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I fail to understand all the excitement about the investor presentation. I told us nothing we didn't know in June last year other than that the project has slipped another year behind schedule.
The signing of the deal just means SOU hasn't gone bust. They will still be strapped for cash until at least 2028, and they have said nothing about how they are going to deal with a debt cliff in 2027.
They have no money for drilling, nor will they in the next several years, and their attempt to find a farm-in partner for a three well program was an abject failure. Calvalley are only funding TE-4 and have shown no interest in wildcat prospects like M5 which would only be the second well ever drilled on a 9,000 sq km area. In any event, SOU would still have to come up with their 35% of any drilling costs.
Sure, it's conceivable that Calvalley could strike a future deal on further exploration with a 100% carry for SOU but that's not part of the current negotiations and I imagine they have their hands full as it is. TE-4 is the only well that could be developed and tied back to the Tendrara production facility in a reasonable timeframe (i.e. the next two or three years). That's why it's already included in the SP Angel reckoning and the value add is fairly minimal.
So everything is still as we understood it last June, except miles further behind with consequent additional costs and deferral of revenue. All the ramping on here in the last couple of days has absolutely zero behind it. People have lost the plot just because Graham has finally broken the deafening silence.
"For those who remember, is it a requirement to drill in anoual in 2024?"
It was a requirement to drill it by 8-Jan-2024. The RNS you want to look at, covering the permits for Tendrara, Anoual, and Sidi Moktar, is the one dated 22-Dec-2022. I'm not aware of any updates since. However, it's not unusual for extensions to be announced by ONHYM on permit periods that have already expired.
At the time of that RNS, the situation was:
* Tendrara entered first complimentary period to 1-Oct-2024. Work commitment was the drilling of one exploration well in the TAGI, presumably the plan is for this to be TE-4 (the other prospect being SBK-1). SOU had to relinquish 40% of the Tendrara acreage on entry into the first complimentary period.
* Anoual, initial period extended to 8-Jan-2024. Work commitment was the drilling of one well in the TAGI. The identified prospect is M5. The complimentary period to follow the initial period is only a year, so I am guessing if SOU don't get their act together this year they risk losing Anoual. If a drilled well looks commercial, SOU then have to acquire a bunch of seismic within the complimentary period.
* Sidi, inital period was extended to 9-Oct-2023, which has obviously expired too. The work commitment was to acquire 500 km of 2D seismic.
SOU is a long way behind on all these commitments, and only TE-4 has managed to get funded. Barring extensions, Anoual and Sidi permits have already expired, but I suspect that ONHYM will offer further extensions if SOU can demonstrate a viable partner.
Thanks for the link. Just watched it. That was horrible. One thing we NEVER get from Graham is any adequate explanation for the ongoing delays. It's 100% clear that first gas in 2024 is now an aspiration, not a guarantee. Let's not forget that this time last year, first gas was still being promised for 2023! In the space of a year, we've lost another year. This is absolutely par for the course for SOU. In fact, if we go back to the very start of the LNG project it was (amazingly) supposed to be first gas in 2021.
There may be very good reasons for all of this, I'm sure life is complicated and everyone's working very hard. The fact of the matter is SOU *never* delivers on a deadline and there is no earthly reason to suppose they will now. So it'll be first gas in 2025, not 2024. And even then it will take time to ramp up to full revenue, as Graham alluded to with the Afriquia side of the equation.
The finance overview did not paint a full picture. Graham's insistence that SOU was not going bust was not totally convincing. First, if the Calvalley deal does not complete, SOU is most definitely brown bread. Cash of $4m at end of August cannot have that much left of it. Graham alluded to paring back G&A to 0.25m/month but there is no way these are the only costs that are not funded out of the project debt facility. My guess is SOU are running on fumes to get the various deals over the line.
That's not the biggest problem. The senior secured notes due in Dec 2027 of $27 omits the fact that 5% annual interest is being rolled up since the last restructuring in 2023. Prior to that, 3% has been deferred since the first restructuring in 2021. The actual amount due will be more like $35m. I suggested before that SOU will not be able to pay this. It now looks like they won't even be able to pay half of it.
With G&A costs of $3m/year, that alone will eat up most of the Calvalley Phase 1 back money between now and 2027. The absolutely best possible case for SOU is $7.6m of Phase 1 revenue for the years 2025-27. (That's their share after the SLB cut, as confirmed by Graham). That could be as low as $5.6m at the bottom end of the gas price range. I absolutely don't believe they will get a full year's revenue in 2025. It's also not clear what pot the ItalFluid "go live" payment comes out of. In any case, I reckon SOU will have somewhere between $10m and (best case) $23m to pay their bondholder debt of $35m. That is a serious shortfall. Phase 2 won't save them either as I would say even 2028 is very, very optimistic for revenue from that source.
Graham says that the bondholders have been "very cooperative (most but not all of them)". I can see them running out of patience in 2027. Indeed, just when SOU's prospects are starting to turn around for the first time in a decade sounds like an excellent time for an abused bondholder to pounce. Bottom line is this uncertainty is going to plague SOU for the next four years.
Ericnat, are you referring to TE-4? The research note only adds 0.3p to the core NAV price for TE-4, and 1p on success. The RNS of 9-Aug-2022 (in which SOU is looking for a farmout partner) notes that TE-4 did not flow gas to surface when it was drilled in 2006 without stimulation. It puts the chance of success at 36%, so not exactly guaranteed.
Genuine question for those hoping for an RNS confirming the Calvalley deal ... what do you think happens next? All of the potential good news is already baked into the SP Angel target price. Anything more depends on new drilling. SOU hasn't found a farmout partner for a well in the past five years, and won't have the money to fund drilling itself for the next five. So then the question is do we leap to the SP Angel target instantly? Seems unlikely as there are still big questions such as whether SOU can now raise the money to repay its bondholders on time.
There's a lot of unusual things about ktf's investment. As the share price fell through 30p, 20p, 10p, five years ago, he kept on predicting that he had no intention of selling at the current price. And yet, a couple of months ago he claimed he was in profit at a share price of 1.1p. That's one hell of an averaging down. He must either have tens of millions of shares (which he doesn't, because he says he's not bothered about the prospect of SOU going bust) or he never held more than tuppence ha'penny worth back in the day. Which is also weird because his MO has always been snarling attacks on anyone who dares to diss the company. Was just browsing his old posts and after the TE-10 duster when JP was mooting a sale of the company, he was confidently stating that Β£30 BILLION would be too low a price for any offer. The guy is either a delusional crackpot or a paid shill.
Ericnat: "No that was a real post of yours. Have a look back."
My humble apologies ericnat, you are absolutely right! (To be honest, it looked too eloquent/humorous for me, thought you had made it up). Good god. I knew I'd been naive, but that one takes the biscuit. Checked my records, and had already ploughed Β£450k into SOU at the point. The conventional wisdom on the board at the time (Q1 2019) was that the share price was "underpinned" at 27p. (In retrospect there was never any wisdom here, just a lot of wannabe O&G experts who failed to spot the obvious -- that a broke company can't afford to get their assets out of the ground. Many STILL haven't figured it out). I would go on to spend another Β£150k averaging down further from 20p to 15p before finally seeing the writing on the wall. Wow, what an idiot! π³π€ͺπ€‘
keepingitfiction: "I think we all know a few of the players of past in different guises whether itβs PS from Wales ..."
LOL. Was that bit of amateur sleuthing based on me not being from the same country as trellis? Sorry to disappoint but, uh ... no.
John121983: "I took a screenshot of ps200306 comment ... "
Good for you. Remember that great quote from 'Taken' ? ...
"If you are looking for ransom, I can tell you I don't have money. But what I do have are a very particular set of skills, skills I have acquired over a very long career. Skills that make me a nightmare for people like you."
I have a particular set of skills too. :-)
Ones that give me access to a searchable database of the last 5 years worth of comments on this board.
I thought you might enjoy this one from a year ago:
keeptofacts, 09-Feb-2023, price: 2.05, "RE: 2p or not 2p"
"as soon as people realise it's not dropping back it will jump to 2.3 or so I think"
Or how about these sad/uncomfortable/tragic posts from all of three years ago:
sreadman, 12-Feb-2021, price: 1.47, "RE: Long Term Holder"
"I invested 100k and have an average of 30p so I have a long way to go to get my money back......"
Tincan1995, 12-Feb-2021, price: 1.25, "RE: Long Term Holder"
"Sreadman you are not alone , but let's hope we see it back at least over time or I may turn green !!"
davefrench, 12-Feb-2021, price: 1.25, "RE: Long Term Holder"
"yes sreadman, I have the same average as you (30p). Long wait indeed if ever. The sensible thing would have been to average down, but when you are sat with a heavy loss, it is hard to commit even more money to a weakened company. Still hope though"
It gets more delusional the further back you go. From this day five years ago:
ericnat17, 12-Feb-2019, price: 22.16, "RE: Drip Drip"
"Hi Crude I have made a couple of mistimed top ups recently. Hopefully anyone buying below 60p will be rewarded in the not too distant future. I am looking forward to the LE party. I am more sure than ever that JP has been working very hard in the background to provide the best shareholder value possible."
Shaungreen47, 12-Feb-2019, price: 22.16, "RE: News"
"The Echo version of the SOU FSC chat is on Thursday. JP is bound to be in attendance. As I have been saying since he started to feather his other nests, I would much rather he concentrated on ensuring his first Company fledged successfully first. I am sure he has spent most of today replying to angry Echo investors emails in much the same way he did with SOU investors during those dark days. I can't help thinking that he got too big for his boots way too quickly and is learning his lessons the hard way at the moment. His reputation is very much on the line ..... let us hope recovers it very soon with the imminent TE10 RNS."
Kinda brings home the ride we've all been taken on ... when you realise the SP Angel target price of 4.6p is a six-bagger from where we are now.
Totl, iirc, I mentioned cult-like behaviour before Kylie latched onto that term. Much as it would be a nice conspiracy story for me to be Kylie, that's cult-like thinking too. I have no idea who Kylie is, I am not trying to depress the share price so I can get in and make a kill (LOL), I make no secret that I have already lost 90+% of my investment here and have no future plans to touch this pile of poo (or any other AIM share) at ANY price. I just continue to be fascinated by the enthusiasm here about how SOU is "just about to come good any day now" when -- even if that happens eventually -- it will be years away and probably not to the benefit of existing SHs. And you don't have to be a clairvoyant tea-leaf reader to see it in the readily available existing numbers.
As much as the deal could not fall through without that being RNS'd, it can't have gone through without an RNS either. I don't think Graham would be stupid enough to organise an investor event in anticipation of it completing on a particular date. Therefore, the only conclusion is that he *IS* stupid enough to organise an investor event in the absence of anything new at all. In fairness, what else can he do after six weeks of being AWOL in 2024 and not a single item from the October update note achieved?
So I expect we will see Graham with the usual shifty, uncomfortable, constipated expression, and more platitudes about how "everyone at Sound is working extremely hard and we expect to be able to update the market in Q1. Blah blah blah 5km of production tubing on site, other stuff on a slow boat from Louisiana".
What you definitely won't hear is that Phase 1 production revenue is now unlikely before 2025, that the $2.5m/month is now less than $1.2m to SOU, that the profit element is much lower than that, that ItalFluid are due the first many months of revenue upon completion, and that SOU don't have a chance of meeting the 2027 bondholder repayment from Phase 1 revenues. That particular sword of Damocles is enough to keep the share price scraping along the bottom for years (apart from a couple of temporary blips due to some cult members here failing to ever read the actual information).
How quickly people forget. Phase 1 construction is being funded out of the Afriquia Gaz loan. SOU can't use that for day-to-day costs. So yes, it's quite possible to pay for equipment while still being broke. What "some posters on here would have you believe" is just the company news that you've forgotten or chosen to ignore.
SoundBoy: "I believe in soundenergy.very happy with my investment.i will shout soundenergy from the roof top..I know it will come good .soon we will be producing and selling gas.whats that worth 4-6p a share.then the wild cards. I.e tendara ..sidi.etc what price then 15-25p.."
Quite amazing. "Believes" in the company but still hasn't read the research notes put out by the company's own appointed spin merchants. "Soon" is a relative term when it seems like Graham is drip-feeding the message that Phase 1 might be up to a year behind schedule. But no, regardless of how soon it is, Phase 1 is not worth 4-6p for producing and selling gas. It is worth precisely nothing. Phase 2 -- several years away -- gets you to 4p if SOU doesn't give away more of its equity in the meantime. The bond repayments, already restructured twice, look to be in jeopardy again already. SOU has no money for drilling and stands to lose the acreage it still holds if it cannot fulfill its work commitments. The company is a shambles and the CEO, rather than providing a long overdue RNS explaining the current state of affairs, is planning a presentation for "potential investors". Presumably ones too dim to notice that the share price has been scraping along the bottom for four years now despite lots of noise about "monetising the assets". Graham may find out that his honeymoon period is long since over.
Just clocked in to see the RNS. Oh wait, there isn't any. Not a sausage since December 6th. Meanwhile an apologia for Graham's delays, generated by ChatGPT on Saturday, managed to get four upvotes from this forum's disciples. They presumably didn't realise its provenance ;-) ;-) ;-)
In the realm where Sarah Dees once thrived,
A tale of change, where dreams contrived.
Her job, a dance with tasks and code,
But now, a shift, a tale untold.
A chatbot whispers in the digital air,
A silicon mind, devoid of despair.
It learned the art of Sarah's trade,
Her daily toils, now in circuits laid.
Sarah, with her human touch,
In pixels and screens, she meant so much.
Her skills and passion, now in transition,
As the chatbot whispers its mission.
The office hums with a different sound,
As Sarah's presence fades around.
The chatbot's algorithms swiftly soar,
Occupying the role she held before.
Yet, in the quiet corridors of code,
A sense of longing begins to erode.
For though the bot may mimic the task,
Sarah's essence is what they unmask.
For empathy and warmth, an AI lacks,
In circuits, there are subtle cracks.
The nuanced touch of human grace,
A quality no code can replace.
Oh, Sarah Dees, in the virtual night,
Your legacy lingers in the digital light.
The chatbot may reign in algorithms cold,
But in the heart, your story's told.
ChatGPT's worst is usually in verse form:
In the realm of microLNG, where challenges loom,
Graham battles against an impending gloom.
A project unfolds, a colossal quest,
Yet time slips away, a relentless jest.
Shareholders frown, their patience worn thin,
For Graham's struggle seems an endless din.
In the world of liquefied gas, he strives,
Against the odds, where success survives.
Late nights echo in the hum of the plant,
Graham, determined, his spirit dauntless and scant.
Shareholder hatred, a bitter pill to swallow,
As deadlines loom, like a darkened shadow.
Yet, in the heart of the microLNG dance,
Graham persists, taking a bold chance.
Against the odds, where pressure is keen,
In the microLNG project, a tale unseen.
Blueprints scattered, plans up in the air,
Graham's journey, a tumultuous affair.
Hated by shareholders, yet he presses on,
In the realm of microLNG, where dreams are drawn.
Through the valves and pipes, a symphony of strife,
Graham maneuvers through the project's life.
Shareholders may scorn, but in this test,
Graham aims to triumph, to outlast the rest.
So here's to Graham, against odds arrayed,
In the microLNG realm, where dreams are laid.
A saga unfolds in the plant's echoing clang,
A tale of struggle, where Graham's hopes hang.
And then there was this, less than a month later: https://www.youtube.com/watch?v=te_69vlM9mc
In this one Graham seems to be suggesting that Calvalley had completed technical due diligence and was on the verge of completing legal dd, and that it would be done and dusted within a week. (Unless Graham was confused about when the "end of this quarter" was, in the last week of September).
Also the LNG storage tank was sitting in Spain and the microLNG plant was completed and sitting in Louisiana, due to arrive on site "end of this year / start of next". Obviously an extra month no longer even counts as a slippage in Graham's mind.
There's only so long you can fool people (even on here), and Graham has been missing deadlines since the day he arrived. These things have consequences. Even if Calvalley comes through with the money, how much are Phase 1 costs going to increase as a result of all the delays? No doubt people have forgotten that the Calvalley deal makes additional money available to SOU in the event of Phase 1 cost overruns, but at the expense of up to a quarter of even the minority stake that SOU retains in Tendrara. As I have always said, it's all about the creeping dilution.