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I think though that the BOD, IIs and PIs don't want to see any raise, but that all hinges on their monetisation project working.
Well, I believe they can't raise below 10p, because that's the nominal value of the shares.
Let's face it, it just depends on the circumstances. If they're raising to keep the lights on, the price will be awful. If they raise as part of a production deal, then any raise will be a lot better.
I absolutely agree. I wasn't clear in my post, sorry.
I meant that, if they can buy production (likely with a swap of exploration, or sale of exploration), they probably wouldn't need to raise further equity, because they could borrow against that cash flow if it wasn't enough in itself.
Here's the thing, if they ever actually achieve buying cash flows, I don't think they'd need to raise fresh equity, because they could easilly borrow against the cash flow.
Even if they only made a net profit per boe of £15, on 2000 boepd, they'd make nearly £11m a year in profit.
From the BOD, mine and probably the II's perspectives, no one wants to see fresh equity raised sub the last placing level of 75p, unless it absolutely has to be.
As always though, that works on the basis they actually buy some production!
I think that the risk is probably less 'can these guys find a good deal?', and more 'when will they find a good deal?'.
While it wasn't what we wanted I think the exploration deals have been good deals in their own right.
Granted, we've heard this before, but so far we've been recently told (15/02/23) that they would update us in Q1 and then approaching the end of Q1, they pushed that to "later in the spring".
Again, we've been here before, but to me, it suggests that there is a deal probably decently underway and that it's just in the final stages.
I don't like it, but staff expenses increasing isn't surprising as their staff on payroll has gone up since they have assets to do work on.
I do rather resent the bonus'. They might feel they're deserved them operationally, but they certainly don't deserve them from a share price perspective.
Page 12 effectively highlights what we all know anyway - raising large sums of money is hard if you don't already have cash flows or equity value to justify it.
Hence why with the size of their own shareholdings so significantly underwater, I think the BOD are effectively forced to go down the swap route, or monetise for cash.
I know there's a delay to these reports beibg written, but I thought it was quite interesting how ambiguous they seem to be about M&A in Norway vs Malaysia.
That being said, right now, I just want them to have any production deal!
I'm less convinced that they'll raise after a deal for Kveikje.
Mainly, because the BOD's own equity is so underwater that even on their sallaries, they'd need to put a lot in to get their averages down and I find it hard to see institutions rewarding them with big options packages after such a long stretch of failure.
It feels to me like they're actively trying to avoid raising fresh equity, so that any deal has the most geared effect on the share price. They xould raise at say 30p and the already fairly full shareholdet register probably wouldn't thank them if they could do a deal for debt, or a swap, etc.
Good point, Ash!
I'm trying to strike a balance here between being positive and looking at the information they've presented with no rose tinted glasses.
At the end of the day, it boils down to having to just having to wait to see what they deliver on the production front and then between now and then I'll gently drip more money in as and when it appears.
At least we're all well practiced at waiting!
Yah, it'll be an interesting one to watch playout here costs wise and just generally.
Right now, the cost basis actually doesn't matter that much per month for me... Only assuming, they actually pull their finger out and get a production deal over the line...
I would imagine we'll never find out why they seemed so confident on a March M&A update, to then push it out in the last presentation to "later in the spring", but it would be interesting to know.
They did seem confident in the last presentation that a production deal was on the way. I think that right now, if they can get a few thousand boepd of production without diluting the equity, then it's clearly stupidly cheap down here. AET: 4500bopd, £50m mcap (Africa), SOUC 3000 boepd, £30m mcap (US), AXL £40m mcap 3000bopd (Columbia),
The question however is: after three years of talking about doing this, will it actually happen?
Now, we don't know if they're going to get production in Malaysian or Norway. They currently imply Norway is more likely, but we'll see. If they do, if probably makes sense that, this will trade on a higher P/E than a more difficult jurisdiction, but we'll have to just wait and see.
I still feel they could say more than they do as a rule.
They're not producing fields. No cash flow is being generated from those assets.
They discovered hydrocarbons, but there are currently no flowing barrels of oil equivalent from those fields.
Erm... There is no production here. Discoveries: yes. Production: no, but hopefully soon.
Ooooooh! Back in the double figures!
Granted, I still need this to go up ~5.5X more to get to my average, but it's a start.
As ever with LBE, I'll believe the potential catalysts when I see them. I don't doubt their intentions, but they're not famed for their speed.
That's my view too, Tuscany. To be honest, that seems to make sense too, as thus far they've proven that they can't buy cash flows in Norway.
Fair point, Ash.
I guess being the small partner in any deal, they're always going to be at the mercy of bigger player's time scales, but it does still feel like they could communicate more regarding any deals they're looking at.
Everything is always very vague on the M&A front with them, which you can get away with for a while, but after a point you start to wonder if it is in fact actually about the obfuscation of a lack of any real deal making going on.
I think that you're right - the problem they're up against is that unless they deliver consistent cash flows, the business will always trade on a fair discount to what even a successful discovery strategy would imply, because it's much easier to value consistent income than inconsistent income.
I wonder how far they're looking to push into Q2 for their next kvejije monetisation update. I would hope not a lot, if they had been confident enough on 15th Feb, to say they'd update the market in the first quarter of 2023.
Well, I dripped a little more in today and if I'm lucky I might drip more in soon.
Nothing major - I think you have to be fairly brave to take massive positions here, just because of their flexible attitude to time.
But we'll see... It would be nice to think they're close to delivering something positive.
I think i'll believe it when I see it. There have been so many false dawns here, you can barely count them and let's face it, that's only about £25k of buying, which isn't exactly enormous.
Very apt Whirl!
I'll probably drip a little more in here anyway in the coming weeks, but I must confess, I'm now looking back and questioning when my Stockholm syndrome set it.
I guess we'll never know this, but it would be interesting to know why they're giving themselves another quarter to get Kvejije monetised.
Is it because another Lotus situation/acquisition has occurred, or just because they're being their glacial selves?
It makes it difficult to plan for as a shareholder - although the price has tanked so much, that anything I buy now does bring my average down.
The question is: is there ever actually going to be catalyst for a big shareprice move?
They keep telling us there will be, but they've been saying that now for three years.