focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
I wish that would happen. Honestly, given where the share price is, buybacks make a lot more sense than dividends, but the shares are not very liquid so I'm not sure they'll opt for this.
Honestly, I think it would be by far the best idea even if they can't buyback that much due to regulation. Say they approve a 40M buyback (16% of market cap), it would be sending a message to sellers that they'll be buying shares hand over fist and put a price floor to the stock. It wouldn't be very material to the company's finances either. I wish they'll announce a buyback program honestly, but I don't think it will happen.
Regarding the EPL, I think it's a bit irrelevant whether it gets extended by a year or not, Labour is very likely to win next year and they have already voiced their intentions towards O&G. I'm not sure there will be any change regarding the UK's politician sentiment towards oil companies unless there is heavy social backlast, which again, I'm not too hopeful for given that it hasn't happened despite the energy crisis in 2022/23.
In hindsight buying the Egypt assets was a huge mistake. Despite a boom in O&G prices during 2022 and average brent price higher than when it was bought it's only problems. Another reason to sack older management.
I think it really isn't the current management's fault, they are doing what they can with what they were given.
I'm not sure what is the reason for today's drop and I'm considering buying some but to be honest, the egypt assets are just a big dissapointment
I honestly agree with you. If they cannot generate cash with oil at 100$ then why would you be invested here when you have plenty of companies trading at less than 3 times FCF.
At the same time as you said it's frustrating that management is making an obscene amount - I believe in between CEO, CFO and some directors they were making 1M a year, on a company that's trading at 11M - so 10% of the mcap is going yearly to a few guys who haven't proved they can make anything right.
As you said, I believe the only value in the company are the Jamaican and the UK license they have, but given that management doesnt seem to be competent I do not trust them to get a good deal.
even though the article might be speculation I dont blame if people sell. I invested in seplat mainly because of their acquisition. It's true that I was impressed with their latest results, their cash flow generation was very strong without Mobil assets, but imo the biggest upside and the main reason why I'm invested in seplat is because of the Mobil acquisition. Therefore I dont think you lose much from selling a bit now and reinvesting if the news are refuted
I found Capricorn a few days ago and it seems very cheap on paper. From the comments I've read here there seems to be a lot of negative opinion of management but in my view it seems they've been managing the company quite well lately?
Tender offer for 33% of the shares has created massive value since the company's EV is extremely low so they're buying current production + other assets extremely cheap.
The buyback program will keep creating value at this low valuation.
Then; on to the company and assets themselves: The egyptian assets don't seem particularly exciting, 66% of their production is gas and gas pricing in Egypt is very low compared to oil on a boe basis (albeit it seems like gas pricing will rise in Egypt in 2022). Still, it's ~35k boepd with around 33% of it being oil.
Finally, I'm not sure if many people have read it but they have a clause in the disposal of the assets they did in 2021 where Capricorn is entitled to a % of profit above 52$/bbl for Brent. For 2022 this entitlement is 50% of the difference between 52$ and current Brent price. The assets they sold produced 21k boe net to Capricorn in 2021. Assuming the production declines a 10% (19k boepd) and that brent is at 90$ on average in 2022 that would be an entitlement of more than 150M $ for Capricorn.
So, company's current EV is around 170M$, 2022 production is around 35k boepd plus the entitlement which will probably be above 100M$ for this year.
I'm not sure what I'm missing but it looks great on paper.
thanks
If they can grow production, sure, go ahead. But remember that in 2021 they reinvested all the cash flows in the business and production actually went down.
I think the time to buy another asset might have passed already, with oil at 130$ I'm not sure you're going to find deals at attractive pricing.
agreed with you, management definitely could do something about the share price.
Unfortunately I asked management whether they were considering a dividend or buying back shares to support the share price and they said they werent considering it, so I doubt they'll do anything about it.
If they had some more shares of UOG I'm sure they'd like a buyback :)
I've been holding uog for some months now and my hope is that they are able to grow production a bit this quarter and start generating cash flows. At 120$ oil they definitely should be able to generate positive CF.