RE: Nat Gas Future16 Oct 2020 13:59
Maverick,
Very much doubt that would be even considered unless all other avenues are slammed closed. If I recall, the last time we issued shares outside of our LTIP awards was for part payment of Erskine (13.5m shares) back in 2014 to BP. SQZ are not a lifestyle company and as such, have to date recognize loyal shareholders as a valuable asset. I would say that given our ability to generate FCF and the fact that this will increase by 67% in little over 14 months that SQZ ability to raise finance should not be an issue! Given our track record of FCF would indicate to me that obtaining a RBL against 52mmboe 2P would not have been to difficult pre-Covid, with lenders being far more cautious now, who knows. Would of course mean we could end up having some debt, where as now SQZ are DEBT FREE.
If shares are to be issued, I would hope they are closed book placing with existing institutional holders or offered as a RI. Of course the issuing of share capital as part-payment akin the Erskine would not be an issue for me either as if I remember, BP were unable to sell them for at least 12 months. Not sure how many PI's would have the ability to take up an offer should this also be a route SQZ take.
All deals need to be financed by some means, although our answer to the BKR transaction would by far be my preferred route if possible and I'm sure it would be the frontrunner for our BoD's too.
Of course the way our SP has recently 'gravitated' into the 90's could be an indicator that SQZ have made 'enquires', we all know how the markets work when an opportunity presents itself.
You can then throw into the mix the real possibility of negative rates in the near future and all that it entails, not helpful when you have +£100m sitting in the bank, but great if you want a massive loan.
aimo of course.
atb
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