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Yeah, unless the Oswig field actually starts a few km higher than we expected it won't be that, so I guess we have a few options:
1. It isn't actually a leak, but just buying (seems most likely), with people chasing one another.
2. News on appraisal wells for our current projects.
3. Deals for our assets.
4. Deals for other projects.
Let's see. Fingers crossed the market likes any news that comes our way!
Heard anything on the grapevine, Daveri?
I think that's exactly it, Harry.
We effectively have two groups of shareholders now: those who bought in for the initially stated production deal and those who came in for the new strategy.
It's not necessarily that either strategy is bad in isolation, but the frustrations sit with saying one thing and doing another.
I think if they find a nice big chunk of hydrocarbons, preferably in one place, they'll be fine and swap into cash flows, but I think most of us here from closer to the IPO thought this would be a similar journey to Kistos or Rockrose.
It is what it is at the end of the day, and I haven't sold out, because I can see value in the current strategy, but it's much riskier than I ever wanted for this position on my book.
It would be interesting to know if they have had discussions and what figures per BOE people are using in these deals. I get there will be a case by case element for it, but it would be nice to know.
TBH, I would celebrate anything that would see us having money returned to us, either in cash or via the share price actually going up for a change.
I have always felt that a large part of the problem here is that they're getting very generous packages on the salary level, ontop of their options and stock holdings.
It means that "getting the best deal for shareholders" feels like an excuse for not acting with any level of urgency, because TBH, they don't actually need to.
I like your idea, Whirlaw, but I think thw firm would be most likely to argue they need the cash for deaps and developments ans would rather not lever up for further deals, etc. That being said, I agree that this is a solid idea by which we can all win.
The thing is, it ultimately depends on what they find.
I don't like the current situation either, but ifbthey find losts of oil/gas it will go up. Simple.
I think the reactions to strikes thus far have been lack lustre because they weren't massive net finds to LBE. Even Egyptian Vulture, which looks big on the face of it, is actually a big question mark, because the ranges given were so huge.
If they find 19m boe net to LBE, we'll see a good rise. 1.70p? I don't know. I think it's always wise to discount personally.
Nevertheless, while I don't like the current strategy, I don't think it's worthless, IF they actually find something.
I think it all comes down to risk. The current strategy is high risk, but they might find something. It isn't what I invested for, but it is what it is now as I didn't sell.
If they find they 19m net boe here, at $5usd per boe, we're looking for an uplift in value of ~£78m to the mcap.
That puts us with a share price of ~£1.71, depending on a lot of moving parts.
Now, i'm not happy either with how this has panned out, but all is not lost (for the time being).
I can't find coordinates, but I think it probably is there now, because the Tune and Oseberg fields are in line with Shetland and we know those would be the potential tie backs on a strike.
Might be they're doing the preparation work for a spud, or they have spudded and are just late with the RNS.
I thought the same thing. All seems a bit odd. I'll see if I can get a rough corordinate set for Oswig.
Yah! Well spotted. Fingers crossed we get some news soon.
I wonder if their plan ultimately is to go for as much near infrastructure exploration as they can and then use the large level of gearing they get from there to pay for the total cost of buying the exploration and then use excess value as a partial chip to trade.
The fact is, it is very cheap to buy exploration and if they find something big or even very big, it will have paid off.
My concern, is that if by some miracle they did find a production deal to do, I'm just not convinced they could/would get full debt funding for it and with our current share price it would have to be an epic deal for it to be at par to our current price let alone at a premium.
Ugh. I just wish we were actually drilling at least, which would at least give us something to be excited about. Even if they found something big, I now question how much we would get a rise, TBH.
Oh well, fingers crossed for a swift spud date and hopefully a strike!
I haven't listened to the investor meet presentation yet, but have listeded to Malcy's.
It all boils down to what they have achieved, rather than what they might want to. At the end of the day, it's hard to value what doesn't exist, either in the form of big discoveries or producing barrels.
I have always felt that they have been economic with the truth where it has suited them - frankly when we went towards exploration and it looked like production deals were off for thr time being, they should have just said that rather than been all cagey about it.
I have asked them, to say, without giving details, if they are in any active discussions re. Buying ot swapping into producing assets.
Production is the key and and as its a key strategic point they've always said, I don't think it would be divulging anything market sensitive to say if they are, considering it is how they've always marketed the firm since IPO.
Tell you what though, what does really interest me, is where all of these big trades are going.
We don't know yet, but presumably we'll find out, because someone must be taking all of these large trades off the market makers somewhere.
For me, the cash pile's only relevance at the moment is so we know we don't need to raise to just keep the lights on, because if it isn't growing, i don't think the market is interested in putting much of a value on it, because it's always being discounted into thr future as cash is required to run the business.
The issue they have at the moment re. swapping assets is that their share of net recoverable resources isn't big.
Egyptian Vulture for example, at the mid point (which I think would be a high figure to take pre any appraisal well, because it's not well understood) would only be net 12.3mmboe for LBE, or $30.7m at the $5/boe figure.
Now if the appraisal well comes out really well, then suddenly that total recoverable figures comes up and then it really is worth a lot to the company, but, its all 'ifs' and 'buts' right now.
I think there's a good chance they might swap something like Kvejije into something with very low net production for LBE, but with development to scale it ongoing or relatively near term. It's the only way I can see them getting flowing barrels considering what they have to work with.
Of course, the other side of the coin, is they might just do a big raise, but it's not obvious that would be at premium to our price and not all deals are seen by the market as being good value just because they're producing barrels.
Look at KIST's latest deal, which raised a lot of eye brows and they paid cash.
Unfortunately, with no drilling in the immediate term and IIs selling down, it's a waiting game. I certainly don't feel in any particular hurry to keep dripping money in, even though at ~50% down, it does make a good difference to my average now.
I think that it's a very simple play now.
We need: either a massive oil/gas strike or a cash flows.
Now the ideal would be thst they can swap into that, with Kveikje, being the obvious that could be monetised quickly because the reservoir is so well understood already. The issue is that, they don't own much of it. Taking the mid point between the 28-48mmboe found, gives longboat 3.8mmboe net, which at $5/boe is still only $19m of value.
That's not going to buy much production, unless they're borrowing a lot of money/raising more alongside it. On similar basis to KIST's acquisition pre the recent run up in prices, that would get about 700boepd of production, and probably less now hydrocarbon prices have gone up more.
It may be they can use the reserve based lending to help with any deal ince they have their foot in the door, because they they could borrow against production, but the speed at which they seem to be not getting production deals done, doesn't fill me with a lot of hope.
I'm not entirely sure what the point of thst RNS was, as I don't think it told us much that we didn't know already.
Suggests to me that either the BOD or other IIs have given them a *******ing for the share price and thus we have the RNS this morning.
My hope is that they can come up with something for production, because the fact is, the total risk load of their current plan re. exploring, is a lot higher than what it would have been of they simply bought production.
Hopefully this new position is indicative of what is to come, in so far that, as they aren't the operator for their current drills, they wouldn't currently need one unless they were in the process of looking at acquisitions where they would.
That being said, we've been down this rabbit hole before, but fingers crossed nevertheless chaps. We could do with a big win here for our patience alone.
Oh, how I know that feeling!
My concern is less so the share price right now, nor even our lack of any giagantic discoveries (although assuming we appraise Egyptian Vulture that may open the door for a "massive discovery" in my book), but the seeming lack of any haste from the BOD to do anything about cash flows.
This exploration route has always felt like a cop out to me, because they wouldn't pay enough for buying cash flows and weren't fast enough when it mattered. Even then, now we have tradable assets, they don't exactly seem to be in any rush to swap them for cash flows.
The problem, is that while they may be shareholders, a shareholder who is also taking a salary doesn't have the same pressures as one who isn't, or is taking a small salary.
I probably wouldn't be complaining if Cambozola came in, but TBF, it only had a 15% COS, so it wasn't likely and we all knew that.
The thing is, even firms that aren't doing mega boepd figures, but are in sensible jurisdictions like KIST (pre recent deal it was on ~5k boepd) have had massive rises, because it is very easy to value cash flows.
Exploration is a gamble at the end of the day and in light of the ESG moves being made by major fund managers, the BOD really need cash flows so that the question marks over future funding can be quashed.
Right now they have:
- 15% of 19-63mmboe at Egyptian Vulture.
- 20% of 9-12mmboe at Rodhette and there seemms to be a question over the commercialisation of this.
- Mugnetind doesn't count as its not commercial in isolation.
-10% of 28-48mmboe at Kveikje
So at the low end LBE have net 7.45mmboe, which at $5/boe is worth $37.25m, or £30m, which is pretty much our market cap.
Frustrating, but down here the valuation seems about right with what we currently know, unless they buy production or find some more oil and gas.
Oswig, Copernicus and Velocette to come. With an expected appraisal well on Egyptian Vulture out into the future too.
Also, let's face it, Cambozola would have been fab if it came in, but it did only have a 15% chance of success. The remaining drills have 36%, 26% and 35% respective chances of success, which is a decent step up.
I think all of us agreed that we would have preferred they bought production, but they didn't. So we have to make the best of what we have and hope they can swap into it.
Alas, no find. Onwards and hopefully, one day, upwards! It would be interesting to know what the big anomalies were on the seismic.