Member Info for ps200306

Did anyone else find it disconcerting that the VP of Geoscience can't pronounce the word "Tendrara"? I said we didn't learn anything new, but I forgot one thing -- the price tag for the pipeline and SOU's share of it. $250m, of which SOU have to stump up $188m. That is a LOT of wonga. We also learned that production data from Phase 1 will increase the share of proven reserves, making it easier to raise Phase 2 financing. While that sounds good on the face of it, it makes it sound like progress on the two phases could be more serial than parallel. Finally, Phase 2 also depends on finalising the GSA with ONEE. How many years have SOU being announcement that finalisation is imminent? LTAs will know how much a bad joke this has become. Graham also talked about the deep discount of the current share price against the SP Angel valuation and hoped this gap would close in the coming months. It's worrying that he seems to be suffering under the same delusion as some of the investors here. The SP Angel price is predicated on the Phase 2 revenue. SOU is literally worth less than blugger all without it. Does Graham imagine investors are going to pile in and jack up the SP before he shows us the money with firm deals in place? With SOU's past history and, increasingly, Graham record of missing deadlines he's going to need to SHOW US THE MONEY before anyone trusts this dog of a share.

I found Graham's presentation strangely misleading and revisionist, to be honest. He flat out stated that the tax issue cropped up after the bond restructuring, as if to say "look how unlucky we've been, just when we were getting things sorted". In fact the tax issue had been dragging along for six months before that. He is also coy on two other issues. First, what exactly are the tax authorities claims? He said that SOU have a ten year tax holiday as if to maintain that that alone absolves SOU of any liability. But that tax holiday is on hydrocarbon revenue. The tax authorities seem to be making claims on intra-company transfers -- it DOES sound like nonsense on the face of it, but Graham talking about tax holidays is completely irrelevant.

Second, he continues to avoid saying whether the tax situation is holding up the closure of deals with Afriquia Gaz. If not that, then what? FID in 2021 is a year behind schedule. Also, he finally came out and said "first gas revenue within 24 months". Am I the only one noticing that FID in 2021 and revenue in two years takes us up to the start of the bond amortization payments in the restructuring agreement, to the tune of a million dollars every six months. ItalFluid are due a large payment as soon the gas starts flowing. So it seems to me that SOU is already up against it, assuming no further delays. Likewise, they are still talking about revenue from Phase 2 in 2023. But that sounds vaguely incredible given that they are clearly not close to inking any deal on financing.

All in all, absolutely no new information in the AGM presentation or subsequent Q&A, and the same fudges are being made as before. Graham needs to SHOW US THE MONEY in terms of getting FID done and not just talking about it, even if it's a year later than advertised. It would also be nice if he gave some hint what the hold up is, and not just that "he and his team are working hard". One pattern has become clear over the past year. When Graham misses a deadline, he doesn't feel obliged to offer any explanation -- usually he just creates a distraction with an announcement about something completely different.

Asking pertinent questions is not trying to shoot anyone down in flames. You should try it sometime instead of just making unfounded assertions, STD123 ... you might end up actually understanding some of the harsh realities facing SOU.

So why hasn't the contract with Afriquia Gaz closed? We are a week away from the anniversary of the HOT agreement. A year is a long time for something that Graham said would be done and dusted well before the end of 2020. My suspicion has always been that Afriquia won't close while the tax bill is unresolved. If that's the case, then it's a big problem even if the tax bill is eventually dismissed. Another year's delay would make it nigh on impossible for SOU to meet their bond repayment schedule, not to mention the need for working funds.

Manyana: "What is the current interest rate to borrow money? 0.99%. The banks are literally giving it away as they cannot make money if the do not lend and they have so much of it that any interest is worth having. So, I am sure Providence could raise €50m or more tomorrow without breaking sweat as they have no debt - note from the accounts - at minimum rate so why dilute? "

PVR is not looking a bank loan. Banks don't lend money at <1% for anything as risky as oil exploration (even for appraisal wells). PVR is looking for a bank to help raise a bond. The interest rate on that will be a double digits percentage. The blended rate on the finance that SpotOn were supposed to raise was <8%. Given that it included Norwegian Export Credit money (typically 2 to 4%) and cost deferrals from suppliers, you can be sure that the bond was going to be considerably more than 8%.

Tincan I appreciate Graham needs time, given the problems he inherited. That is, the company put all its eggs in the exploration basket, drilled three non-commercial wells, and then wasted a year chasing a partner who failed to raise the investment capital they promised. To resurrect anything from that would be impressive. Graham's performance hasn't been spotless, though. He raised funds on the back of a heads-of-term agreement with Afriquia Gaz and implied that FID would be taken by the end of 2020. Contrary to what STD123 keeps repeating, it's not tenable to use Covid as an excuse for why this didn't happen. The pandemic was in full swing and SOU staff were already working from home by the time of the HOT announcement. The foot-dragging by both Parsons and Graham has ongoing implications for equity dilution. I have other concerns about Graham such as I don't think he has been as transparent as he could have been about the details of the tax bill situation.

On the other hand, Graham did come through with his promise from earlier in the year to get a third party company valuation. Unfortunately it's not pretty. Even if Graham pulls off the feat of sorting the tax bill and completing Phase 1 it's not worth anything in terms of positive returns to shareholders. It's really all about Phase 2 which is why his recent comments about not needing a partner to keep the ship moving forward were concerning. The exit of Schlumberger makes the task of raising funds for Phase 2 all the more difficult. Maybe it'll all work out and SOU will be able to drill again. I have no crystal ball. Even taking an optimistic view I'm pretty sure it won't be less than seven years after the rig mobilisation for TE-8, which is a helluva long time to have waited.

STD123: "Over 10% up so happy days. No need for negativity this weekend."

8% by my reckoning. Was down 6% yesterday. STD123 doesn't post on down days, though. The share price is essentially unchanged since Graham (in whom we trust) took over early last year.

Thanks Hairy. It probably won't be on SOU though.

Even I'm not foolhardy enough to dabble in crypto ;-)

Not to worry StMary. I have a stack more to lose on PVR which is pretty ropy as well ;-)
Not quite as ropy as SOU though. I do genuinely hope SOU pulls through for the people who are still hanging on (me among them). But as they've told us themselves, it's depending on Phase 2 before it's worth more than a brass farthing.

(And yeah, I realise how stupid that is, before anyone feels compelled to point it out. Hence, my newfound interest in soberly evaluating SOU's *actual* prospects and not some ramper's wild imaginings).

StMary, no I have an actual *realised* loss of well over 600k (which will eventually be closer to 700k if SOU goes completely belly up).

Yeah Indeep, that's my sense too -- it will drag on for a very long time. I'm still invested here also, so will be keeping an eye. No chance of it making much of a material impact in my case (I've lost about three times as much as you by my rough calculation) but could still benefit a sibling if it comes good.

STD123: "this is what PS does. Attacks any poster that hints at positivity due to her selling up at the wrong time ... sold out at the worst time before the recent rise and then went on to make another huge mistake by investing in PVR which weeks later is now worth half what she paid."

Both transactions occurred 15 March (months, not weeks ago). Anyone can check for themselves the share price for SOU and PVR on those dates versus today. Neither has moved substantially. STD123 is lying for reasons known only to himself. On the other hand, anyone can also check STD123's post of 15 Apr 2021 18:31:

"PS I have not said the price is going to the moon but have said 4-6 p I would expect in the next 3 months which is far more likely than your prediction of 3 years. I am so confident this will be achieved that I resisted taking a profit above my break even point of 3p. You are correct I did buy on the hype but unlike you, I will now make a profit. I will never understand why you did not keep the faith in Graham and the board and you should be glad for those who did but some of your comments this week can only point to the bitterness of missing out due to poor decision making on your part."

One month still to run on STD123's prediction of 6p. Will it happen? No, it won't -- and that's because of the fundamentals which I have challenged STD123 to discuss instead of whinging like a spoiled child. If anyone finds this tiresome, rest assured so do I. On the other hand, as often as STD123 trots out the same cheap lies over and over, I will be compelled to knock them down. It would be much preferable if STD123 provided some justification for why his valuation is so different from that of SOU's own corporate broker.

db71, believe me I digested the video in detail. To quote Graham: "What we've noticed in the last few months is that we've got a different type of potential co-venturer approaching us to look at the development. They particularly liked Phase 2, the bigger project, the pipeline project, the CPF and the gas to power project that we're looking at putting together for Phase 2. So yes, I think the opportunity to do that is always there, but we don't need another partner at this stage to go forward with Phase 1".

With respect, that's hand-wavey blather. He "noticed" that there was a different type of partner approaching SOU? Gimme a break. He is not talking to anyone at any substantive level about Phase 2. Obviously he has plenty of other things on his plate for now. But eventually SOU needs a partner and an *awful* lot of money to get to the point where it is worth anything at all.

tom111: "Why keep knocking it absolutely no point imo".

I am not knocking SOU. Just stating home truths. Perfectly happy to be challenged on every single thing I say. If I'm wrong I welcome correction. I have still heard nothing to suggest that SOU is going to be worth more than zero in the next 2-3 years even if everything works out ... and there's a non-negligible chance that it won't.

That Graham Lyon interview was slightly incredible on several fronts:

a) not a single mention of the biggest elephant in the room, the tax bill.

b) conveniently skipped over Schlumberger as a funding partner for Phase 2. SP Angel have also conveniently omitted SOU's expected debt position at Phase 2 from their latest valuation. They're not even telling us how much debt SOU now needs to raise, but it is safe to assume it's $120m+.

c) vaguely handwaved at potential interest in Phase 2. Reading between the not-so-subtle lines: there is nothing substantive happening on Phase 2.

d) Mentions a drilling program planned for October 2022. No mention of the fact that SOU doesn't have a brass farthing for drilling, nor will it have on foot of Phase 1 revenue which is all committed to paying off debt (which is why, as people seem to constantly ignore, SOU is worth LESS THAN NOTHING until Phase 2 is signed, sealed and delivered).

e) Mentions the closing of the Afriquia Gaz and Italfluid contracts as a conditional, not a guarantee. What's holding it up? (We all know it's the unmentionable tax bill, but why is Graham is being so coy?).

The Schlum deal is a diversion. 75% of nothing is still nothing. Graham needs to get his a$$ is gear on what really matters.

STD123: "Good luck indeep just don't to a PS and throw your money into something that will half in the next few weeks."

Still making up those fairy tales. Of course, STD123 is the one whose investment halved in a matter of weeks. He had a chance to get out at breakeven and decided to wait for it to double. What a joker.

Best of luck Indeep -- sorry for what sounds like very substantial losses; as you can imagine, I completely empathise. (I see one fine poster has already turned on you as a "moaning investor". That's par for the course here unfortunately. The moment you take off the rose-tinted spectacles there's a howling mob with pitchforks who can't bear to hear any word of dissent).

STD123: "Over 10% up. Try putting a negative on that."

Who does this idiot ramper think he's kidding? Crows about every random twentieth of a penny rise, ignores the falls. You'd think after two weeks of all these "rises" he'd notice the SP hasn't actually gone anywhere.

Malcy (in addition to regurgitating the entire RNS) says: "Sound appears to have been very smart indeed and has taken advantage of SLB wanting to change its world wide strategy with regard to upstream investments and has stepped back into this asset on very good terms. They have an NPI structure and are funded to go ahead with the prospects of considerable upside, another piece of smart management by Graham Lyon and team."