RE: Sou / Tarot reading next stock to move North15 Apr 2021 22:17
ST123: "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."
You're in no position to say what's likely because you steadfastly refuse to look at any numbers. You don't really seem to have any clue what's going on here. The nature of SOU changed in 22-May-2019 when it announced its intention to monetise the Tendrara assets. It went from being a company that could rely on raising money on the back of potential value of undiscovered resources, to a company that would henceforth be valued on existing assets. The share price had already fallen nearly 90% at that time as, not only had SOU burned through all its cash on failed drills, it demonstrated that the years of seismic acquisition, gravimetrics, and basin modelling were all essentially useless in terms of predicting reservoir permeability. There is doubtless more gas there, but it will need very deep pockets to find it. SOU is not that company. It might have been had it been more prudent, but the "high risk, high reward" strategy was too tempting.
It is a truism that lots of companies are valued on potential future value until the hard realities of actually turning potential into revenue set in. Every company has to grapple with that reality eventually. SOU announced its intention to do so in May 2019, and that was a very good thing imho -- it was the time of my biggest averaging down -- even though it meant that anyone who bought in at the very high prices had essentially already lost all their money at that point. However, it turns out that exploiting the assets when you don't have any money is no stroll in the park either. Those putting up the cash are rightly going to be looking for a large slice of the pie. It didn't help that JP and Rothschilds turned out to be completely inept at finding a suitor. The result was that the SP fell *another* 90%.
What YOU completely fail to understand, is that the share price is not an infinite elastic band. "It fell 99% so it can just as easily go back up" is a fool's opinion. The cost of keeping the lights on when you have no cash means constantly giving away bigger and bigger slices of the asset. Your steadfast refusal to pay any attention to how much is left is what leads to your lack of realism and bitterness over any negativity.
You may see your 4-6p. That's probably what the LNG is worth if you ignore the impending debt cliff a couple of years later. It may even be that the 4-6p value is reflected in the SP whenever FID occurs, which is why I didn't disagree with Gassy earlier. But since that will fully value SOU even after LNG starts flowing two years later, I'd expect any exuberance over FID to be short term and for the SP to drift back down again. Again, you have to consider the share structure and warrants, which will be a constant drag on SP. Most people are just looking to recover a pittance or make a quick buck.
Sign In
Follow the stocks
