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I think confidence has been dented by them not following through on all the pre-placing talk suggesting an imminent acquisition. The emphasis in the recent 8cap note had switched to a possible merger/takeover and an accelerated drilling program. I see the SP edging back towards the placement price, but a step change from there will require clarity on plans and/or positive updates from Gwinville. My sense is the necessary RNS's are not far away.
The lack of communication since the placing has been frustrating to say the least. The broker note issued by 8capital (main underwriters of the placing) on July 8 seemed to de-emphasise short term acquisitions and hints at prioritisation of an accelerated drilling programme.
We can't be far away from an update on the Gwinville Wells so I'm hoping that may be combined with a bit more transparency on forward plans.
In the meantime it is good to see the SP trending back towards the placement price and I'm hopeful it will go higher than that when they do reveal plans for Q4.
I'm surprised by the lack of an emergency repair plan for Freeport. Almost like they want Putin to inflict maximum damage to the global economy.
If it stays there it should see the SP edge further back towards the placement price before the end of the month. Follow that up with positive news on flows and Gwinville earnings and we should be set fair for a strong Q4.
Encouraging signs that sentiment might be turning positive again? A return to the 55p placing price by end July would be nice especially with lots of positive news potential through Q4.
@Viable.
I'm sure it won't be news to you but are you aware that a huge chunk of IOG's shares are held by administrators?
Thanks Viable.
I can understand a desire to accelerate drilling and if this is now prioritised over inorganic growth so be it. SOUC could be more transparent on this and if they provided the clarity I have suggested ismissing it might help stem the bleeding of the SP.
For what it is worth I would be surprised if we do not see a significant revision of futures pricing around the time of the Freeport resumption. European prices are almost 3 times higher than those in the US. The disconnect won't be sustainable in the mid term.
The silence from SOUC remains a concern. To have said nothing whilst the SP continues to wilt post-placing is a significant concern and erodes trust.
Thanks for digging Viable. Look forward to your update!
@Harka.
It isn't just about irrational short term price movements. Those happen all the time. When they happen so soon after a significant dilution at a heavily discounted share price, they suggest a connection. In spite of your take on it, perhaps their message isn't getting through? I personally feel that communications are inadequate (frequency) and sometimes contradictory (content/strategy).
I don't think.you can blame shareholders for assuming that the discounted placement price was to be mitigated by a rapid/immediate acquisition, as is often the case in such circumstances. We have not seen an immediate acquisition so doubts are raised as to the identification of acquisition targets and timing of the placement. Such doubts are compounded when a subsequent RNS muddies the water by introducing the prospect of 'mergers' a message taken a step further in a note from the lead underwriters of the placement that emphasises the prospect of a takeover of SOUC. The same note discusses the use of all of the placement proceeds in Q4/22 to support an increase in drill rate from 15 to 21 wells per year as a catalyst.
Perhaps the share price is dropping to reflect the doubts over timing, implementation and prioritisation of corporate objectives? For example, I have significant doubts that I would see the value of my investment restored to post-placement levels by a takeover of SOUC.
I'm happy for you if you think the road ahead is crystal clear but it seems that many PI's have less conviction and are understandably upset to watch the value of their investment diminish on a daily basis whilst the board sit back and watch. In my opinion there is a pressing need for them to restore confidence and slow or stop the drop in SP.
I do hope you are right about the S.P. Neil. If it hasn't recovered before the Canadian placees can sell I can envisage a bloodbath.
It would perhaps make sense for them to issue a statement to the effect that they do not see any justification for the drop in SP and that they are pursuing their strategy on time and to plan. If they could add that they are confident that their strategy will restore and enhance shareholder value in the near term it might have the effect of stemming the bleeding. A verbal tourniquet so to speak. I can but hope that they are busy with other matters that will be more effective, but silence is draining my faith.
I wonder how much we P.I"s have lost?
At least placees will have had some form of breifng as to what they were buying into. We were not even afforded the courtesy of a 'heads up' on the dilution by a discounted placing.
I don't think it would be too much to ask that we are now given clarity on short-term drilling plans, or for a non-specific reaffirmation of intent to speed growth by acquisition.
It would also be comforting to see some insider buying at the now depressed (and depressing!) share price.
Instead we have been treated to radio silence whilst we watch our investments depreciate by the day. The manner in which this has been handled betrays a contempt for private investors. A very poor show indeed.
Good morning Viable. Trust you are well!
The ship is becalmed, the crew are having a siesta and appear happy to let it drift on the currents of the market, albeit in the wrong direction.
This is going to take spectacularly good news just to get back to the placement price never mind the pre-placement highs.
As always any insights you can garner will be gratefully received.
Respectfully disagree Neil.
In many instances where placings have taken place an acquisition occurs simultaneously or very shortly thereafter. With Souc we have gone from a clear assertion that the placing would be used for acquisitions to now the lead underwriter implying that the money will be used to accelerate drilling in the hope of a takeover of SOUC!
Communication with existing shareholders was non-existant ahead of the placing and now appears to be coming via intermediaries and now talks of mergers and takeovers of SOUC! Do they have a consistent strategy to recoup shareholder losses? Why have a placement if they didn't have an acquisition in mind and agreed in principle?
I wonder what will happen in a few months time if the SP is still lingering below the placement price, there is still no sign of any acquisitions and placees are free to sell? Has investor relations gone on holiday or don't they care? They seem content to just watch the SP drift lower and it surely could not have been envisaged that it would be trading at a 20% discount to a discounted placement price! It is remarkable that they have made no attempt to arrest such a dramatic drop in SP.
Sorry dyslexic fingers...20% below the discounted placement price, not 10%.
I would have hoped that they gave some consideration to how long it might take to get the SP back above the value it was before they decided to discount the placing. That prospect feels a long way off right now and as the saying goes, there's many a slip between cup and lip.
If they are looking for a potential takeover I'm doubtful that the premium they could be offered on the current SP would be enough to recover my losses.
I0% below the placing price and the only crumb we have been tossed is that current sales are at a modest premium to Nymex. t's just a shambles.
Very disappointed that we have had no direct communication from the board since the placing. Do they not recognise (or care) that the unannounced placing has been an unmitigated disaster for private investors (and placees)?
The suggestion of imminent acquisitions is already feeling like it was based on wishful thinking and the latest 8capital (Lead underwriter of the placing) note seems to give emphasis to an accelerated drilling program as a catalyst for a potential takeover of SOUC
If this is reflective of the boards intent then I'm more than disappointed, I'm angry.
It is about time we saw a positive and constructive RNS to halt the downward trend in SP. An update on the Gwinville flows as a minimum or preferably confirmation of the acquisition(s) they once seemed to suggest were imminent.
Maybe they are happy to see the SP go lower to encourage the buy out that is now being touted by some.
Hi Viable,
Do I detect a shift in tone away from 'acquisitions' here? The note seems more focussed on how increased drilling and positive well results will make SOU a takeover target. Of course these options are not mutually exclusive.
If there are no acquisitions in the pipeline then we are looking at a longer haul to get SP back where it was before the placing. Nevertheless 8C maintaining its target price is good news. Are you still confident that they are pursuing short term acquisitions or do you see them now using the placing money to significantly ramp up drilling?
They have indicated intent to accelerate the drilling program and to pursue value accretive acquisitions . If they deliver in the coming months trust will be restored, however the dilution and heavily discounted placing have served nobody well to date. Let's see if they start to turn that around imminently. If they don't the timing and impact of the placing has potential to severely damage their reputation.
The RNS announcing the placing has the closing date for the prospectus offering as 'on or around 7th July'.
It seems possible le that they are waiting for that before announcing their intentions. Could be an RNS tomorrow but might stretch out to Monday if the closing date is late by a day or so.
Since we are also due an update on Gwinville performance I think it is fair to assume an RNS is imminent. Having shafted existing shareholders and places alike it needs to be a spectacular!
Considering there were just 24 trades today, with sold value only exceeding bought value by £10k, it is hard to rationalise a drop in SP of 5%. You would almost think that demand for NG has plumetted and that it is trading at record low prices. Oh well maybe a stellar RNS later this week can turn thing around.