Member Info for longtermthinker

But Krakenoil,

how are they going to sustain the dividend, yes it would be great at the start, but how are they going to step up production? or even keep it level for that matter. They have declining assets. This is why the share price is stuck at these levels IMHO, without a show of direction from Linda, they will stay here.

Regards LTT

Going forward under the current EPL, there is no insentive to buy producing assets in the NS (which was basically Harbours business model). Due to the high tax rate on profits, it would be stupid to buy producing assets that will be taxed at the same high rate even if the oil price drops back to the $70's.

Infill drilling is worth while due to the high tax relief on the drilling costs, but with no guarantees that if a Labour Gov comes in and takes away that tax relief, Harbour could be sat with stranded assets in the NS that are not viable to drill, even though they are sitting on the doorstep with infrastructure near by!

I know it's a bit of a basic way to look at it, but have I got the gist of it? I can't see a picture in my head of what Linda is going to do next. She walked from the Falklands, she let Brazil go, Zama.......will is Zama! Where are they going to get growth from going forward? Yes they can pay down debt, yes they could increase the dividend, but many of Harbours producing assets are in their twilight, without infill drilling they will decline faster; that hits production and then they are in trouble.

I think I'm going to hang on into March, but if it's just a "We paid down debt and we are increasing the div" I am afraid I will have to say Sayonara to Harbour.

Regards LTT

But where does the growth come from, they can do infill drilling on the existing NS portfolio and tie back the low hanging fruit so to speak. However they would be paying the EPL on those profits even if oil drops back to the low $70's per barrel or God forbid the $60's! That isn't going to cut it to raise the share price, we would just be running faster and faster just to stand still!

No they need to look overseas for expansion, but where? Zama just seems like a dead duck, they have been taking about it since getting it from the PMO deal, but nothing seems to have moved on, plus there is the risk of Mexico moving the goal posts again, so I wouldn't want Linda putting more eggs in that basket. They let the Falklands go and exited the exploration licence interests in the Ceará Basin in Brazil and the Burgos Basin in Mexico.

Anyone got any ideas of where the growth will come from, as if not, Harbour are going to be hanging around 290p-340p, bouncing in-between for the forceable, which turns out to be a nice little earner, but not really what I was hoping for when I bought in.

LTT

I was wondering the same as there is a big difference if they compound annually and use the annual Euribor rate.

By the way thanks for the link as always Mogger.

LTT

I do hope you guys are right, I’d love to get 25p/50p per share, and on paper we should get it and more, but why hasn’t there been anyone hammering on the door, we have had the high oil and gas prices for some time now, why hadn’t anyone farmed in/made an offer? Why haven’t we got a line of bankers outside our offices with cheque books in hand?

It’s because it’s so far away, because it could be an isolated asset and because the media has so demonised the oil and gas industry that the big money players are shying away from getting involved.

How are Borders going to raise the cash on their own?

I really hope they can but don’t see where the money will come from at this present time. Payback in 2 years sounds great, but that is only after 2 or 3 years to get to FID, then drilling the wells, renting the FPSO after it’s been refitted to Darwin’s specs. So anyone stumping up the cash is not getting it back in 2 years, they are tying up cash for 3 or 4 years IMHO.

LTT

Bloo,

I think the plan is to re-inject the gas to support production, as you say FIG don't want a LNG plant on the islands so they will just lift the condensate and any gas will go back in. I think thats the issue with the gas in the northern basin, Johnson could be quite a large gas discovery but a gas to liquids floater (I think shell one or two) however you would need a HUGE gas field to make it viable, hence nobody is bothered about the gas down there.

LTT

Hi gus0,

I’m afraid that payment had long gone, plus it doesn’t count as PMO who paid it watered down the carry, charged RKH for there share of costs, then PMO got taken over by Harbour who walked away, giving back 100% of Sea Lion back to RKH. Then Navitas who were to be signing up to develop with PMO decided they still wanted in, so RKH gave them 65% for offering to stump up the cash to develop, paying all costs up to FID which RKH will pay back plus 8% (I think from memory), then they will fund, upon a successful FID, two thirds of RKH development costs that will be interest free and paid back from 85% of RKH free cash flow.

So RKH go paid nothing from Navitas, only a promise to find the cash to get SL up and running.

So what will someone offer Borders? A similar deal? But I can’t see Brimacombe waiting in the wings for such an offer that will take years to come good. I do hope I am wrong, but my only reason for being in here is for the possibility of a takeover/buyout. 10p would be very nice thank you.

Regards LTT

Hope you're right PageofCups, but can see Mr Brimacombe as being in this for the quick buck, he is not going to hang around 3 to 5 years until production if we are lucky. Plus the share dilution if a partner farms in and we need to pay our share of costs. Look at RKH, they have had to give away 65% of their Northern acreage to get someone to loan them them money that they will ultimately have to pay back out of revenues! How can Borders expect a better deal than that?

No I feel we are going to be taken out, it's just at what price.

LTT

How many would take an offer of 8p to 10p a share? I know it's worth far more than that, the new investors presentation clearly show, even if they are a little optimistic on the rig costs! But even if we double the rig costs, the payback it still extremely quick.

However who will take the risk? No major is interested for a start, even Harbour with all their cash, (well not quite as much these days thanks to the EPL) walked away from the Falklands with an oven ready Sea Lion on a plate. RKH has some adjacent acreage in the Southern basin with lookalike prospects, and may have been tempted to rig share with Borders, however they need to get Sea Lion over the line first which is at least 12 months or more to FID. Even if RKH got the OM award tomorrow, they would be more likely to make an offer for Borders rather than go into partnership to develop IMHO. Then way down the line when Sea Lion is a producing cash cow, bundle the whole southern acreage together and get a farm-in for the whole shooting match as there will be Darwin as the hook to start the ball rolling.

Don't get me wrong, I'd love Borders to get a heavyweight partner in, or get taken out for 25p/50p a share, but my thinking is, if someone offered 8p-10p in the current climate, the board and the large shareholders would take it, a 100% to 200% return is nothing to be sneezed at, better now rather than waiting 2 or 3 years to get to a FID IF someone farmed in tomorrow! IMHO

Good luck to us all.

LTT

"B&S aims to attract partners to provide the funding to take the project AWAY" , more than likely, with a market cap of 18m why would anyone farm in, why not buy the whole thing? I know you could say the same about RKH, but with the OM funds in the wings any bid would cost a good deal more than the currant share price.

Basically IMHO there is no-one with cash to do it, the big players don't want the hassel, the smaller players don't have cash flow and the mid caps are afraid to invest and probably couldn't get the cash from the banks to fund it. Borders and between a rock and a hard place for sure.

Don't get me wrong, I have a few Borders just in case, but still find it hard to see where the money will come from. Once RKH and Navitas reach FID and the rig is on the way down to drill, then people will start to take notice, but until then, i'm not so hopeful. Plus the independent report seems a bit light on the details. $200m for drilling 3 wells without a rig share seems very optimistic to say the least. Also why would RKH and Navitas get a much higher spec rig than necessary to share rig costs with Borders, it's one thing to take higher rates on the chin when doing some appraisal and exploration drilling, it's another when you have 10+ production and injector wells to drill for development.

As for Argos, well what can I say! Could Borders end up in the same situation.

LTT

Thanks Exploration.

Fingers crossed the flow test goes smoothly and the results are good.

LTT

Dear Exploration, first and foremost I would like to say thank you for your insight and sharing of information, it really helps us non oilies get an handle on what is going on and helps with further research to make better informed decisions as to buy/sell/hold.

If I may ask for further support with my understanding, I would like to ask something that was asked further back in the various chats that may have got drowned out with the "Duster" chats and so on.

Can they make a judgement from the wireline as to whether it's worth running a well test or not? I suppose what I am getting at is, they have gas, more than just shows I imagine, so they have run a wireline and it shows properties of the formation. What would the criteria be that would mean they decide to do a production test or not? If they had only shows they wouldn't waste money on a 30day well test just for the sake of it right? Of course they are doing the production test to see how the reservoir preforms and nothing is certain, but what would the cut off me as to the do/don't, hence why I am trying to get my head around the situation.

Regards LTT

I like this bit;

"NEARLY HALF OF ANNULMENT APPLICATIONS ARE DISCONTINUED BEFORE REACHING AN AD HOC COMMITTEE
Almost 30% of all annulment cases are discontinued and never decided by ad hoc committees. The apparent reason for this is that many annulment applications are made on a tentative basis, in order to comply with the 120-day application deadline and/ or to create leverage for settlement negotiations. The discontinuance rate has increased over the past decade."

Not saying this will happen but it could, the ROI have limited avenues to go down and as the document shows. I am sure they will drag it out as long as possible, bit it will cost them every month.

LTT

I imagine the ROI will be going down the route of the way the Quantum has been worked out, this would likely mean the "Stay" would stay in place as how can you go after assets if you are not sure if you are going after 250m euros or 150m euros!

On the plus side however, if they go down this route, they are by default agreeing that they have to pay something, so even if the quantum is reworked and they agree on 100m euros, plus interest, it's still a pretty penny on our pockets and mean ROI have no other option than to pay up! IMHO.

All seems good to me and the fact they have had their first video hearing bodes well for a reasonably quite conclusion.

Happy New Year by the way, and Vid's good luck with your future endeavours.

LTT

Happy New Year to you too fecm, yes I hope so, can’t see any reasons so to why Navitas won’t steam ahead towards FID particularly as they have got FIG to hire a team to handle everything oil related. Seems they are forward thinking getting the foundations in first, which is far more than PMO did.

Regards LTT

Hope you are right Much, be great if Italy just paid up but can’t see it somehow, they had set the wheels in motion and will drag this out as long as they possibly can, they did it previously with the jurisdiction play at the 11th hour and have done the same here.

Still as you say, €40k per day is not to be sneezed at. I wonder which route Italy go down with their annulment, either way they are clutching at straws. The next bit of news should be will they put the award on hold or will they allow RKH and it’s lawyers to go for the money? Chances are if they are playing the Quantum card, they would have to put it on hold.

Well it will be all to play for in 2023, she should get some news on the annulment front and some sort of update from Navitas . Exciting times ahead indeed.

Wishing everyone a wonderful festive holiday and a prosperous 2023.

LTT

Ralph, time wasters who have hired Ian Ramsay and Thomas Stensgaard as well as strong armed FIG in hiring a complete new team to control all aspects of Sealions development, yep they are wasting time and money apparently putting up a couple of million for FIG to get those new hires onboard!

To be honest I’d rather have a company quietly getting on with things behind the scenes than PMO promising jam tomorrow only to kick the can further down the road as each self imposed deadline draws near!

Let’s see what happens in the New Year. I predict this time next year we will be considerably higher and all the options will be exercised to be cashed in! If not I’ll buy you a pint at the following AGM, to drown our sorrows.
LTT

Said with tongue very much in cheek, but stranger things have happened. If Linda is brave enough (much braver than many I might add) to walk away from the NS licensing round to send a message to UKGov, could she farm back into SL and share cost with Navitas! Let’s face it Mexico, is not a friendly place for western oil companies, the Gulf could go the same was with US Gov wanting to buy green votes. Even Guyana has bumped up the costs of licenses and royalties and all the sweet spots have gone. Even if they went for it you have deep water drilling and risks of a duster.

Where as we have said so many times before, FI had Sealion which is oven ready with great fiscal terms, what is not to like. Plus it has legs for add on development.

One can but dream.

LTT

Wonder if Borders will be next?

LTT

I’d like to think they are pulling their finger out after the delaying tactics Italy have pulled before, dragging this on far longer than necessary, after all it was a unanimous vote in our favour with a huge award nobody expected.

I just hope Italy are foolish enough to try to go down the jurisdiction road again, having had it thrown out twice, the third should be short and swift!

LTT