Member Info for MudPump

I'm not sure why you think the receivables relate to international/private equity customers. Admittedly without digging too deep, my assumption is that the receivables relate to power generating companies, particularly Calabar and therefore NDPHC (structurally private, but shareholders are National/State governments). My guess is that these struggle to get some customers to pay up, particularly when forced to raise power prices quickly due to the sudden Naira devaluation - they are unlikely to cut power to a hospital or to a big employer in an influential politicians backyard. So, as AK says, the solution will be to work with them to try to get payment as and when possible- likely to be a drawn out process but ultimately most of the cash should come in as I understand there are World Bank guarantees for the majority....although to be triggered reluctantly.

The impression I got was that the oil project won't advance unless AK is able to fund it in a non-recourse manner, presumably using some kind of aid-based guarantee. That won't be easy, with international aid being generally reduced, particularly for hydrocarbon projects. But I think you can over-state the risk here: any nationalisation would kill the wind project (which apparently has government support), and, like Chad, the oil has to pass through a pipeline and be loaded in another country, which makes stopping sales receipts being passed to the government easier. For the same reason I think the Chad situation will eventually be resolved in our favour, albeit with a major haircut.

Having listened to the call and looked at the presentation it seems to me that the company is pretty much where everyone expected it to be, no real surprises. The shocker was the placing at 7p. We don't know whether there is some urgent liquidity issue, but the purpose was clearly stated by Knott as bringing in two strategic investors who would add value to the company, one by offering a source of acquisition funding, the other offering some kind of local knowledge. The placing price was obviously set low, using the fact that some institution wanted out at virtually any price, to cross some stock to friendly institutions at a 'secondary' offering price, giving legal cover to issue new stock at the lowest price possible. Knott, some other institutions and other board members insulated themselves from the cost of this by averaging down, which Knott also advised listeners to do. Unfortunately PI's with a large holding and no spare cash will bear the brunt of this giveaway. We can estimate the cost of bringing the new investors on board: I don't think there would have been many complaints if the issue had been priced at 20p, so the 13p left on the table equates to about USD 70m. In other words, if the combination of the new investors contacts, knowledge and immediate access to funding generates more than $70m of value for the company in the near future over and above what could have been generated without them, then the plan will have worked out OK for all shareholders (though rather more for those that are able to average down). That doesn't seem entirely implausible, so perhaps things are not as bleak as they appear.

Https://www.africabusinessplus.com/en/817705/chad-minister-abdelkerim-mahamat-abdelkerims-london-roadshow-launches-80m-mining-sector-project/

I wonder if the minister had to field any questions regarding unexpected nationalisation.....

No surprise that Perenco are unimpressed with the nationalisation. Petronas must be very unhappy too as it makes their stake, which we know they want to get rid of, virtually worthless. Difficult to imagine they will have the slightest interest in investing in production growth. The most likely outcome must be a deal that allows Petronas out , and Savannah/Perenco in, assuming they are still interested, and the junta can handle the loss of face.

SAVE should certainly not 'walk away'. We should continue to claim our share of lifting receipts, as per the documentation backed by the ICC, and continue to press the arbitration case. Obviously no investment should be made in the licence areas, and I suppose the other partners such as Petronas will be unlikely to agree to any further investment either. Production will therefore fall over time. It's possible that there will be a change of regime at some point, with an interest in getting production back up rather than playing games.

I think the "tell them to F off" faction are being overly pessimistic, but further, are missing the whole point of Savannah (setting aside the fact that a man under threat of imminent assassination by rebels supported by Wagner, according to US intelligence, is unlikey to be too worried about being told to F off by a small UK company).The strategy is to collect assets being dumped by majors well below npv....due to potential reputational risks as well as the actual risks of erratic policy, coups, nationalisation etc associated with the type of countries Savannah is targeting. Complaining about the difficulty of getting the Chad deal done is like an insurance company complaining about car crashes - the problems are what creates the opportunities in the first place. So the answer is not to flounce off like a rebuffed teenager, but to manage the situation as best as possible. The first requirement is to have a portfolio, rather than a single asset...and Savannah are working on exactly that. And worth remembering that while Chad looks a problem and SS ok right now, the situation could easily be reversed next year. The second requirement is to use all the tools available to extract the value...and there are probably many. Exxon and the others who set up the Chad/Cameroon venture were not amateurs, would have been fully aware of the risk of nationalisation or other problems, and would have written as much protection as possible into the structure. It has already been pointed out that the funds from lifting are received by an offshore entity, which is more likely to abide by international law when distributing them than random and illegitimate decrees. And there remains the possibility of blocking Chadian assets overseas etc, as has been used against India, Argentina etc. So no reason at all to give up and walk away, the fun is just getting started.

The Chad employees of Exxon seemed rather nervous about the employer change to Savannah, although that seemed to have been settled. I wonder how they feel about their new employer SHT? Are they still getting paid? If so, by whom? Has anyone seen any social media noise on this?

Computer909, As of Dec21, Ralston had 3.225m shares (source: prospectus). Also 2.5m options ( 4 year remaining life, strike 6p, source AR2021, note 18). Plus 1.5m 5Y options 6p strike, vesting at 10p, awarded 16Dec21 (source RNS).
Best improve your research.

It is certainly true that the share price and operational performance have been disappointing over the last 3 years. But the question now is not 'should I have invested at 4p+ 3 years ago?', it is 'what is the upside from 1.7p over the next 3 years, versus the risk of a slump toward zero?'. IMO the reasons for delay and poor performance are understood - disappointing performance of the ex-Soviet well stock, the need for 3D, absorbing the Schlum acrerage, installing an EPF and covid. Going forward we are part way through a 2 well program to test an adjusted strategy, working with BH. Until we have the results of that program I don't see that you can write it off, or the management. Expectations seem pretty low so the risk/reward profile is attractive IMO.

"Nearly £20mil with nothing to show"
Other than more than 60 million boe 2P, an EPF, a lot of 3D and well data, and production of a few hundred boepd so far. The strategy is still on track, maybe your timeframe is a little unrealistic?

"We desperately need this well to flow" Not sure I agree with that completely. Obviously it would be hugely beneficial if it flows at the 'predicted' 500 boepd, but I don't see that it invalidates the strategy if it doesn't.
To recap: as I understand it, the strategy here is to accumulate a decent amount of acreage with plenty of evidence of production potential (done), to shoot 3D and accumulate data sufficient to work up a large number and variety of potential targets (done), then to drill one after the other in a fairly constant campaign, obviously adjusted depending on the level of success from the different opportunities (in process). Ideally this would be funded from cashflow, but the campaign may need additional funds from the sale of additional equity from time to time at the early stage (where we are at)...which is why BLOE is a listed company. PH's style may grate and he certainly needed to avoid getting over-excited in interviews (which he is now avoiding). But as I see it the strategy makes sense and is at an early stage of execution so it is way too early to write off either the plan or PH.

It is also worth noting that the current auditor of BLOE is BDO, the fifth largest firm, not a third rate outfit. The 'concerned shareholders' are implying that BDO are incompetent.

The resolution commits the company to pay for the audit, and would therefore stop the capex programne. Any shareholder wishing to see a successful outcome to this drilling programme must vote AGAINST. If the 'Shareholder Group' were serious about their offer to pay they would withdraw this resolution and submit another, merely committing the company to cooperate with the investigating auditors.

AnotherLambo, the point you make about the resolution is very important: what the 'Shareholder Group' say about being prepared to meet the cost of the investigation does not change what the resolution actually proposes ie. a full forensic investigation paid for by the company. If the 'Shareholder Group' is prepared to finance their own investigation they need to propose a different resolution which would simply commit the company and its auditors to cooperate with the investigating auditors.
In my opinion the resolution demanding a forensic investigation was only proposed in order to attempt to swing the vote on the first resolution. And the 'offer' to pay for an investigation is proposed in the same spirit, in order to create some doubt about the financial impact on the company of the cost of the audit.
In general I am often supportive of the shareholder action to focus the mind of management on wealth creation for the shareholders rather than themselves, but in this case the cynicism of the 'Shareholder Group' is obvious, and I have voted against all of their resolutions.

I don't see that this fight can only be about the opportunity to milk fees; surely the FFGP crew stand to make a lot more on their shareholding if the company is well managed and successful than by charging 'outrageous fees' for various 'services'? Another curiosity is the share price - given that Gneiss placed shares (presumably to funds that are likely to vote with them) at 3p, and FFGP have an avaerage well above that, why are the 'interested parties' not hoovering up every share under 3p in order to increase the likelihood of a vote in their favour?

Many of these are custodians, typically of retail holders but there could be larger (though not over 3%) holdings split between several custodians. But generally it doesn't look great for GP - retail seem hostile so they would need Amati and produce a convincing case to flip some of the retail to have much chance I think....BUT the unknown here is the Schlum option position. I am not sure of rules for derivative disclosure in the UK. In Canada they would have to disclose any reduction of their option position for example, but is that the case in the UK? If they've ended up in a fund influenced by the GP crew and they choose to exercise them (assuming American exercise) then they'll get what they want....

It's difficult to imagine any BOD would want to appoint Gneiss as 'advisor' in future, inviting a campaign of insinuation on social media against themselves. If GP have something to say about the departure of the NED they need to come out and say it instead of working through 'commentators'.

I don't think anything is less impressive than attempts to poison the atmosphere on bulletin boards - is this what passes for PR these days? If GP etc have a genuine grievence concerning the performance of Dimmock then they need to simply publish an open letter to the board detailing it, as is frequently done in the US. If it is convincing enough they will quickly amass the votes needed to dump him. If they are incapable of publicly describing his failings then they should stop the irritating manoeuvres in the dark and support the management who as far as one can tell from the outside are trying to monetise the assets for all shareholders.

V111JAS
You've pretty much summed up my thoughts here.
There are probably negotiations going on in the background now, involving the 'non-concert party', the BOD and Schlum, so I'm not convinced that it will come to a vote. But if it is heading that way I would like to see clear guidance from the BOD with their defence of Dimmock and the progress so far. If the GP/Lang/FF party want any votes from anyone other than themselves, they need to set out convincingly why they think Dimmock has screwed up so badly, what he should have done differently and what their man would do differently going forward. Simply stating that Dimmock needs to take the blame for them having overpaid for their stake and stopping any open discussion by sending their goons to erase social media debate isn't going to cut it.