my views / opinions- pt117 Apr 2018 21:35
i dont tend to post here often, but have held for a few years and have added substantially over the last few months. those who know me understand i look at the investment case from many angles. a few points some may have missed. i will not be posting this every few days as some do on lse BB's! it is my views not a ramping mission - all must do their own research and fact checking. A bit random on subject ..but such is life!
Good points:
1. reserves. co has 46M bls 2P. one can and should consider these may not be economic at low oil prices despite being reserves certified, but at $70 oil i am content. so co has oil and does not need to drill to find.
2. balance sheet value of oil. as pmg has bought the assets via transactions, the balance sheet value of the oil is peanuts per bl (like 63p max and that assumes all the integible assets are in pdl which i suspect is not the case). so that means on production the accounting write back from B/s to proffit and loss account is very low..(this is good!)
3. pdl concept. Without question �hub �strategy is the way forward for the NS. Via fpso or existing host platform makes little odds to me.
4. sour oil. As posted earlier I have little concerns about the h2s. if scott is souring (which I am told it is), then nexen have the procedures in place to deal with this. as posted earlier I suspect blending will be required. Amine stripping may be required. This is techy detail which can be resolved (and the plant changes funded if required).
5. management. much is made of tom cross's history, which is clearly 1st class. but i have rated Colin Percival as a tech "powerhouse" for many years.
6. "skin in the game". the bod & pdmr's have 30% (TC about 20%) . important in my view.
7. enterprise value. The cash was �26M at the start if the year (inc the �1.7m loan, see below), plus FPM shares at some �5M sales value. The �price we are paying� as investors for the 2p (and other assets) is the Mcap minus this value�so rubbish cheap as discovered 2P (lets say Mcap at �56M less the �31M cash and investments..so that�s �25M eventerprise value.
8. dutch gas assets. They pay part of the G&A. not all but a slice. That means we do not have to discount the forward NPV by the full G&A cash burn. Of course they have EV value also (call it what 900 bls per day oil equal at say 50% (its gas so sells for less!) of the normal Ev / flowing bl. Say �13M of EV)
9. other assets. Of course pmg has some blocks WOS (100%) and a bunch of other stuff..lets say these assets are only worth the costs to maintain at the current time.
10. EV per bl 2P. I make the pdl oil currently priced at some �12M EV.. so that�s some 25p / bl..call it 40 cents..that is peanuts as a market valuation compared to others ($4bl / per would be a good starting point based on recent transactions..discount as means to prod
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