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Note also this line, which also featured in the acquisition RNS.
'As per the terms of the purchase agreement, the Company has agreed that in the event of a commercial discovery being declared at the Sasanof-1 well, it will issue an additional 150,000,000 new ordinary shares of 0.25p each in the Company (“Ordinary Shares”) to Western Gas Corporation PTY Ltd (“Western Gas”) with a maximum value of €8.7 million, being 80% of the market capitalisation of Clontarf Energy plc (“Clontarf”) on 6 May 2022.'
In other words, the market value of the 150M shares payable to Western Gas Corporation PTY on issue appears to be capped to €8.7M beyond which a more significant re-rate would mean a lesser number of shares would have to be issued. This implies a ceiling SP for full issuance of €8.7M x 0.8556 (EURGBP) / 150 (shares in millions) x 100 (convert to p) = 4.96p.
Seems clear to me where they anticipate the SP going.
Note also this line, which also featured in the acquisition RNS.
'As per the terms of the purchase agreement, the Company has agreed that in the event of a commercial discovery being declared at the Sasanof-1 well, it will issue an additional 150,000,000 new ordinary shares of 0.25p each in the Company (“Ordinary Shares”) to Western Gas Corporation PTY Ltd (“Western Gas”) with a maximum value of €8.7 million, being 80% of the market capitalisation of Clontarf Energy plc (“Clontarf”) on 6 May 2022.'
In other words, the market value of the 150M shares payable to Western Gas Corporation PTY on issue appears to be capped to €8.7M beyond which a more significant re-rate would mean a lesser number of shares would have to be issued. This implies a ceiling SP for full issuance of €8.7M x 0.8556 (EURGBP) / 150 (shares in millions) x 100 (convert to p) = 4.96p.
Seems clear to me where they anticipate the SP going.
'AS OUR SP RISES, we plan to use our paper as ammunition to create shareholder value.'
Reckon they are expecting a massive rise in SP. If they don't pass this then they would not be able to take advantage of a major increase in SP to raise funds, which would mean their hands are tied in the event of a major discovery. Seems like a sensible move.
The director also have a huge holdings here, so they will not want to dilute themselves unnecessarily, which also suggest as higher price as possible for future funding.
Moreover, the meeting is not until next month and the drill should already be well underway by then, so any further funding should be some way off.
'AS OUR SP RISES, we plan to use our paper as ammunition to create shareholder value.'
Reckon they are expecting a massive rise in SP. If they don't pass this then they would not be able to take advantage of a major increase in SP to raise funds, which would mean their hands are tied in the event of a major discovery. Seems like a sensible move.
The director also have a huge holdings here, so they will not want to dilute themselves unnecessarily, which also suggest as higher price as possible for future funding.
Moreover, the meeting is not until next month and the drill should already be well underway by then, so any further funding should be some way off.
All ECO shares held by AZINAM appear to be subject to 6-18 month lock ins. Good show.
https://www.londonstockexchange.com/news-article/ECO/tsxv-approval-for-closing-of-azinam-acquisition/15448056
Next we should hear about the closing of JHI deal, which is due this quarter. Hopefully we will then get our first peek at the Canje CPR and prospects map. Should be big. Can't wait.
Note that the drop in cryptos occurred at 13:30 GMT when the latest US CPI figures were released showing greater than expected inflation and increasing expectations of rate hikes. Gold, oil and equities were all hit simultaneously, but are rebounding.
And for newcomers, the seimic map showing the location of Sasanof in relation to the Mentorc discovery.
https://cdn.offshorewind.biz/wp-content/uploads/sites/6/2021/12/29173509/Sasanof-amplitudes-on-merged-3D-seismic-showing-Mentorc-Field-and-Western-Gas-Sasanof-Prospect-outline-Source-Western-Gas-1024x582.jpg
I would add that the farm in announcement was made on a very bad day for the wider markets, which now appear to be stabilizing. All CLON needs is one spark to set it off. The fundamental proposition is in place. Once the SP looks like it has consolidated and starts to move higher I would expect it to snowball. Last week's 0.80p is the obvious initial target, but I won't be surprised to see a break above that level once it gets going. The best way to clear placing shares is to spark a huge rally and sell into the massive buying volume. Of course, anything can happen so consider your own situation and position accordingly.
To put the current SP in perspective, in 2019 when oil and gas price were much lower ECO reached about £190M market cap ahead of Joe and Jethro drills which combined were about 55 MMBOE net to ECO and 41% COS. We are at £10M for 136.7 MMBOE net at 32% COS. On the same multiple per BOE risked CLON would be 15.5p BEFORE drilling. Obviously we have some placing shares to churn, but hopefully that conveys the level of cheapness here.
Forget about production at this stage. It's all about unlocking a major discovery. The choice of what to do in the event of a discovery is yours, but I will take into account the market cap on discovery, the forward plan, the balance sheet and various other factors such as likilhood of a takeover or asset sale and whether I'd rather just relax at the beach, but everyone's assessment will be different.
Vbeckers, Most AIM stocks have very little or no institutional investment yet many of them have extremely big moves higher so that is not a factor. Indeed many exploration stocks regularly reach hundreds of millions in market cap on the basis of a single drill, even with targets much smaller than CLON's net share of Sasanof-1, and we are only £10M (!), so a much a higher valuation pre drill is eminently feasible.
Generally speaking the market is not concerned with development at this stage in proceedings. It is the same with mining exploration stocks. Explorers tend to re-rate ahead of transformational exploration and then again as development moves towards first production. There is usually some lag between the two, so some people may sell on discovery. In the success case I imagine CLON would look to sell the asset although a takeover would be the most likely outcome IMO.
Quite right Dicko. Anchois-2 was estimated at 151 MMBOE gross going into drilling and Sasanof-1 at 1,367 MMBOE on a 2U basis. The fact Sasanof is surrounded by other major discoveries and developments is a huge plus as the Australian jurisdiction. The point is that even compared with Anchois-2 pre drill this is super cheap on a BOE basis. The rest is just cherries on the top.