nothing that materially adds large amounts of production. If you think about it, in this current and near future climate, where is new production coming from? Exploration and in particular anything risky is not going to happen. Oilies are wanting to cut back on spending and div's are being cut. The majors will not get involved in the Falklands for obvious reasons, but it has to be attractive to mid caps as a huge amount of work has been done.

I'd like to think anyone taking on PMO would be looking at the North Sea, Zama and Sealion development as anyone with cash/low debt could in 3 years be pulling in 60k barrels a day, in other parts of the world with higher taxes surely you'd have to be producing far more for the same return.

With rigs and services idle, 2021 has to be the best chance of getting the job started or at the very least signed off with lower break even costs. Oil cannot stay at $35-$40 for ever. The longer it stays at these levels, the stronger and higher the bounce up will be as too much of the industry will be decimated.

It still amazes me that oil is looked at like any other commodity rather than the life blood of everything we know.

US may have opened up too soon, but we are already talking about Summer holidays and no quarantine, we too are going to get spikes like the recent deal in Leicester; other countries too, but the powers that be have decided it's time to move forward otherwise the medicine(lockdown, unemployment, economy, business closures, etc) is worse than the disease.

We still need to protect the elderly and high risk, but we also need to get the show back on the road.

LTT

Mal,

It was my understanding the shares they bought went back to the people they borrowed them from, so they are not entitled to anything as they are not a share holder. I could be wrong though.

LTT

I believe whatever RKH get will just go into running the show until first oil, keeping Moody et All in tea and hobnobs. There would be no payout to shareholders as the tax liability at first oil would need to be settled before money could be used to pay div’s or special one off div’s.

I do home there is more going on behind the scenes as it will be too late trying to secure and sign off on equipment/rigs/fspo etc in a year or two as oil gets back into the $60/$70 range. IMHO.

LTT

SK do you not put it in to a trust fund or something as surely every gift over 3K he will have to pay tax on. I'm no accountant but imagine there should be some vehicle to reduce the tax otherwise all your hard work gets taxed twice. Can't you put 20K in his ISA allowance and then just trade in that wrapper for him, profit all tax free? Maybe you are doing that already. Just a thought.

LTT

Down, I think you are playing with fire, I don't know about anyone else, but a short walk this morning and there is a definite increase in traffic; lots of shops open; lots of people out and about.

You are trading against the tide now; you are doing it in the hope of a resurgence in Covid cases; a 2nd wave but just as easily a vaccine could be confirmed that would buoy the market and oil; bigger draws could be announced; shale numbers could come out showing a bigger drop in production than estimated.

I am in PMO for the longer term, I'm in low enough to to ride any bumps and I don't have the time or inclination to watch this daily and worry about it. I have a job that I need to focus on, along with some home schooling so my style is research and invest with a eye on things but with a review in the Autumn.

However you as a trader I'd imagine would be moving in to cash; taking profits and waiting to see, not gamble on things out of your control. The market does knee jerk about of late, but when you consider what OPEC+ have done and are doing and what they need from the oil price to keep civil unrest at bay; then trying to short oil at this time seems insane, the risk reward equation is not worth it. That is of course for s REAL trader, whom makes a living from this game.

Good luck with whatever your plans are.

LTT

I would have thought them more likely to consider a new tac on new applications, now change the rules part way through.

I also feel (although officially they have to be unbiased) that FI is a special case, an outpost of the UK of strategic importance. With oil production in the Falklands the islanders can pay their way and then some and it will allow HMG to fund and increased military presence in the region, just a stones throw from Antarctica.

It is just governmental grumbling to appease the greens and lefties, as it stands we are a long way from turning off the fossil fuel taps and they know it.

LTT

£1 would be nice for sure, how soon that will happen is another as you say the market and fundamentals are out the window at the moment, everything is knee jerk and media driven, up and down which makes sense as traders want volatility, make on the way up, make on the way down. Just look at GS, one minute shouting oil will hit new highs, the next saying it will crash and take years to recover! Hhhhmmmh anybody would think they had skin in the game!!!!!! LOL

However fundamentals will out, can't help feeling that with Covid and the oil price the oilies that survive with will be super lean having cut back and reduced outgoings across the board, so even a couple of $1 on oil and it materially effects the bottom line.

PMO said $35 average for there year kept them in neutral, taking in to account their hedges; once they are going in July (from memory) we will be at the mercy or the oil price, but with around 100K production once the deal is done, even $5 dollars up for oil brings in a lot of cash when the rest of the company operations are lean. As it is do we not get a $2/$3 premium to Brent? If so we are already in front at these levels.

Just have to hope we don't get a 2nd wave of Covid and things start to open up around the world in the Summer. Don't know about you all, but I have noticed a definite up swing in traffic this past couple of weeks.

LTT