Member Info for ps200306

Those are existing holdings that I think SOU has to note as offerer for Angus. Afriquia Gaz, OGIF, and Simon Davies. The AG shares match the number issued to them last July.

I think we're all equally in the dark.

The only thing worth hearing is that they have a definite route to funding. And not from some new set of chancers either. However, if the December RNS was anything to go by, all we're going to hear is that they need to find money and drill a well, duh.

No strategic review today, then. Don't worry about the shareholders PVR -- we *expect* to be treated like cr@p.

Speaking of pump and dump, I also can't understand why SOU aren't taking the same approach. If they are so desperate for cash as to be considering a potential basket case like ANGS, why didn't they announce Phase 1 FID, watch the share price bounce and do a raise on the back of it. (Phase 1 FID doesn't actually add anything to the value of SOU, but enough punters here seem excited enough about it that you might get a temporary SP uplift). This is what makes me worry that there is some emergency brewing at SOU that we haven't been told about.

Obviously the PR consultants need the weekend to figure out how to dress up the phrase "no mun, no fun".

Thanks again Oofy. That all sounds a bit horrific. Or, at least, insanely risky for SOU (unless they have no other option, which worries me). Anyway, I find it hard to believe that SOU's lowball offer would be accepted, or would beat out the five other potential bidders.

That was an interesting exchange, Swizz. I'd like to think Varadkar was serious about supporting hydrocarbon extraction under existing licences. However, he also said the government would be neither supporting nor blocking the planning application for the Shannon LNG terminal. And that seems in direct contradiction of the Biz Post's report the other day that Ryan intervened directly with An Bord Pleanala to say that Shannon LNG should not be permitted under any circumstances.

Is it a case of the left hand not knowing what the right hand is doing? As coalition members, FF/FG need the Greens. Would they be prepared to **** Ryan off by suggesting he get the finger out on Barryroe permitting? I wonder. Regardless, I think public sentiment might turn if oil/gas price inflation stays with us. The 2022 predictions from market analysts are all full of a new buzzword -- "Greenflation" -- the spiking of energy prices in response to the climate change agenda. The only problem is we still have a starey-eyed eco-loonie at the helm in the department that matters.

Thanks for the info Oofy. I understood from some comments that the drop-dead date for coming up with loan payments is July. Also a lot of references to "the hedge" which I understand is some sort of gas delivery commitment for later in the year?

I can see both SOU and ANGS shareholders being disappointed. Optimists on the ANGS board are expecting 5-7p offers for ANGS shares. This seems a tad too optimistic. A CPR from last year puts the NPV10 revenue from Saltfleetby at a conservative case of 25m and a mid case of 38m. That's less than 4p/share, and is probably the only thing that a purchaser looking for a revenue stream would put any value on (SOU has a similar situation with its Tendrara asset). The diluted value of Tendrara would probably be about 6p/share of the combined companies, so ANGS folks could get their payday eventually, but right now the SOU offer is going to look like 38% of a company priced at less than 2p/share. Guaranteed to make shareholders unhappy on both sides of the deal ... but indicative of how cash-strapped SOU must be.

Irish Examiner, yesterday:

The crisis over Ukraine has helped push up prices of crude oil to almost $89 a barrel on Wednesday, in a further sign that inflation pressures for Irish businesses and households is not going away any time soon.

It takes about two weeks for any sustained changes to the global crude oil price to pass though to the costs of higher or lower distilled petrol at Irish forecourts.

Amid the widespread shortages of all types of energy, including gas and renewables, this winter, the price of oil has taken on an ever-increasing significance for business costs because more electricity is now being generated by oil-powered stations.

The price of home heating oil which has already spiked by over 53% in the past year is a further cause for worry for people watching vulnerable households who have the most to lose from energy costs.

Meanwhile, the future price of wholesale gas — a key fuel that accounts for over half the power generated on the all-Ireland grid this month — has continued to trade at record levels for the next several months, according to contracts for delivery this summer.

Prices on the so-called Dutch TTF futures contracts on Wednesday morning, for European gas to be delivered in June, was quoted at €82.50 per Kilowatt hour — which is three times the price of last June.

Economists, including the Central Bank, are looking closely at whether energy-driven inflation will spill over to the wider economy.

Irish inflation which had risen to an annual 5.5% in December, the highest for two decades, is also being repeated in many other countries, including Britain and Canada which have set new 30-year records.

https://www.irishexaminer.com/business/economy/arid-40793718.html

Sundance, I fear you are right. It seems pretty clear SOU is interested in ANGS for the cashflow potential: there is no other plausible rationale for giving away 38% of SOU's assets. In fact, both companies desperately need the cash -- from the musings on the ANGS board it sounds like they are in serious trouble with creditors if gas isn't flowing by April. SOU has its own problems looming, as I have a hard time seeing how they can get the LNG flowing in time to both pay off ItalFluid and start amortising the bond by December next year (not to mention the bond payments they have to pay this year and next).

The ANGS discussion board is a bit of a déjà vu from a SOU perspective -- endless delays to get to first gas at Saltfleetby, fifteen months overdue on an already revised timeline. If this is what SOU is pinning their hopes of revenue on, what does it say for SOU's own timelines? If things were to go wrong at ANGS it would be a millstone for SOU.

None of this is a good look for Graham and SOU. The first possibility, as you say, is that SOU is not destined to rise above penny stock status. I think this is unlikely, otherwise the valuation they paid SP Angel for would be fraudulent. More likely is that their short term cashflow situation is serious enough that they have no choice but to give away a significant chunk of their assets. This could be a combination of preparing for a bad outcome on the tax bill, or realising that they can't meet their debt repayment schedule on time with LNG revenue. Either way, it's going to represent a very significant dilution for shareholders which will not, it seems to me, be compensated by the value of ANGS' assets. Obviously this is all rank speculation on my part, but if true it would also make one worry about what happens if SOU are NOT successful in their bid.

Obviously it's understandable why Graham would be staying tight lipped about all this during a commercially sensitive period, but it doesn't make this bolt from the blue any more tolerable. It would be nice to know when this cashflow crisis became apparent, and what is says for the Phase 1 and Phase 2 timelines.

More from the Biz Post: "The government’s stance opposing the construction of any form of Liquefied Natural Gas terminal in Ireland poses an “enormous risk” to the country’s future energy security, the Irish Academy of Engineers has warned. It comes after Eamon Ryan, the Minister for the Environment, intervened directly in the planning application of Shannon LNG, telling An Bord Pleanála that it should not be permitted “under any circumstances”...."

Suggests to me that Sleepy knows exactly what he is doing, trying to strangle PVR by dragging his heels on Barryroe authorisations. The guy is a firkin' eco-gangster. Never did trust those mad starey eyes.

Brent just passed the $90/bbl mark. WTI not far behind. At these prices failing to get Barryroe developed would be an insult, not to mention a crime against the economy.

Not to mention the nuclear power we'll be getting over the new interconnector from France.

Biz Post today: "State’s anti-LNG terminal stance risks future energy security, engineers warn. Secure gas supplies needed as Corrib gas field is set to expire in a few years, say energy experts."

Ryan's only business experience is selling cycling holidays. As a nouveau eco-socialist his vision extends no further than sending the country on one long cycling holiday at the taxpayer's expense. I'd like to say it will work out no better than our last experiment in basing the economy on selling ever more expensive houses to each other. But I fear it will work out much, much worse. By the time we wake up and realise that he has run our energy infrastructure into the ground there will be no easy fixes available to us.

I think it's fairly routine. There's a link to the takeover code in the RNS which can be downloaded, see section 8.5 of it. My understanding is that it requires SOU's advisor, Cenkos, to disclose any holding it has in either SOU or Angus once a takeover approach has been made. There's a time limit of 10 days to make the disclosure after the takeover approach. Basically, Cenkos is just following the rules against dodgy dealing by non-involved companies, and revealing that it holds a few grand worth of shares in one of the offerer or offeree companies. I could be reading it all wrong, but that's what it looks like.

Biz Post: "Ryan intervenes directly in ‘senseless’ Shannon LNG plan. The Minister for the Environment says permitting the scheme, which could use fracked gas from the US, would go directly against government policy."

Yeah Sleepy, keep spinning tales about your Frackin'-stein monster while the lights go out, indigenous gas dwindles, and we are still burning COAL!

Have been mulling over the recent RNS again looking for clues. It is baffling to me that SOU would want to give away 40% of its equity in return for an entity whose value, on the face of it, should be dwarfed by SOU's assets. This, at a time when SOU is supposed to be on the cusp of the most significant progress in years in terms of realising the value of those assets. Phase 1 FID is supposed to be imminent, and Phase 2 news is expected just two weeks after the deadline for SOU making an offer for Angus. The rationale given is that the combined entity would provide:

1. An enlarged platform for investment and growth;
2. A larger portfolio with diversification across sectors and maturity of assets;
3. The potential to deliver multiple projects for the Combined Group's shareholders; and
4. An experienced team with complementary industry backgrounds.

This really doesn't answer the basic question. There's nothing wrong with any of those aims but there's no attempt to quantify them in terms of the value of this specific deal. What is it that could be so compelling? I'm working on the basis that Graham is not stupid. Is his arm being twisted somehow? The RNS is definitely his own work, going by this innocuous sentence: "Sound Energy is currently only minded to proceed with the Possible Offer on the pre-condition that a recommendation from the Angus Board is ultimately forthcoming". It's a small point, but being "minded" to do something has been a favourite turn of phrase of Graham in his spoken communications of the last two years.

I was interested to note in the Dec 29th RNS about finalising the loan with Afriquia Gaz, that: "The Loan, which is secured on the issued share capital of Sound Energy Meridja Limited, will be available to be drawn down by the Company in whole or in tranches, at the Company's election, over a three year period commencing on 24 December 2021 and will be applied towards the development of the Tendrara Production Concession". I always assumed that part of the AG loan would be available to pay for ongoing SOU G&A costs. This RNS makes me wonder if that's true. Does SOU need an alternative shorter term income stream to keep the lights on, such as might be available through Angus? But against that, SOU might anticipate a jump in SP on upcoming announcements and could piggyback an equity raise on it, which would sound like a better deal than Angus.

Is something about to go bad with the tax bill? Does SOU need a separate income stream outside of Morocco to protect assets from tax demands against SEM? This one is in the realm of straight-up conspiracy, and I can easily think of objections to it.

Still baffled.

"PS, where are you picking up the data that the oil has a high wax content?, the CPR’s that I have read, state circa 17% and it’s classified as a high quality sweet oil 43 APR,…GL S"

Hi Swizz, not so much the wax content but its characteristics -- Barryroe oil is solid at room temperature! Pour point is 21°C. More important is the WAT (wax appearance temperature) of 46°C, which is the minimum temperature at which it must be brought to surface and requires specialised subsea hardware. The method previously mentioned was vacuum tubing. After that, the handling involves things like insulated pipelines, heated storage, or treatment with diluents that act as pour point depressants.

See pages 18-27 of this presentation by J O'Sullivan:
https://www.pip.ie/download.php?fragment_id=5713&group_id=1099&page_id=370&requested_page_id=370