Member Info for MozzaBezza

Very interesting watching KIST this morning (this isn't meant as a knock to KIST, FYI). That suspended at ~165 and you can buy in the 170/180; area now. It has also gone rather quiet on Twitter for a stock that was so in vogue when it listed, although the same could be said about LBE there.

I think it illustrates how deal structure is probably more important in many ways than quibbling over BOPD and reserves.

I wonder if KIST hadn't given the firm they were buying equity in KIST, at what price they would have raised that new equity at. I would suggest probably a significantly higher one, considering that it seems from reading around like most were scaled back to 1/3rd of what they wanted in the raise and that a lot of people weren't allocated stock at all. Perhaps 200-250p would have been the correct level there.

I think LBE are in the advantageous place of having a much lower market cap and so being more heavily geared to any upside event than KIST was. I actually don't want to see LBE do an open offer on any deal, because otherwise you're removing a lot of the appetite in the open market for stock, which seems counterproductive to me.

We'll see. It remains a waiting game here, but I'd like to see a straightforward deal with equity raised at a premium and debt done to sensible levels. No shares given to the companies we're buying stakes in and no open offers. Keeping the structure of any RTO very concentrated I think is the key for LBE coming out with their guns blazing post any deal.

I'd like to see something really good sooner rather than later and would be prepared to accept that for a lower level of bopd ultimately.

I think they can get six months off in my book for covid, but after that and I think my sympathies begin to fall off a bit.

All I would say is that they do now seem to be doing something when previously there wasn't a lot of evidence of that.

Personally, I'd be quite annoyed if they bought exploration at the moment, because the modus operandi has always been to buy production and then bolt exploration in the side.

This being said, I think more of it comes down to how they structure any deal. KIST are raising new equity at 155p, which if the firm they were buying from weren't getting a portion of said equity, I think they would have raised at a higher price.

If we buy exploration with near term production and they can raise at 300p for it, then that's a good deal in my book, but I'd be a lot happier with buying production.

Yah, that explains it. Good point, Paul.

TBH, it felt like a cut and paste job from the presentation and the set of results, which makes sense, because ultimately that annual report is backwards looking.

I think a deal is probably getting closer and I'd love to see one sooner rather than later, but I'm being cautious and remaining as neutral as I can on the subject.

This being said, I do still believe that they're looking at/for former Faroe Petroleum assets and as there weren't that many of these you can likely say what they're after with some specificity - I think the latest job postings are a positive indication that they're doing something useful at the very least, too.

Nevertheless, as it has been for a good while now, it's just a waiting game really.

That's a good analogy. Certainly, my view has always been that this will basically do nothing and then one day we wake up to a deal, it suspends for a bit while they finish it and they raise.

Any debt capacity I would imagine has been prearranged to a large degree, so it's only the equity component that would wiggle around valuation wise.

If you look at RRE, they raised at 150p for their first deal having IPOed at 50p, so I think we'll probably see something similar here. The institutions in at 100p here at LBE are unlikely to want to dilute themselves, so I think the bar is (for my sensible worst case scenario) set for an equity raise at 100p.

In reality, I think the BOD's option have to place this over 200p and then gain more than that again to get their full options due to vest, so I think the likely real price of a raise would be ~250p minimum.

Certainly, it's very nice to see this sustained buying in the market. I wonder who it is, or even if it is a few different bodies, because you'd only need 12 25k buys to get to the 3% threshold.

I like buybacks personally, although I do understand why many don't.

For me, I think they work best when done alongside a dividend policy, because it causes that dividend payout to gradually increase on a per share basis while the firm can keep the actual dividend payments flat. Additionally, most shareholders will derive the majority of their returns from selling their shares rather than via holding for the dividends, in which case they may as well accelerate that process with a buyback.

Only my opinion, but either way, it doesn't look like you necessarily have to worry about an imminent buyback or else they would have done one already.

I have emailed the company to express my opinion re. buybacks. While I think it makes nearly no difference, I would encourage others to do so as well. If that's what people believe, let's let the firm know!

I know people quibble about the best way to return capital to shareholders, but I really think they should be performing a buyback alongside this dividend. Frankly, they're making so much cash right now there's little reason not to.

What I can say in the case of Line, is that HH's PA is in maternity leave, so she is subbing in, although it may well be that she does other things too than just being his PA.

I don't know. To be fair to you all, I've just ran though the former staff of LBE on Linkedin and actually you're all right, they were on contracts the previous people, so in that regard you may all have a point.

Nevertheless, I'm still determined not to get too excited!

I suppose it all depends on why they are after these new recruits... If it is for due diligence then we'll have longer to wait, but if it is because they have a deal now over the line then we should hear quickly.

I don't want to get my hopes up too much, as we've been here before, but I am optimistic going forwards. Certainly, we do actually seem to be doing something now.

We'll see. TBH, it doesn't really matter either-way, as long as people aren't trading on the back of it.

My gut feeling is that we'll have to wait a bit longer, but obviously I'd like to see a deal done sooner rather than later too!

Well, if we assume it's the same style of info Daveri apparently had in the summer, then I would guess that he has been made aware of a book build.

Am I going in the right direction, Daveri?

Ah, here we go again! We had months of this nonsense where the live limits were 2 shares on offer after months of what was the exact opposite, where you could barely sell anything.

I admire your honesty. Thanks.

Do you have any thing to corroborate that, Oilman or is that just speculative?

To be fair, we've all said these things before about a deal being imminent (me in particular) and yet we've had no deal, so I don't disagree with Paul's attitude.

The fact is, it's been an annoying hold, but most of us are still here and will believe it when we see it.

Personally, I'm optimistic we'll see a deal soon now thst the market has opened up a bit, but certainly (and this isn't an accusation) I won't pretend that I think every aspect of this firm is brilliant, when I'm not convinced it is.

97p paid. Been a long time since we've seen that!

Looking very strong, I think (having had time to evaluate this) that they must be quite close to something now - more and more of these transactions are being done with the majority of the work pre-suspension, so it may well be they in effect sorted one now, but are getting the background clear to minimise market impact of a long suspension.

I was a bit skeptical when it looked like they were only taking a reservoir engineer, as it felt like we should have completed that chapter, but these new jobs suggest that we must be very close now.

For me, any deal should still ultimately be about production and cashflow, not finding more barrels in the ground - but if they can get both than that's even better.

I still think they're after a package of ex-Faroe assets personally, but I may be proved wrong in that. Time will tell.