Member Info for ps200306

Drjenner, even in late June 2025 Zeus were projecting Phase 1 first revenue, Phase 2 FID, and the drilling of two wells, all to take place in 2025. Right up to the end of Q3 SOU maintained that first gas was no more than 14 weeks away. Then suddenly, 10 weeks later it was more like 20 weeks away. To be honest it's been the same every year since 2023. First gas has been as far away at the end of each year as it supposedly was at the start.

SOU either has the most incompetent project management known to man, or mgmt know they are telling porkies. Or, to avoid defaming them, lets instead say it's "little white lies" -- intentionally spinning the absolute most optimistic scenario that couldn't realistically come about without a miracle.

I've recently been looking at the claims around solar. The idea is that SOU can pull itself up by its bootstraps, deploying solar on a modest scale with each 20MW project providing funding for the next, up to a total of 270MW. The problem is SOU has no money even for the first of these. It is struggling to keep the lights on coming up to first revenue. There is a $5m payment due to ItalFluid (that's just SOU's portion of $25m). Management have gone very quiet about where that's coming from. They wouldn't be able to pay it out of the next TWO years revenue, on top of G&A.

I've been using a figure of 1$/W for solar, with a payback time of five years. Even with 90% debt funding, SOU would have to raise $2m for the first solar project. (I'm assuming the Gaian gong therapist won't be putting up anything). Where's that coming from, and how could it self-fund the next project in any viable timeframe?

It's not total doom and gloom. Taking a closer look, it looks like there really are big changes afoot in the Moroccan and, more generally, African solar market. PV costs and payback times may well have halved. Solar panels are being manufactured in-country by a Moroccan operator on behalf of an Italian PV company, and they've doubled their capacity to 1GW in the last year. Debt funding for PV projects is being provided by the African Development Bank and others. The solar PV market is growing exponentially in at least 25 African countries (from a low base).

That said, there's no indication that any single lending agency is providing 90% funding to projects. Big projects involve big consortia and the whole idea is to leverage private investment. SOU don't appear to have anything special to bring to the table, neither funding nor already procured licenses. They would almost certainly need to team up with someone with deeper pockets. Their track record of attracting suitable partners is not stellar, even in the O&G business where they have some expertise.

And even if I'm wrong and they make a go of it, it's only good news for current shareholders if they don't get diluted by more than the value of the additional assets, which is less than certain. Would be nice if they stopped treating their SHs like idiots (even if some ARE)

Maru, there was a 10-1 share consolidation at the end of Feb.

https://www.lse.co.uk/rns/SOU/notice-of-gm-n0m0zymw5g5rvkz.html

That's not an "FT analyst report". It's a bot on the FT site quoting "one analyst". That analyst is Zeus, whose reports we already have. And since they were predicting the same thing for last year as they're predicting for this year, you can take the timing with a pinch of salt. There's a million sites on the web that just scrape the same reports and your favourite AI tool will just do the same.

As anticipated, the loan note holder has revealed themselves via TR-1 as "Mr. Vitaly Vinogradov". There's a couple of profiles on LinkedIn / Facebook but nothing that would definitely identify them. Regardless, I view this as a positive. They sold all their previous converted shares into the market as per normal "death spiral" practice. The fact that they are now holding 8.3m shares means that 1) they probably viewed the recent weakness as a bottom for the SP, 2) they are holding for at least a bounce on start of gas sales if not longer. There have transitioned from debt extraction to equity upside.

BV: 'our "very supportive " Loan Note holders are helping SOU to conserve their cash Balance' 🤣🤣🤣

Before your time, but did you actually READ the 13-Jun-2023 RNS? SOU (or rather its shareholders) got totally mugged. Held up at knife point and relieved of 16% of total share equity for a pittance of a loan. The "supportive" loan note holder is a predator. And SOU is still swimming in the same shark infested waters trying to survive until first revenue, let alone raise cash for any other operations.

SOU were under no obligation to make an interest payment right now, so they're not "conserving" anything. I doubt there IS anything to conserve, as we may well find out when we see the horrible terms of whatever the next cash raise is.

Sorry, slight correction. Forgot the new shares don't get admitted to trading until the starting bell on Friday. That'll be the day to watch out for (and Monday for a TR-1).

Thanks Ediacaran, you're right. It did strike me as strange that they would have hung onto the £250k. And, on rechecking, the amount spent the other day pretty much exactly matches the amount that would have accrued had it been redeemed when SOU got their Mana money. So I think we can definitively say the convertible note is finally finished.

Will be very interesting to see if these new shares are immediately sold into the market. If so, then even the death spiral note holder is wringing their hands of this dog of a share. But I have an idea that's not the case. I think this has become an equity play for them. We will know soon enough -- either we will see a TR-1 before the end of this week, or we'll see a ton of shares getting dumped (and there's certainly no sign of that today).

Final comment, and this time contra-Kylie. Despite predictions of doom, the share price has actually been remarkably stable and robust since the Managem deal completed. Yes, it's somewhat depressed but there's been a huge seller selling into it all along. The recent almost-final CLN conversion may mark a change in tactic. If the note holder is indeed breaking cover and will file a disclosure, it means they have switched from debt extraction to equity upside. That would accord with the fact that this is their first conversion for almost 18 months, just as SOU is about to become revenue generating. The proof will be in the pudding. Either you will see continued selling pressure over the coming month as the note holder liquidates their remaining shares, or they are holding for the bounce on first revenue. To be honest, the latter makes a lot more sense. That means the note holder believes the SP has bottomed out and is set to rise from here.

Posting at 4am just to rile BV 🤡.

Kylie is correct here. The Convertible Loan Note is the gift that keeps on giving ( -- giving shareholder money to the note holder). The total dilution from the CLN has now topped over 16%. That's 16% of a company with an asset worth $400m to raise £2.5m. Even though the term was five years, the note holder probably got all their money back within a year despite a plummeting share price. In fact they were probably responsible for much of the share price drop since they were selling into it as they converted the loan.

The history is eye-popping. They converted 90% of the loan principle into 100m shares in just the first five months. (That included 22.2m shares that SOU never RNS'd, breaking regulations). Upon conversion, the entire 5 years worth of interest accrued, leaving them with £1.7m of interest with which to buy further shares at market price.

There was a slight fly in their ointment. The loan note was announced on the same day as the Calvalley announcement. The share price was supposed to fly. Had it done so, the note holder could probably have exited with 100% or more profit after six months. That didn't work. Every cloud has a silver lining though. The more they lost on their principal conversion the more shares they would get for their interest portion. They've been selling shares as soon as they've acquired them. It's standard practice on a death spiral loan note. The lender creates supply pressure to depress the SP. They also get to avoid the 3% ownership where they'd be required to make a declaration. Even with the declining SP they had probably recovered their initial outlay by October 24, the last time they bought shares before yesterday.

After that they had to wait it out to see where the share price was going. From my calculation they spent all of their remaining accrued interest (including the interest accrued to date on the £250k of remaining principal) yesterday. 83 million shares that they effectively haven't paid a penny for. If the shares go up they make a packet. If they go up enough they have another 33m warrants that were tucked away in the original deal. And they still have £0.25m in original principal to spend.

SOU could easily have envisaged all this. The most generous interpretation was that they thought the SP would fly on the Calvalley deal before the CLN holder could convert on the cheap. The less generous interpretation is that they didn't give a Flying Fumigalli as it was the shareholders getting shafted anyway. All in all it was an utterly, utterly horrible arrangement for share value.

The hilarious thing is that Mr. Yappy on this board thinks SOU are going to raise further funds on generous terms and even raise enough to acquire assets (possibly through "debt ratio restructuring" 🤣).

One final item of note. Yesterday's conversion represents 3.84% of the company. In theory, the CLN holder now has to declare who they are. 🤔

BV, if it will make you shut up, kif's username is a play on a former poster here, keeptofacts. The irony is that keeptofacts was your slightly less obnoxious twin -- posted for years and years, berated everybody who raised a murmur against SOU, constantly made over-optimistic predictions which all turned out to be wrong, and finally scuttled off with his tail between his legs in June 2024.

https://www.lse.co.uk/profiles/keeptofacts/?page=4

BV, I meant to respond at 2am just to rile you, but didn't get around to it. I can't say I'm even slightly surprised that your only response to sensible questions is to fret about my bed time 😂. Trolls are gonna troll. You clearly can't see a problem with the CFO and CEO both telling you at the end of Q3 that SOU's cash position was fine and that revenue was imminent (direct quote from GL: "I don't think it's months away"). You don't question their competence when, just 10 weeks later, they tell you there's a four month delay without even an attempt at explanation. What's more, not only can they not access bridging finance (yes, I realise you don't know what that means) but they're going to dilute you to pay for that AND to fund their adventures with a slick-talking-gong-therapist-turned-energy-czar. I won't even ask if you understand the capacity bottlenecks in the Moroccan electricity grid or have read the new law on accessing the medium voltage grid. What industry commentators have called a "slow-moving liberalisation" has been a regulatory nightmare. Last year they finally got around to producing a Turd, the tariff for using the MV distribution network. (Absolutely not a joke, though surely a delicious irony ... it's the honest-to-god official acronym for Tarif d’Utilisation des Réseaux électriques de moyenne tension de la Distribution). Nothing happens fast in Morocco and you can expect this new Turd to be particularly hard to navigate. SOU had one job to do -- batten down the hatches and wait for their $400m asset to come to fruition at someone else's expense. Instead, a new fancy-pants CEO is going to risk it all on a spending spree with your money. Whatevs, I doubt your ability to comprehend this reality, nor do I care. You've just joined Adam on my filter list. For my part I continue to hope that SOU can retain some decent value in spite of themselves. As you say, we'll see what happens.

BV: "yes i have done my research about Gaia Energy who have multiple large projects with multiple partners over the years."

Great. Give us the names of a few of the completed solar deployments in Morocco that Gaia has been involved in?

BV: "SOU only need 50% of the cost in the Solar project, so once the first is up and running the income from solar sales will self fund the rest ... I think you need to do the research thinking the Solar is only a 20 mw project, when it's going to ramp up to 270mw."

Who's the other 50%? And I presume you mean 50% of 10% since GL mentioned 90% debt financing. So you reckon SOU can persuade someone to lend them $18m, raise $2m of their own, THEN apply for one of the new liberalised medium voltage grid connections, plan and execute the construction, and make enough operating profit to rinse and repeat EVERY 12 WEEKS (which is what it would take to get their 270 MW up and running in three years). You realise 270 MW of solar is the renewables analogue of James Parsons 31 Tcf of gas ... assumes every last detail will go exactly to plan and on schedule with unlimited financing available. The reality is that all of SOU's projects have been years behind schedule and nobody would touch them with a barge pole for finance, resulting in them getting stretched over a barrel by Managem. If you'd been around more than a wet week you'd know this.

BV: "I personally think that the consolidation is to give SOU far more financial independence for future debt restructuring / borrowing for producing asset expansion. The debt restructuring ratio is one of the main priorities Andy has already mentioned, so i guess this is the purpose imo."

"Debt restructuring ratio" isn't a thing. The first time you used the term I put it down to a typo. Seems you actually think it's a real concept. In any case, the share consolidation has nothing to do with existing debt.

How does the consolidation facilitate any borrowing? It's being done exactly because SOU *can't* borrow -- nobody will lend to them. Reducing the nominal share value below the share price allows them to issue new equity which they are currently not allowed to do. They are telling you as plain as day that they are going to dilute existing shareholders. What's not clear is how much they intend to raise and for what purpose.

Is it because nobody will give them the bridging finance they sought, which case they might only seek maybe £1m for a likely 10% dilution? Or is it to cover more expansive plans such as solar projects (seeing as the hydrogen partnership is an utterly worthless boondoggle)? Even assuming 90% debt financing is available for solar, a paltry 20MW scheme at, say, $1/W of CAPEX would require SOU to find $2m. I presume Gaia won't be coming up with half of that, given they are an even more worthless company than GeTech. I presume you've done your research and know that they've been going since 2008 with no sign of a successful partnership to date, and the CEO is a loon whose side hustle is spiritual therapy sessions with gong music?

SOU's only mission should be to preserve shareholder value through to Phase 2 implementation. The last thing we need is a new CEO with delusions of grandeur. But I expect that's what we've got. You should probably be thankful you only have a pittance of a shareholding.

The debt restructuring and bridging finance are two completely different things. Bridging is required to keep SOU solvent over the next three months. As usual, SOU have got themselves over a barrel. Last time it cost them (or rather, *us*) 10% of the company to raise a few hundred k. At least we are closer to generating revenue this time. But I wouldn't be the least surprised to find an ambitious CEO tempted to not pay it off as quickly as possible so as to have money for pet projects. Not to mention several substantial cash commitments that SOU has this year that nobody seems to be talking about. Shareholder dilution is always the easy option, especially when nobody kicked up a fuss as two thirds of SOU's value ebbed away over the past several years.

"PS And golden tickets and £10 won’t do it meant nothing to mislead less sophisticated investors- really?"

That was premised on finding some of the fabled 31 Tcf. I am no geologist but it took me no more than a couple of hours of research (after the fact, unfortunately) to realise that cementation was always the Achille's heel of the Moroccan TAGI. It is not a simple analogue of the Berkine and other basins in Algeria and even those are "tight". Even modern stimulation can't squeeze hydrocarbons from a lump of dolomite. There's a reason Moroccan oil and gas is small scale after sixty years of exploration. That's why estimating SOU's potential value should focus on the existing discovered assets which, in fairness to GL, is what the SP Angel and Zeus valuations did under his watch. Unfortunately you can't deter "less sophisticated investors". There are still people on here who think there's going to be a massive breakthrough. And it's true that SBK-1 has a decent chance of success because of its already known profile, but wildcats like M5 are a low chance.

I also hope Richard is well. I lost a shed load of money here, and corresponded with him about it at length. However, at the end of the day my decisions were my own and I never blamed anyone but myself for being too starry-eyed. I do remember a small bit of Parsons-inspired confusion about "the value of a Tcf to SOU", but I was able to do the numbers myself. Never considered it either sensible or practical to pursue. Parsons always talked about "high risk high reward" and people made their own decisions. At the end of the day, back to back dusters left SOU without the money either for further drilling or -- as we've seen in the many years since -- the means to monetise the assets it already had.

SoundasaPound1: "... just wondered what people’s thoughts are regarding likely timescales and news for 2026. "

Nobody knows, and anybody who claims to know is engaging in idle speculation. We are totally dependent on Mana and SOU for information and they're not in the habit of giving anything out.

"Will we receive Phase 2 FID within the next 6 months?"

Nobody knows. We've heard nothing other than that Mana have "commissioned" the revised FEED. That could be days away from completion or months from starting.

"What’s the likely timeline for Phase 1 production + revenues?"

Shortly after they cut the red tape (figuratively and literally). If we miss the end of Q1 deadline you will hear about it at the end of Q1. That's been the modus operandi for the last four years of this 18-24 month project.

"Will we get receive a drilling programme + 2 drills in 2026, and if so what do people think/guess would be the likely timeframe?"

Nobody knows. John Argent told us in September that drilling would take "9 to 12 months from a standing start". I would think the logical inference was that we were not even on the starting blocks back then. As far as we know, no drilling permits have been received. Is any other planning work ongoing? Your guess is as good as anyone else's.

"Do people think the share price will get to 2p in 2026 and if so, by when?"

Will depend on news flow. We had promises of "near term" news flow in 2025. We have promises of news flow for 2026. The share price will go up when there is news flow instead of promises.

I-man: "I was wondering why it’s taking so long to announce further drills, possibly because it may make sense for Mana Energy to buy a drilling rig rather than renting? "

We know the rig that is stashed on site is not suitable for both SBK-1 and M5, so of the reasons you listed the "different rig specs for different wells" might be applicable (which is not to say there isn't some other spec that could do both). But the real reason for delay may lie elsewhere, given that the last we heard Mana hadn't even managed to secure a drilling permit.

Takes two weeks to fill the tank but that's unlikely to start before March.

Google Earth image looks about 4 years old ... LNG tank foundations under construction. https://shorturl.at/zbYad