Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I don't think its anything to do with whether results are good (Accomp) or indifferent (Gtx). Its more to do with standard reporting by US companies that announce results within a month to 6 weeks of the end of the period. Many of these are large complex businesses. BUR are trying to catch up with that standard, in preparation for quarterly reporting starting in 2023.
I notice that the finnoexpert article quotes YPF claim figures ranging from $1.1bn to $5.6bn. These are clearly taken from the range shown by the table on page 64 BUR 2019 Accounts. These figures are net to BUR but do not include judgement interest, that, as stated previously, could possibly double the amounts.
As part of its submissions to the Court BUR put its claim at $8.4bn. That is also before interest, but necessarily before deducting sales (so not the net to BUR figure). That gross (and corresponding net) figure can also be found in the 2019 Accounts.
This contrasts with the figures shown by Gtx, $13.2bn to $15.6bn. I seem to recall that a calculation was provided but why should we prefer these figures to the 2019 Accounts figures and BUR submitted claim?
I don’t think I shall be willing to hold out until September. C Bogart has said that this case was proceeding as a breach of contract and J. Preska must have known at an early stage that there was a clear breach by the Argies. As we all know the formula for compensation for the expropriation is specified in the contract. There is the issue of the date of the share price to be used for the calculation, but otherwise the basis for the damages calculation is already set out. She may be trying to limit possible grounds for appeal, but apart from that what reason is there for delaying this case even more. Holidays are for wimps.
So I give the Judge 8 weeks max to announce her judgement. That’s the 23 August, any later then I have to assume that we have a problem. At that point I would have to consider offloading 50% of my BUR shares to defend against an adverse outcome. TWT seems to think he can win whatever happens but I don’t see what game plan would achieve this.
That does not really answer the questions. The last sale of Petersen was in June 2019, before the MW episode, and before evidence was presented to the court. So the sales are of diminishing relevance now. To me it says more about CEO Bogart's abilities as a salesman, after all we have bought into the story as well. But where we are now is that the case being decided by the Judge, and all that matters is her decisions based on the evidence.
Alright I admit it. I am all in on BUR. But all this waiting is beginning to get to me. Doubts are creeping in. If this case is such a slam dunk surely J. Preska could have written most of her judgement before even the last submissions? Maybe she is thinking there is a principle that the interests of justice are not served by awarding BUR a huge gain whilst the injured party, Petersen, is still bankrupt?
The shorts had a good chance to get out recently when the SP was in the 600's but they are still there. Does that mean they are waiting for £5 and below? That's not just about YPF, that's saying that the whole business model is flawed. We never hear from the shorts saying what their current thinking is (its been a while since MW). Are we just in our own echo chamber only hearing each other saying that BUR is going to win?
C'mon guys and gals, tell me that everything in the garden is lovely.......please.......
In their final deposition, Buford actually claimed $8.4b, before pre judgement interest. That was on the basis of taking the mid point share price of YPF, between the date Arg announced their intentions, and the actual date of acquisition. There is no legal basis for using this mid price (unless arrived at by negotiation or arbitration) so JP might find it difficult to go for that. Instead she might play safe (whilst showing favour to Argentina) and go for the actual acquisition date, giving the lower figure of $5b. Still, surely she would be sympathetic to awarding pre judgement interest, so the total would come to a healthy $10b. Based on the 2019 Accounts (net of sales and expenses) that would still give net $4.5b to Burford. I would take that, but definitely resist more attempted discounting .
I think that Guzman, despite his left wing credentials, is probably more pragmatic and realistic than Kirchener. If this resignation indicates that her economic notions are in the ascendency, that is not good news for the Argies. Of course she was President when YPF was expropriated in 2012 so she will be identified with the huge cost of her reckless actions. So we can expect more intransigence and delay if she has anything to do with it, as she tries to dodge responsibility.
Thanks Accomp and everyone for you comments. Done this transfer now. Might have reinvested when the price was 720 had I known how to do this. There again I find BUR share price very hard to read, and maybe another opportunity will arise. Preska may take her own sweet time to announce her decision, and people might get nervous about half year results before that. Who knows. Meanwhile HL might think about making their procedures less complicated. Thanks again.
Thanks Accomp. I have an HL ISA and Fund & Share a/c. Yes the "cash" from the div appears in the fund total, but as you say NOT in "available for investment", implying that it is not cleared funds. So you could not reinvest the dividend if you wanted to. In the case of my F&S a/c, I instructed HL to pay the div paid to me. That has not been done. HL is negligent and out of order holding on to our money like this.
I am getting very annoyed that HL have not passed on the div payment paid out by BUR on 17 June. A week later, no payment. I have em'd to complain but I expect HL reply will be the usual PR crap, apologies, funds not cleared etc. Anyone else with this problem? If widespread problem maybe FCA should be brought in. HA! Don't have much confidence in them either.
I know that you will say that its futile, but I have emailed my local constituency MP to complain about Russian sanctions penalising UK shareholders. I pointed out that until recently EVRAZ was a FTSE 100 company. As such many UK shareholders would have been invested prior to Feb 24 (whether directly or via investment or pension funds). When sanctions were applied first to RA and more recently EVRAZ itself, those shareholders became unintended victims when the EVR listing was suspended. Whilst sanctions may only be a minor inconvenience for EZRAZ, UK shareholders effectively lose their investment. There should be a compensation scheme for those who find themselves in this situation.
Of course backbench MPs have practically zero influence on Govt policy. Our local MP has been suspended twice, the first time for using the expression "ni**er in the woodpile" and again for voting against the NI increase. But maybe being a rebel would free the MP to speak up against Govt policy.
Why not bang your head against the wall of indifference and write to your MP? I have of course only received an acknowledgement not a substantive reply.
BUR needs more capital if it is to finance continued expansion of is portfolio. Obviously the need for capital has been exacerbated by delays in court activity. When I asked if BUR needed to raise capital for this reason, CB ducked the question, merely saying that in some instances it would increase returns. The fact is though that BUR has raised some $800m in the last 12 months (although some debt retired). The debt equity ratio must be around 25% currently. High enough I suggest.
The fact is that BUR really needs YPF to come through, with a substantial amount in cash up front. I suggest that at least $1.5bn needs to be set aside for future expansion of the BUR only portfolio, gradually repay debt, and wind down some of the dependency on investment funds. Whatever is left over ($1.0 bn?) should be used for share buybacks. That much would put a rocket under the share price. Not before time, a welcome boost for long suffering shareholders.
BUR 2021 Accounts landed with a thud. Its a heavy read. I don’t bother with all that ESG and diversity crap. These days proving that you are a believer in such things is one of the burdens of being a public company. Then there are risk factors, all 18 pages of it, with a summary as well. If you take all that too seriously you wouldn’t invest in anything. Apologies, I’m going off piste with this, but no wonder the report is so massive.
My main point: the latest update of BUR internal modelling (page v management letter) shows prospective $3.8bn in realisations, $2.2bn in realised gains and $400m of asset management fees. Whilst weighted average life of the concluded portfolio remains at 2.3 years for asset recoveries. Am I right in thinking that would imply around $1bn a year of realised gains and fees? All this not including YPF. Still a lot of jam to come…. tomorrow.
Just checking back with page 64 of the 2019 Accounts. The damages now being claimed (leaving aside judgement interest for the moment) amount to $8.4bn. That is practically identical to the number stated on page 64 described as "the midpoint of by-laws formula range". So BUR are not going for a maximum figure, which would be 33% more. Judge Preska is certain to know the maximum figure so going for a more modest amount is probably good tactics. According to BUR's calculations (after expenses etc) this would produce a net entitlement to BUR of $3.4bn.
Now if we add judgement interest which at this point pretty well doubles the damages claim, we have a total entitlement of say $6.5bn. Converted to £ at 1.30 we have a colossal £5bn !! Or over 3 times the present SP.
What effect would this news have on the current SP? You have to say that this information has been in the public domain for a considerable time, and explicitly stated in the 2019 Accounts. So maybe not so much immediate impact. Frustrating as this is, we may have to wait for JP's judgement, a decision about judgement interest, and then there is the possibility of appeals. Still, I tend to agree with Gtx and TWT that this looks like an outstanding opportunity.
Surely this is a sitting duck for a takeover? From a non sanctions buyer located in Russia (are any oligarchs still standing) or China. Or maybe a management buyout. If they bought the business out from the holding company (rather than a takeover bid for the UK company). That would leave a quoted cash shell in the UK. What about £300m cash for the underlying businesses, must be worth that easily. It would be nice to see the 2021 figures first though, due 13 April I think. Might throw another £10k at this come Monday.
Oh yes I forgot item 9:
9. Scrap the "traffic light" system. This was set at such a stupidly low level it was constantly triggered, causing palpitations amongst the eco worriers, and ultimately causing fracking to be shut down. The trigger alert should only occur if 2.0 on the Richter scale is hit 3 times in 24 hours.
Companies like IGAS and Cuadrilla have suffered heavy losses trying to kick start the fracking industry. They need some serious political commitment, and legal and financial support if they are to throw more money at this. For example, the following needs to happen:
1. Licenses need to be reinstated and extended
2. Government, police and legal support against activists, vandalism and obstruction. Think about significant exclusion zones, injunctions, banning named individuals.
3. Fast track planning applications direct to govt dept.
4. Ban landowners (such as NT and C of E) from refusing to allow fracking on their land. "Right to frack" as a national imperative.
5. Companies should have the option of surrendering their accumulated tax losses for an immediate cash payment at the current rate of Corporation Tax. That would be conditional on companies re-activating sites or starting new drilling.
6. Tax holiday for 10 years starting from initial commercial flow of gas.
7. Reinstate awards for local communities after a year's flow of commercial gas.
8. Support/fund research into efficient, improved fracking.
Phew, can't think of any more at the mo. Suggestions welcome.
IGAS management get paid to get these things right. In November at the time of the RBL determination, they announced swaps of 216000 bbls. By the update in early March it was 231000 bbls. The implication is that they have been contracting swaps on a regular basis (indeed that accords with their express policy) regardless of the prospects for the oil market. it So you can't really defend them on the basis that they didn't know that the oil market was tightening or that Putin was threatening Ukraine. Even Joe Biden noticed that.
The real problem here is IGAS policy of rolling hedging. That works in IGAS' favour when oil prices are falling. But right now when prices are spiralling upwards its a disaster. I guessed a $6m loss but now its more likely $10m. In other words, hedging losses good, but hedging against making profits? How stupid is that?
Looking beyond this policy failure, we have a situation Houston. What should IGAS be doing now that oil has gone over $120 a barrel? What would Captain Hindsight do? I would be very happy to lock in a price of $120, even if that risks missing out on the price going even higher. Therefore, instead of hedging around 50% of the years production, why not increase this to 80% or more of the whole year's production?? Binge out on swaps every time the price goes over $120. Sadly our IGAS management are bogged down in fashionable eco "transition" foolishness that will never replace oil earnings, and are too unimaginative and cautious to make such a bold move. I am beyond frustrated with them.
Despite decades of experience of oil booms and busts, IGAS management usually manage to get it wrong with their hedging. They have over 231,000 bbs hedged at $74 a barrel. That means that instead of getting at least $100 available currently they will get $74. So they have lost in excess of $6 million, presumably mostly hitting the bottom line in this current half year. Just great. This helps to explain why the recent results announcement was so low key. They knew they had blundered again. When challenged they say the the borrowing terms require them to hedge 50% of production on a rolling basis. But guess who negotiated the terms - yes IGAS management. The 231000 represents about one third of a years production. so hopefully the remainder can be sold at a higher price. The shocking thing is that IGAS should have been shaping up to pay off their borrowings this year, and get rid of these covenants, but little chance of that now. Idiots.