Member Info for Megla

Jesus Thunder, I'm pretty sure the company know how to write an RNS that says we were a bit optimistic during the H1 results, we now expect to do this, that and this by this date, without putting themselves on the chopping block.

Don't tell me what to do with my shareholding, I didn't ask for your advice.

Come on now Seav, the guy stood up during the H1 results and said to shareholders and analyst that it would be complete within a couple of weeks. Should we pretend he didn't say it? It is not worthy of a clarification?

I'd argue that the board is treating shareholders with disdain by not providing an update, but then you spend most of your time trying to bloke smoke up their bums, so you probably don't see it that way.

Can you not see the irony in yours and Seav's posts?

This isn't an AIM company blah blah blah, but then holding the company to their own guidance is silly?! Honestly, you really couldn't make this rubbish up.

So you’re going to hold after the tax refund Seav.

Myself and lots of others (including institutional investor) will be taking the opportunity to get shut. It really is inexcusable to say something will be completed within a ‘few weeks’ and not provide an update when it doesn’t happen.

You obviously like the deal to sell the assets in the North Sea, I think it was dreadful. Add the two together and that’s a big enough reason for me to sell and question the decision making process at the company.

Each to their own and all that.

Let’s be honest, no one has a long-term interest in the company, we all just want the tax refund to be paid so we can make a few quid and move on.

If folk did care, there would have been way more questions about selling tax free producing barrels in the best price environment in years, that would have produced a mountain of FCF next year.

The company itself makes very questionable decisions (imho) and fails to keep its shareholders up to date, as evidenced by the ‘few weeks’ gaff by Mr Thompson that the company seems reluctant to address.

Tax refund received, divi paid, shareholders sell during the artificial boost the buyback will provide.

Short term hold, then a big fat sell for me.

The interim period adjustment from Jan 2020 to June 2021 was $273m, this comes off the $460m. Standard practice of course as we're eating through the reserves and keeping the cash flows, so at the end of H1 we would have received $187, which is less than I thought. Add in another $100m of cash flow between the end of H1 2021 and the completion date (end of Nov?) and the amount payable by Waldorf reduces to less than $100m.

Okay, we'll get a decent amount from the additional consideration ($60m for 2021?) and further payments in other years (if oil prices remain high) but we're selling tax free producing barrels in a great price environment. It makes no sense to me, especially considering FCF next year would likely be around $250m at 15kbpd and $75 oil. As an energy company we should be maximising the value of our assets, not selling them to someone else to do just that.

I've voted against, but really doesn't matter what I think, the major shareholders will decide.

But it isn’t $455m Stanley, that was based on a transaction date of 1st January 2020. Since then, Waldorf have benefited from the higher oil prices by bringing the consideration to $273m at half year. Add in another 5 months at $70/$80 oil and that becomes less than $200m net to Cairn at completion.

The additional consideration is okay, but selling tax free producing barrels in this oil price environment is crazy imho.

They have lost their minds. These are tax free producing barrels adding mountains of FCF at current oil prices in a stable part of the world. Yet the benefit of the higher oil prices is going to Waldorf in reducing the sum payable at completion. Okay, there's some future decomp liability to consider, but that's less than half this years FCF.

The board should realise this is a mistake and pull the vote.

I hope everyone’s voted against the North Sea asset sale, or is planning to do so at the GM.

The deal is utterly insane in the current oil price environment, especially considering the UK tax loss position.

The final consideration payable by Waldorf will only be about $150m when the working capital adjustments are taken into account, which is crazy for 19k of flowing barrels with oil prices at $80+.

It should have never been recommended to shareholders in the first place in my view.

Yup, also gone past the guidance of a ‘few weeks’ that Mr Thompson mentioned on 7th September.

Assets currently valued at zero if/when the cash drops.

Market is still pricing in some risk that India about turns.

True market value will be reflected when the cash hits the account, if it doesn’t, it certainly will during the buyback. There’s zero chance the market will give the company the opportunity to pick up shares at a discount (whatever metric you choose to use) when they’re going to be buying back so many.

In short, we just need the cash to hit the account and the market will do the rest.

Certainly sounds that way, let’s hope for a speedy resolution so the market can actually assign some value to the business.

Decent deal, shale is high capex and low returns.

Would have preferred the cash was used to pay down debt rather than being returned to shareholders though.

Let’s see what the market thinks.

Seav, just rough numbers really. No one really knows what the share price will be post divi. With the current share price, the divi adjustment would leave us at 100p or a market cap of £500m. Obviously it won’t be that, or the market would be valuing the assets at zero, but if it was, it would mean the £145m buyback would buy closer to 30% of the company

Things will become a lot clearer when the cash drops.

When the cash arrives, the share price will adjust.

Until then, they’ll be a risk premium baked in.

Patience is key.

Relax Baysil, the market is still pricing in some risk that India won’t pay what‘s owed. Fairly sensible really until the money is in the bank.

Obviously the risk is small, I wouldn’t have thought the board would put their credibility on the line by giving a timescale for payment unless they were incredibly confident of it it coming in, but the risk is still there.

The buyback will plug any gap between the market cap and the valuation. As the company will likely be buying back 25% of the company (post divi adjusted share price) holders won’t want to give their share up on the cheap.

ATB

With the pile of cash they’ll have at the end of next year, I just hope they don’t make a rash move and overpay for some assets.

Peakview, on one hand you say it’s an impossible calculation at this stage, but then slap a minimum price target on the company of £200m. What is that valuation based on?

As a holder from 13p, my only current problem is working out when to sell, getting a reasonable estimate of what the core project is worth, post tax, will help with that. Obviously the inputs to that calculation will change, but it doesn’t stop anyone playing around with the numbers.

The revenue part of the calculation is fairly straight forward, the core project is roughly 30mboe and this can be multiplied by whatever gas price. The other parts are tricker, what is the total capex, abex and opex requirements for the life of the fields?! Would $15pb cover it?! What is the expected tax rate?! I have no idea on any of these. Some rough estimates from the company would be great so investors have a rough guide of what to expect if things go as planned.

Would be great to see if someone has put any of this together?

Slightly lazy post, but has anyone done some analysis on what the core project is worth, post tax, at various different gas prices?

The analysis will be hindered by a likely reserve downgrade at Elgood, but would be good to see what numbers people have.

Consensus estimates are for $12bln of CFFO, which feels about right.

They’re also expecting an adverse working capital movement of $1.5bln, which I’m surprised at given the $4bln in Q1. Unimportant really, but does limit the net debt reduction.

Q3 likely to be even better than Q2, so would definitely be expect buybacks to be back on the agenda, especially given the current discount of equity to book.

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