Member Info for Moleinahole

Investor81 - the current mcap seems to be made of £12m cash and £12m for the rest at 1.5p shaeprice on DEL - they are around the £20m MCAP mark. We are at £67m MCAP. So on pure MCAP its 76% IOG and 24% DEL as of now.

If our risked NAV is 42p (@£201m) and theres is 7.6p (@ £106m) then combines its £307m. Based on risked NAV alone a 65%/35% split. So there is a bit of a gap there but I would argue IOG is way more certain while you could justify a higher value to bring them closer - I'm happier at current MCAP split. DEL will think that their asset is worth more long term once proved and thats the gamble.

Are the two better travelling together or apart? Short term IOG don't need DEL - long term it adds some extra resources to exploit. DEL seem very reliant on shell or another takeover. Maybe that would be why Shell would prefer a known safe pair of hands at DEL - like IOG management to develop. Hence my current thinking price may not be the sole determinant of a deal here. Risk and consolidation to develop SNS resources may be as much a factor.

The average is irrelevant in a offer for paper not cash. The investor has to decide whether he wants to sit at his current share price or join a bigger operation which has some lower risk close to market assets and a track record of delivery and good links into Shell themselves. If he joined IOG at even a low price he would get his 3.5p in the next year inside IOG paper alone and still have exposure to most of the upside if the assets were any good in time. If Shell didn't drill or drilled a duster they could be sat with a very different valuation at Deltic.
You also have to weigh up the macro economic climate. IOG will go to first gas - shell could mothball exploration and DEL are 100% reliant on them to get towards market. IOG have passed that stage and are on towards production.

No your not missing it Investor81. It comes down in part to confidence in those NAV numbers. I think we are under valued at our risked 42p (I think we should be nearer 50p or a bit more) but I used that to compare the two anyway and their 7.6p - I really have no idea how solid that number is from the broker note.

The market reaction on Deltic today speaks volumes about what market thinks the price will be if an offer is made. It does not price in a big premium so far.

Finally Peak saw you couldn't resist posting on Deltic board. 2.5p aligns the risked NAV's of the 2 companies.

But i would say IOG paper commands a bit of premium due to advanced nature of the project. So something between 1.5 and 2.5p. At 2.5p it would be a 35% DEL and 65% IOG split. At 2p its 30% to 70%. At 3p its 39% vs 61% and so on.

Fancy numbers in the 4 to 5p range seem way too exaggerated when you look at what even producing assets can go for these days - take Amerisur. 5p would value IOG and DEL pretty much 50 % / 50 %.

At end of the day this one will be determined by our bigger holders appetite for risk/reward not us.

Also looking at Deltics board composition they have pencil pusher as CEO and Geologists. IOG board looks much more solid with a track record of actually developing fields to production.

Does make you wonder if we have been invited to have a look.

Well no follow up RNS so far.

This has clearly been leaked too early as IOG have alot of stakeholdlers to align. Deltic have enjoyed a nice rise off he back of it. I'd be happy if we just sit on our hands for a bit and let them ponder exploration risk to their share price. Any offer has to be cheap and more a merger than a takeover.

Mark Hughes is of course ex shell. Also he knows about Breagh next to one of the Deltic licenses P2424 from RWE and INEOS. So I think Shell should have no issues with IOG!

Tempting to think that maybe this is part of a bigger consolidation as previously touted for UKCS. Interesting waiting game now. If we carry on with what we have I'm happy with that - but remain of the view any offer has to be cheap in current climate to protect our position. While Deltic has £12m cash thye have to pay 25% of drill costs at Selene so they will be exposed if that comes up short to fund developing their other assets.

Solena makes sense but its risky, the rest you would think makes alot less sense.

At 5p a share I'd vote against - not that I hold enough to make a difference but the big institutions do so its them they need to persuade - but then again the risk to them is a bit hedged by them getting cheap entry due to LOG debacle. I looked at the large shareholders and Lombard have a good % there as well - so them and LOG admin will swing any vote.

Monday RNS if IOG are serious but anything around 2.5 to 3 is max I'd be comfortable with and even that would leave me nervous as is high as it risks hammering our future upside on our low risk project if it turns out to be not as prospective as they think. Skipper and Harvey drill is a good example where even drilling where you think it has high COS the results can be not what you expect or hope for.

The shell links are interesting though. Like to hear more from the board now.

If it's all share it's not CalE! A mix of cash and shares maybe but still IOG paper behind the offer or shares and then cash farmin by CalE still dilutive but could leave a cash pot.
Could they take the LOG shares out as part of this with cash and use them from treasury?

Many questions but not changed my initial reaction want to understand the proposition, the risk and the value. Having under performed drilling skipper and Harvey I'm not a fan of exploration drilling! Up to the board to follow the RNS up with some details. But if it's not cheap I don't want them touching it personally as would prefer a lower risk steady return than higher risk.

R8 the problem is that you have to explain how they intend to sort out the mess they have created with the litigation and then explain the zero communication for heading on 2 years. Politics (and that being used as a cover for all things unexplained) will only take you so far in this saga and will not resolve the litigation which is why I still apply common sense and credulity tests even when looking at this abnormal company. If it was that clear cut it would have been resolved in Cayman and not escalated to New York, Texas and California. You then have to explain why they went into the final round of the arbitration with no legal team. If its a massive CIA esque intelligence driven play then time will tell.

I don't mind the it will be alright on the night of the big reveal - but where is the evidence of how you secure the asset from Outrider. The litigation to date has not filled me with the impression of a carefully planned or thought out plan.

Are you suggesting we are nearing the end of this because of politics and if so how do you see the litigation being resolved because if its not the politics is irrelevant whether you think people like me are too close to the coalface or not because FTI will have the asset. They simply have to stop that litigation by either winning it or settling it. Period.

Yes just had a quick scan of there stuff and some bits don't fit. I'm not so keen having had a quick scan now of exchanging equity in our safe project now for something involving drilling risk unless the price was low so that the risk was shared. Equity would enable that risk to be shared but would need to be keenly priced or the plan explained for me to vote for an equity dilution at this stage.

Some basic calcs show they seem to be double the price of last takeover attempt valued pretty much at their cash then !
Currently something like 2 times cash but burning through their pot. So would not want to pay much for this let them come on board and then enjoy growth. The board must not overpay if they made an offer.

Well this was my caveat the other day when they floated the short term acquisition route in addition to 32nd round.

Would need to look at the value and how they intend to pay for it to see the effect on IOG shareprice. Shares would in IOG would need approval to create them on our side - but CalE might buy it and let us pitch in with a bit.

Key is how value accretive the asset is and how cheap it can be bought for. At this stage its hard to call. Are they producing and need a route to market or just reserves?

Pyro that was true until the moment the GG did not revoke the license.

The arbitration and its subsequent politics has left the asset moot. Block 12 has a license held 50% by an entity legally controlled by FTI (the liquidators) and 50% GOGC. Corporate wise FRR tried to move that 50% into another FRR entity. That is what has to be resolved in New York. As of today Georgia would view the asset in an entity now controlled by FTI while FRR think they have moved it into a different entity FRR US away from FTI.

So if New York also rule the transfer void then FTI would have voided the corporate transfer and be free to sell it and any assets on to another player for whatever they are willing to pay. At that point they would need GG approval which may or may not be given. If New York upheld the transfer then GG would have to decide what to do about accepting the amendment to the registration which they already denied pre and during the arbitration - so FRR would probably have to show how they intended to pay for the program to achieve that. So at that point they would have to have a partner or funds to secure the transfer.

So as I see things - for FRR to proceed they have to win in New York - which they could do if they really have evidence of a breach by Outrider in the California case. If they have I would expect both those cases to end abruptly and the transfer to be uncontested. The GG would then decide on the plans or deal proposed by FRR and probably require re-employ local staff.
If FRR lose in New York then FTI will look to sell the asset on to someone probably pre-approved (and possibly known even now) by the parties involved.
I suspect California is scheduled to run ahead of New York and probably Texas given the defence no doubt FRR would lodge that if they prove the California case then New York and Texas become void.

I think I have been clear I have not been able to maintain any communications since early Q3 2019 (so well over a year now) - which coincided with the time we saw large numbers of job losses and the heating up of both the Outrider and arbitration actions. I've now given up trying as I'm of the view we will only hear anything now either from a liquidator or if they win in California. Georgia is interesting but not where I think the next key events will occur.

Gipps yes. First Zaza is not going to be bringing oil company presidents of majors on a jolly to meet the government in Georgia. Smaller operators maybe - but not big operators. If it really was a strategic play that meeting would be convened via state department and not thrown out as a bone on a minor news site and not declined. It doesn't stack up to me at all. For all the criticism leveled at the GG that has the same sound as the claims Hope blocked investment in the litigation case evidence we have seen. Its not very credible.
FRR clearly have in the past dealt with companies again we know of Exxon providing technical advise , oil sales have in the past involved BP and long standing work with both Baker Hughes and Schlumberger as service providers.
So its possible but while title to the block is up in the air seems implausible. Starrage understands exactly what I'm saying. Its not important unless a grand deal paying off Outrider is in the wings maybe after they have exhausted the litigation in California and found a way to exit without huge costs or win it. Hence my comment that anything is possible. The way out here has not changed since Dec 2018. Its just got messy and complicated and less likely as time has gone on.

CF you've tempted me to reply!

The arrival of Hope and YA was because FRR failed to attract a better quality of investor after the 2010 restructure. I think its a mistake to link them together but I think all of them are a symptom of the same problem. A weak balance sheet with no certified proven reserves (Rainbow we have certified unproven reserves/estimates) has attracted the "flies". I'll safely bet Outrider and Hope wish they had never got involved now trying to reprise their Madagascar oil coup and YA were relieved to have got out with most of their capital (and for all we know all their capital given we have had no accounts since mid 2018). YA are pretty sharp but don't think they are anything other than a bucket AIM lender.
The shorters have targetted FRR in large part because the share had plenty of liquidity to short and trade but the weak balance sheet and persistent equity releases be it primary bid or just YA selling every month made it easy. The Georgian side and the dispute over Block 12 is also linked to the failure to find oil/gas and the expiry of the Block 12 exploration phase in Nov 2017 has just caused the shorters to pester - someone leaked or let slip it had gone to arbitration. To construct a conspiracy involving all these parties is really too much - especially if FRR really has state political support behind it.
I think it all went critical in Oct 2018 when the undisclosed interest due on the loan notes fell due and could not be paid because the equally undisclosed production numbers from the 2018 campaign came up short. That rattled YA and Hope thought he had a chance of getting an equity position or get the asset using the mortgage security.

I have no idea how the company has survived the past year other than by slashing its costs to nothing and the secured and unsecured creditors playing along for reasons I have speculated about before (its in their interests to see an orderly liquidation or sale) and then FRR using their joker having accumulated political support historically and lobbying to keep the Georgians away. I would never rule out a total left field event here but I find it increasingly unlikely. To move forwards they have to stop litigation and start doing what they should be doing as an oil and gas company - drilling and producing. But that requires money. That means a farm out or a loan as equity is not an option now we are delisted! Its now over 2 years since we have had a drill in the ground.
Don't forget Outrider only need about $5m out of this to break even - they could get that in damages if they are lucky or lose the lot in California such are the stakes in that game. Everyone else unsecured debtors and shareholders are at the back of the queue as I find it hard to believe the mortgage security will be overcome unless they have strong evidence in discovery of malfeasance and win that case. Hence why the US cases is where to look now not Georgian elections interesting sideshow.

Jonathon - I'm not that daft. I think I'm coming at this whole sorry episode from a totally different perspective these days . the more I see in the court and other documents the less credible I find all the alternative theories and excuses.

But equally if this really has become a political play then there is a time to fight and a time to find a settlement. I'm really not seeing the kind of political backing for FRR I would expect if this was a pure east vs west game to provide cover for the politics they have decided to get involved in. They have used the influence they did have I fear to retain the 1% after they were unable to retain 100% in the arbitration. The onus to me looking in now was on FRR to make the next positive move. Continuing the highly political media campaign in my mind was pushing it too far. That's my just how I see it - I would prefer them to tone that down and sort it out round a table. If FRR have the political backing and major in the wings then that is what should have happened even with the GD.

This one is going to stand or fall based on whats going on in US courts not Georgia. Whether Georgians extend the license or not is irrelevant if its lost to FTI and the long queue of creditors. I find the the major in the wings and massive resources carrot if we drill some more unconvincing. Its been dangled and pulled up and down too many times since 2016 which coincides with when the finances went south as they could not resolve the Outrider situation. If there is a massive resource and the means to get it out is known we would be getting more backing. We are not.

To me I'm seeing a series of commercial disputes whose root is FRR lack of bookable assets and cash to fund both short term liabilities and long term development items. Bedex mused why is it still going yesterday. Well I think the answer to that is that the creditors have to move carefully to ensure they can extract the remaining assets away cleanly.

If everything was fine the company would have no issue making even token attempts at communication. They continue to fail to keep shareholders informed. The fact people don't even know who might be on the board at the moment speaks for itself.

This may not be a popular view but its how I see it I'm afraid.

Looed if true that Zaza has scuttled off (like Levan did) and we have no way of validating it that I can think of then for those who have been around a while we had even less luck with Steve at the helm for many years. He never replied to any communication attempt I am aware of - those who have spoken to him have had to go face to face to the AGM. The company are just not engaging with shareholders in any way at all since things got complicated in mid 2019 and with no listing requirements are unfettered and can say nothing. The company articles give them leeway to say nothing - which is exactly what they have decided to do.

But I have to say I think the public opposition that Zaza has spearheaded was and is not a good idea. I know some people here thing it was inevitable but I think they should have eased off in public once the loss of license threat was removed.

The real important action to watch for is in the New York case in my opinion. It might be that the New York case is pending resolution of the California case given the irreversible consequences of that proceeding to conclusion. The statement on the California case was made by Steve - I've not seen any disposition from Zaza in those cases.

Whatever is going on its heading towards an end game in my view sooner rather than later and for FRR shareholders to come out of this intact is a very slim chance.

Very good awards for us. No drill commitment that I can see just less expensive seismic re-evaluation. Shallow and near to tie in - should add a bit more onto the future value here. Very pleased with that result - will have a look at the details tonight on the OGA website as looked at some of these the other week when trying to work out what they went for. Exactly what the hub concept should be doing scooping up small accumulations to leverage the export pipeline. The ones next to Redwell/Harvey where CalE have not yet dipped their toe in yet become interesting as well. Why wouldn't they come in in due course with 50% offer?

I think BUTD/Peak and myself are on the same page - a 20% move up/down on a £5000 top up buy feels like a win while waiting! My average is around 17p mark so whilst I'm at my target for the long term ride - any weakness at this level is very tempting. BUTD - 2% of the company is a mighty holding I wish I had the capital but I'm in recovery mode at the moment after some equally mighty losses elsewhere and blown a hole in my capital (Trellis - SOU is one but not alone that has done that to me). Patience can pay off though - I have 2 holdings that have been bottom drawer for years in the renewable/alt energy field that have perked up after years in the doldrums.

I think this one has its own dynamics and so a going to be quite unlike others. The institutional holders are all in profit and holding while in the wings we have the LOG legacy with the administrators sat on their pile of shares. Neither are selling - meanwhile the free float as it becomes available is being hoovered up (by us from what I can tell).

With no need at the moment to use equity for substantial funding (other than director salary deferal purchases) and that equity held once the news flows its going to be interesting to see how it moves towards its discounted value. It could smoulder away for a while yet before it takes off possibly as you say in a couple of shifts in range. But agree if it starts to move you can't buy unless someone provides liquidity - dropping the price doesn't really free up volume of shares when they are tightly held. It would need some of the larger holders to divest of positions to lubricate the market.

I'm still of the view a take out offer is a 50/50 here though - I think anything in the 40p range would interest LOG admin and the insts would also be on a 4 bag at that price. So its a real possibility as they progress.

Drop in bid but has the offer come down? Would be interesting to do some dummy trades in volume and see what they have available. We are not aware of any issues - so its just because its so quiet they have a defensive spread to discourage trading and keep volume thin.

Peak on second read of the notes 2 bits came out for me.

First was the comment on operational risk in the drilling and cash and hence the importance of planning and getting is right rather than just done.

The second was the other opportunities. First read I thought they meant the license round. But second read it sounds more like a producing asset. Are they looking at a near term opportunity here? The only downside on that would be how to pay for it. May be a good time to pick up something that someone wants to dispose of but when looking at something like that it does pose a risk of further dillution depending on how funded or a deal constructed. The other possibility is that the opportunity is just another player using the pipeline to market. So maybe there is some sort of opportunity there.