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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.

Currently up 7% in Canada...

LSE price is up. Google graph isn't always up to date.

Am expecting s gradual closing of gap to the placing price ahead of a potential RNS later this week.

On the wild assumption that placee's conducted due diligence , closing the gap with the placing price would seem a likely trend ahead of an anticipated RNS.

Souc's finances are summarised in the Eight Capital report appended to viable's post. The hedging issue is explicitly discussed at page 14. It is a short term issue and seems to me to be of limited relevance beyond this year. Indeed Eight Capital estimate that SOUC will be free cash flow positive by Q4 of this year. Net debt at end 2022 is predicted to be $1 million. All seems easily manageable given the recent doubling of production revenues.

.From the RNS announcing the placing

...."Following the encouraging test results of our ongoing operations at Gwinville, utilizing our improved Generation 3 completion design, we believe that this is an opportune moment to finance the business for further, operationally-driven growth through the Offering. In tandem, we continue to see significant opportunity for accretive acquisitions in our area of expertise and believe that this financing will allow us to continue to act nimbly and opportunistically as we execute our growth strategy. These are truly exciting times for Southern Energy and our shareholders."
.......

Note that they specifically mention using proceeds for 'operationally driven growth' and it seems probable that this will include new wells and possibly incremental improvements to infrastructure. An acquisition is not immediately required but will accelerate growth and increase reserves.

There is no obvious justification for the share price trading at a significant discount to the placing price and I can't imagine the board being happy with that. They will want to keep the institutional investors happy so I also anticipate one or more positive RNS's in the coming days and weeks.

I see. So basically they sold some new shares so they can buy them back with the proceeds of the sale to try and mitigate reducing shareholder value by 50%.

Sounds like a plan!

I did note that, however the word 'potential" is not to be overlooked either.

The RNS did promise much and yes you would assume places did due diligence. However few if any.of them will have expected a near 20% discount on placing price. Something doesn't feel right.

You do wonder if they have a plan. If others manage to announce acquisitions councident with a placing why couldn't SOUC? Did they think they had a deal only for it to go pear shaped? Time will tell, but if they dont have something in the bag and announce it soon I dread to think what might happen here.

Still no news and so the slide continues. 46p finish n Canada means its approaching 20% below the placing price. What a car crash this has become!

We very badly need some positive news to counter the generally bad market sentiment. That combined with what is looking like a bombscare of a placing is certainly taking a toll on the SP.

...and 11 million quids worth of new shares, valued at 55p hit the market next Tuesday. Wonder if that might impact the SP?

My buys this morning have gone through just below tbe buy-sell mid price and have been recorded as sells.
Have seen others note the same.

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From Stockhouse Forum.

"Gwinville Horizontals Cost $8.9 million US
So, about $3 million US per well.

We just raised $30 million US which should,if entirely used to drill more Gwinville Horizontals, be capable of drilling another 10 wells or so , excluding the added cash from ongoing increases in Production.

In. Addition we have 7,240,000 Performance Warrants which become exercisable as to onethird upon the Market Price equaling or exceeding CAD$1.20, an additional onethird upon the Market Price equaling or exceeding CAD$1.35 and a final one third upon the Market Price equaling or exceeding CAD$1.50.

That will raise another $10 million or so.
However, with all that cash it seems more likely that they will make one or two bolt on acquisitions that could boost production ( perhaps oil ) by 2000 barrels or so.

So there is a great incentive for management to run the share price upwards, so that those warrants get into the money".

There is also speculation that yesterday's drop in Canada might simply reflect shares from previous warrants being sold to finance participation in the new placing. Since there does not appear to be any reason relating to fundamentals, that at least seems plausible.