Member Info for ps200306

SOU won't be drilling anything this side of 2024.

TE-10: "A mechanical stimulation was carried out over the uppermost primary zone by an experienced crew of Schlumberger engineers, deploying 'state of the art' Schlumberger Hi-Way technology, the first use of this technology in Morocco".

Only so much lipstick you can put on a pig.

https://www.slb.com/completions/stimulation/fracturing-services/hiway-fracturing-technique

Don't know about the #1 spot, Shen, but I was thinking you could apply to be head of PR.

Perhaps I should have said that the basin model on its own is not enough, since the "high graded TAGI" has turned out not to be so high grade so far.
TE-8: "TAGI sands at the TE-8 location are likely tight; full sequence of Westphalian sands in the Paleozoic ... relative low permeability"
TE-9: "60m of dolomitized silty sandstone, interpreted as an age equivalent to the primary target TAGI sandstone... the interval is of low porosity and therefore poor reservoir quality"
TE-10: "estimated net pay of up to 15.4m in a succession of thinly bedded gas bearing intervals distributed throughout the 110m gross TAGI reservoir interval... gas flow rates achieved were below the commercial threshold"

All a bit moot anyway, as SOU won't be going exploring without first hitting Phase 1 and Phase 2 goals in the horst.

Well, I see that the tarot guy has now been proved absolutely right about an RNS on 30-Apr and two more in May. None of them of any consequence whatsoever of course ;-)

You realise that the 6.5p valuation is based on Phase II (the pipeline) bringing in revenue in FY2023. The gross debt/EBITDA projection for Phase 1 is 9.8. As I said, it's consistent with the LNG being worth zilch to shareholders as it will go entirely toward paying debt for a decade. Everything hinges on completing the Phase 1 deal (which in my opinion, as I've said, depends on sorting the tax issue) AND THEN ALSO deals and financing from as yet unspecified sources for Phase II. No information whatever about the latter has been forthcoming, from which I infer that there are no solid leads as yet. Graham's only word on the subject is that traditional sources of funding are generally not interested in fossil fuel investments these days.

If the Phase 1 deals come through then SOU's survival is more secure. No vultures are going to come in and pick over the carcass, which enhances the likelihood that SOU could sell its assets if it cannot raise Phase II finance itself. But that could be worth less than the 6.5p/share that SP Angel projects. I also would expect that the exploration assets would be worth essentially zero in that scenario. Consider what SOU themselves paid for them, and that they have done precisely nothing to prove up their basin model since, and indeed have cast doubt on the commerciality of the TAGI plays.

All of which is to say that SOU could be worth anything between zero and some double-digit share price in future. Sensible people will base their assessment on actual solid newsflow about Phase II goals, not on vague notions about billions worth of gas in the horst and definitely not on tens of Tcf in the TAGI.

ericnat: "Just done a very quick calculation and after Sound has paid the Lease cost. This is worth deal on its own is worth 1.4p per share every year. If sound pay off the debt, bond and tax over the first 5 years this goes down to app .8p per share, and then following 5 years it is over 1.4p per share per year."

That would beg the question as to why SP Angel values it at -1p (minus one) per share? I repeat my fag packet calculation from April 18th:

Assuming the LNG flows on schedule the revenue side is easy -- it's $8m per year. He has about $2.2m in debt interest and bond coupon for the first year or two. Add in some figure for SOU wages and running costs. Then he has to start paying an additional $3m of bond amortisation per year for four years. At the end of that there is the remainder of the bond to pay off plus deferred interest, amounting to $20m. Basically, every remaining cent of revenue from the start of LNG would have to be saved up to meet that bill. Post 2027 he has to start saving to pay off the debt from the gas purchaser, due in the early 2030s. But that's easier because the LNG plant lease is up soon after, and SOU revenue will increase by around $6m/year. SOU is effectively debt free by 2030.

(The above takes no account of the $14m tax bill. Also bear in mind the additional 260 million shares and warrants promised to the bondholders and gas purchase).

Yeah, keep pretending you didn't read it ;-)

Greenie arguments against fracking are ludicrous.

https://friendsoftheearth.uk/climate/fracking-facts

Combination of non-sequiturs, issues that are not unique to fracking, and general hysteria. The earthquake argument is hilarious, akin to previous hysterics about GMO "frankenfoods" and alar on apples. Do they even realise that the Richter scale is logarithmic? A magnitude 7 earthquake is the energy equivalent of the largest nuke ever tested whereas the seismicity limit for fracking is the equivalent of a single hand grenade.

PVR only gets to write off development costs against tax if it actually gets the oil flowing. We will see the lie of the land next month, as PVR has to apply for a Petroleum Lease Undertaking in June. At that point the clock starts ticking as they then have to submit a development plan and apply for a Petroleum Lease within two years. The lease undertaking will also incur fees of about a $1m per year to PVR, doubling when they go into production. On the up side, a Petroleum Lease Undertaking effectively requires the goverment to grant a subsequent Petroleum Lease if PVR submit an acceptable development plan and the goverment is satisfied as to its commerciality. Even with the Greenies in control, I don't think they can stop this. That said, you have COP26 coming up in the UK this year, and activist groups suing the UK government for continuing to issue North Sea licenses. They will presumably fail, but it's about the optics and the Irish Greens will watching.

However, even before crossing that bridge PVR have to get their other ducks in a row, including raising an awful lot of finance in a market that is increasingly leary of fossil fuels. I still think it can be done, but an uphill battle all the way.

Ilyas01: "My take is - on good news (RNS's to come) we may see a rise to 10p this year. Have I got it totally wrong?"

Yes. Totally, utterly wrong. Check the actual forward valuation that is available.

"I got on board earlier this week with a long position, already down the amount I placed on my position :-). Hopefully this is not the trend here."

The trend is easy for you to check yourself. Series of "good news" RNS's over the last two years, shareholders bilked for easy money in a raise. SP slides as the news turns out to not be what you thought. Check out that other joker, ShareTrader123 (who seems to have disappeared) with his manic optimism. He's one of the earlier batch of losers who got sucked in.

ericnat: "The provisional has done its job, now its time to see what GL can do about renegotiating."

Renegotiating what? The gas purchaser deal is not over the line. Nor does it seem likely it will be until the tax bill is sorted. Would YOU lend someone $13m when they are at risk of being shut down by the tax man? Would be stark raving nuts. Not happening.

"Also we will own the plant at the end of the lease. The bond will be paid off quickly it is then Gravy from there."

Uh, no. Does anyone actually READ the figures plainly available via RNS? Even when the lease ends SOU will be pinned to its collar to get the bond paid off and then the gas purchaser loan. That will take every cent of LNG revenue until 2032. There is a reason this phase of the project has a NEGATIVE value. It keeps SOU alive but is worth zilch to shareholders.

"That is for preparation of selling all of the assets and a significant dividend return to share holders."

You're having a laugh. Even with SOU borrowing to build a pipeline it is worth 6.5p per share. Sell it to someone else who has to build the pipeline and they will take the lions share i.e. LESS than 6.5p per share to SOU. And all that is years away in the best case.

sundance: "In the words of the joker, why so serious !!!!"

Simply bemused that nobody here seems to be able to smell the coffee beans. I genuinely wonder if anyone actually bothers to read the company info. People speculating about 10p (or 40p in one case recently) when the company themselves have told you it's worth nothing like that, nor will be worth anything at all in the next two years. People seem to imagine some "magic happens here" moment without any reference to actual reality. It's truly bizarre.

And finally...

ktf: "I filtered a long while back ... similar in style to that other manic depressive trellis. similar time of posting too, usually late at night"

Trellis works overnight. So do I. Sorry to burst your bubble. Oh yeah, about that filtering ... we both know you read all the posts. But will enjoy picturing you squirm, unable to answer this in order to keep up the pretence ;-)

Finally finally, would love to see somebody, anybody, put forward their valuation with ACTUAL FIGURES to back it up.

LNG production isn't going to raise any funds for drilling. The income in its entirety (and more) is needed to pay off debt. That's WHY it's valued at -1p. Dilution to fund a drill at current market cap would be about 40%. Can you imagine the impact of another failure? Getting to LNG is sufficient only to keep SOU on life support. Its main hope of decent income is the Phase 2 pipeline development. For that it needs to find a farminee AND raise $90m, a daunting challenge. Given that the two year anniversary of Parsons' announcement of monetising the Tendrara assets is next Saturday and there isn't a whisper of any substantive discussions, that's not happening any time soon. The chances of SOU being worth anything are years away, and very far from guaranteed. Meanwhile, if Graham doesn't close out the LNG deal soon and get some advance money in from the gas purchaser, there's going to be a dilutive raise just to keep the lights on.

sundance4: "I hear you are a charitable man and have on many occasions helped many ,well all I can advise is leave people dream and don't worry there will never be the huge sums invested like before"

Dreams are good, hallucinations are harmful. It pains me to see people still getting suckered by hype merchants on here. The share price was back in the 1's today, down a third since the bond restructuring peak. The company's own valuation is that it is worth LESS THAN ZERO even if it manages to settle the tax bill at no cost and gets to LNG production.

Or, more likely, nobody will close any deals until the bond AND the tax bill are sorted.

SP Angel values it at $154.4m, 7.5p per share, 6.5p after adding the current -1p value. Lots of hurdles to jump first.

It's actually overvalued. SOU's own commissioned valuation tells you that even after LNG is finalised it's worth -1p (MINUS ONE) per share. There is no near term transformational news coming. That would require Graham to announce a farm-in and the raising of a $90 million loan for a pipeline. It would remain to be seen how much of the company was given to the farminee. Right now -- and likely for quite some time to come -- SOU is worth literally less than nothing.

Yeah, comforting to see the chairman has as many shares as I do :-/

Almost two thirds of the 3p warrants are now exercised. Either someone doesn't want to be left out or they just want the current 15% markup between warrant price and market price. Wonder if we'll get a final bunch tomorrow before expiry.

Good point StM. A couple more housekeeping notes next month would see his predictions for two RNS's in May come true as well ;-)

blocker2: "Tick up due............."

Why? Amazing level of wishful thinking going on here. What happened to this tarot-reading charlatan:

Malkis: "smell the RNS 3Oth April lol. All good news"

Not so clairvoyant after all, then. Maybe better luck with this one, though I very much doubt it:

Malkis: "RNS due in May good news! 9p in May. Summer 13p- 19p. Enjoy"

So in summer the price is going to be three times what SOU's own promoter predicts for after the LNG plant *and* the pipeline get built. Bizarre!