Member Info for ps200306

You are right LONGWAIT, exploration upside is the part I am studiously ignoring. It could come good, by a miracle. Personally, I find it rather fantastical to think that SOU will raise money for a pipeline, and also for drilling. LNG certainly isn't going to pay for it. So even if it happens, how long will it take and how much equity would be left? The number of shares in the company has already more than tripled in three years. There's also the dire record of TE-8, 9 and 10. Nevertheless, I don't claim to have a crystal ball and anything is possible (just very unlikely, imho).

ST123, that is shockingly nonsensical. I not only can, but I DID, give a value. People value companies all the time. It's what investing is about, at least in sane times. You could question it (though you haven't), you could dispute it (though you haven't), you could pull your own number out of your ass (but you haven't even done that). All you've said is "there is value" and "in Graham we trust". And you're prepared to wait several years in hopes of getting a little above your break even, which is a small fraction of that of many other investors on here. Seems like a remarkable failure of both curiosity and ambition. Each to his own, I guess.

Just to close off a rather glaring non sequitur, though. Of *course* people are prepared to spend millions on an LNG plant. There's a supplier getting paid handsomely for it. There's a purchaser who is eager for the gas. There are bondholders who want their money back with interest. What has any of that got to do with shareholder value? For equity owners the only thing that ultimately matters is the discounted future revenue stream. And SOU's revenue from LNG, net of operating costs and debt, for the next six years is NEGATIVE. Remember, the LNG is only a way to keep their head above water for longer, in hopes of raising money for the pipeline. It actually REDUCES the value of the gas compared to the pipeline option. And they are no closer to that now than they were two years ago. (But there's one hell of a whack more shares on issue).

ST123: "I happen to think that there is value to be had here and I am prepared to stay invested..."

But not prepared to say what you think that value is.

ST123, the *dead* ducks are aligning ;-) I've never said SOU wouldn't get to LNG and certainly resolving the bond moves it closer. The point that you refuse to listen to is that SOU has *already* frittered away most shareholder value *regardless* of making it to LNG. Probably of little consequence to you with your 3p average, and only here a wet week having bought in at 4p last year. But for the rest, it's curtains. Why don't you give us your own estimation of value? It's really a very simple calculation -- you have all the inputs. Now that the bondholders are getting another 20%, SOU will have little in the way of spare cash until after 2027. If the LNG contracts get closed I can see the price spiking to four or five pence. A bunch more people will buy in, just like you did on last years spike. Then, like you, they will sit bemused when the price drifts back down as the short term traders take their profits. Nobody will stump up cash for more wildcat drilling in the Triassic sandstone which is as tight as a gnat's ass, and if pipeline money is raised it will be at the cost of more massive dilution. SOU will muddle on but there will be no dreams in the desert.

keeptofacts: "you won't hear from ps for some time, he/she will need some time to calm down and TRY to put a negative spin on this rns :)"

You gotta be kidding, right? It's a horrific RNS! Sure, it keeps the company going as I reckon it's a done deal that the bondholders will vote for it, so there's that. But as for Churchillian speeches being made by Johnny-come-lately ShareTrader123 about "the dark days he has had to endure", don't make me laugh.

Welcome to yet another 20% dilution -- 250 million more shares and warrants take us up to a nice round TWO BILLION issued or committed. Coupons of 1.5 million/year (some of it deferred). Repayments of 3 million / year starting at end of 2023. So that's basically half of SOU's LNG revenue committed until end of 2027 at which point they'll still have a 20 million debt to pay off. So not dead yet, but on life support for many years to come (in the *best* case). Nothing here to change my mind about the wisdom of bailing out.

Ah yes, SoundasaPound1, investor sentiment. There's is always the chance that other deluded yahoos will bail you out. That's the real reason for the shoot-the-messenger attitude on here. The only knight in shining armour that's wanted is the one with more money than sense, who can be left holding the baby while the rest make good their escape. Ok, I will leave you all to your delusions. Perhaps you will have your day (and knight) in the sun.

Rubber, not impressed with your armchair psychology. I have family who still stand to lose a lot of money if this goes pear shaped. There is no reason for me to want the SP to suffer, in spite of having made the right decision *for me* with the best information available. That's not going to change. What boggles the mind is that there are people so willfully ignorant of the facts that they have to ascribe nefarious intent to anyone who dares to speak them. But you're right, none of this will change the outcome. There is no need for me to say more, as an unpleasant RNS is now only hours away.

Anyway, I *am* starting to feel I've done this to death. Anyone wanting to dispute my numbers and my prognosis, I'm quite happy to share them. Apart from that, I'll probably pipe down for a while (to great relief I'm sure, especially to those who only want to hear happy thoughts).

SoundasaPound1: "How do you know that the share price will not go above 8p in the next several years? Surely, no-one knows whether it will or will not at this stage?"

There is an average P/E multiplier for the industry of 16 to 17. It's quite easy to work out SOU's net revenue from the LNG using facts we already know from RNSs. We know how many shares and/or warrants are issued or promised. It's simple arithmetic to work out a price per share. That's the *best* case, assuming nothing else bad happens with the bondholders etc.

It comes to 8p, although as was pointed out to me, I didn't factor in interest on loans, or any running costs. So could be a couple of pence below that. None of which is to say that there can't be a buying frenzy among AIM speculators who have no idea how to value it. That's possible, but it's not something you can base a valuation on.

And, of course, there is still the pipeline and further drilling which I haven't considered. But given that it's going to take two years to get to LNG and SOU will still be just keeping its head above water, the fund raising for drilling or pipeline will have to start all over again. There's no way SOU will be able to afford that from LNG revenue so there will be more raises and more dilution. As I said: several years before you have a chance of a sensible valuation above 8p (and it's probably lower).

Rubber: "If things go right they will be 8p by July in my opinion."

Any rationale to back up your opinion, or just wishful thinking?

LawrenceH: "We are definitely on the cusp of transformational news ..... at long last. Exciting Times Ahead"

LOL. You see, this is what keeps me coming back. You are completely delusional. You can't POSSIBLY be on the cusp of transformational news ... certainly not if you mean by the March 31st deadline. Because we know for a fact the bondholders aren't sorted. You will have an RNS on Wednesday announcing another delay, and that "negotiations are progressing and at an advanced stage". Or maybe not, as the exclusivity period also expires so unless it's extended then it's back to the drawing board. What happens beyond that I have no idea, but Graham has got some sort of significant problem on his hands that you seem to be in denial about.

keeptofacts: "oh, but it's SO much better if the white knight can paint themselves as the victim of BB bullies :)"

Standard pathetic put-down. Nobody on here is bullying me and I wouldn't give a rashers anyway. I'm not bullying anyone either, just setting out some apparently unpalatable facts. Nobody seems to have disputed them even though they don't want to hear them. There's always the filter button.

belstaff: "ps - OK we all get your point, now can you stop repeating it time and again"

Why, what's it to you? But yes I will, as soon as people stop asking me to respond or making silly unsubstantiated statements.

rubber: "Ps2. It just seems strange that someone who does extensive research and in your own words bought ... etc. ... is now persistently telling investors that these are not worth around 1.6p"

Huh? Where did I say I did extensive research BEFORE the fact? I was a complete idiot. It was only after I realised the SP was falling faster than I could ever catch it that I got some sense and figured out how to value it. And where did I say these are not worth 1.6p? I said the share price is not going above 8p in the next several years. But I am not claiming any kind of crystal ball. For some people 8p would be enough to make a handsome profit, or at least get out intact.

LawrenceH: "Accept your loss, you made that decision now own it & grow up & grow a pair, take a good hard look at yourself in the mirror and give yourself a talking to."

I'm not the one in denial.

LawrenceH: "Have some respect for other people and their investments"

How is it disrespectful to point out some hard facts? You're the one telling people to grow and grow a pair.

sam1962: "its hard to say sell now..."

Couldn't understand your comment but it sounded like a recommendation to trade the sh*t out of this share. Hardly a glowing endorsement.

Rubber: "Ps2 is not very balanced over on PVR either, he's ramping the life out of them."

A stupid and transparent lie.

ST123: "PS and PD have been in a downward spiral of depression for sometime now. They continually wallow in anything negative so therefore have no objectivity. Even now when things are looking more positive than ever, they still cannot see that we actually have a great opportunity to get to first gas and realise our potential even if it’s not going to happen in the immediate future."

First of all, it would be nice to see some actual facts or at least credible projections from those trying to ramp the share. This is from the guy whose only justification has ever been "in Graham we trust". Also from the guy who bought in on the last positive RNS and has been stuck here ever since. I presume that wasn't your PLAN was it? You were making a profit, now you're making a loss, and that's "more positive than ever"?

Listen up folks. Stop clutching your pearls. If you can't hsndle some basic facts, you should not be investing. I will listen to anyone putting forward plausible projections. Not to haranguing or moaning about negativity when it's as plain as the nose on your face that you're about to get a negative RNS within days. How about this: if I'm wrong about that, I'll shut up. If I'm not, then YOU consider shutting up.

Tableleg, yes I am looking out for you. And no, I am not looking to buy back in at any price (although I am still a holder). Maybe what spurs me to keep writing is masochism ;-) I'm genuinely intrigued at how many people want to shoot the messenger for just stating the current facts on the ground. The weird thing is I don't see anyone trying to dispute those facts or present "alternative facts" (notwithstanding the out-of-date upbeat videos).

We HAVE been massively diluted -- that's a fact. We DO have a tax bill and bond maturity looming, in spite of six months trying to resolve them. We ARE about to miss the deadline for concluding an LNG deal for the second time. Even if everything comes up roses at some point, the net revenue to SOU from the LNG will be relatively paltry, there will be massive debts, and there will still be no pipeline. And that's without considering much less rosy scenarios like the bondholders holding out for a much bigger slice of the pie or total ownership.

As far as the doom-mongering goes, obviously your mileage may vary. Holders with averages of a couple of pennies may well get an opportunity to unload sometime. Those hoping/needing to get back to high valuations of the past are, in all probability, doomed. If the big prize ever materialises, it is many years away and current holders with high averages will have been diluted to oblivion.

Yes LW, and if you look back to 2014 and several times since you will see PVR were in "advanced farm-out negotiations". As we've learned, it means nothing until someone brings home the bacon.

JP's deal was to retain 23.3%, but possibly give away another 9% for cash. Yes, it was a big percentage, but it was a free carry all the way to a pipeline plus at least 10c a share in cash. The pipeline capacity was six times the volume targeted for LNG and with a much higher margin (no LNG plant lease). The cash alone was worth more than the LNG is going to be and the gas revenue -- even at 14.3% -- was more than the same again (for a total of 19p value per share according to Malcy iirc). I think most people would bite the arm off anyone proposing such a deal now.

Of course, those "advanced negotiations" turned out to be a mirage as well. And since then, the company's cash continued to be run down, and SOU have issued or promised something on the order of another 700m shares and warrants. That's the sickening thing. Under PIs noses their equity has been massively diluted and there isn't even a pipeline in return. Every sniff of allegedly good news has been used to get PIs to part with more money. If a pipeline ever materialises you can bet there'll be a ton more dilution for that too.

But all that's in the future after Graham sorts out the bond and the tax bill and closes the LNG deal. And since we know that's not happening by the current deadline, it'll be interesting to see what his latest excuse is.

LONGWAIT, the next news is not going to be good. It's got nothing to do with the value of the assets, which are as good as can be reliably known at this point. Nor has it anything to do a lack of demand or need for the gas. In all those senses it's similar to PVR (also waiting for funding, but debt-free) which I know you are invested in as am I. It's got everything to do with the overhang of debt which has been left unaddressed for too long. We know for a fact that the bond has not been sorted. It may be that the next news will contain some proposal to put to the bondholders. Maybe it will get sorted some time after that. All that can be said for sure is that the next news -- due by Wednesday -- will be that the deal has not closed. I don't see how anyone other than the most wishful thinkers could imagine otherwise (despite their chagrin at me stating the obvious). And that leaves one to wonder why Graham hasn't managed to seal it. Why has he let it lapse instead of just upping the offer to the bondholders, which seemed like a logical next step? There's no doubt Tendara is going to be developed by somebody, sometime. How much of the profits will accrue to current PIs is another question.

Ericanat: "The cost of the LNG plant always looked high to me, now it is clear why."

It's hard to find representative costs but US averages are around $500 per gallon per day of capacity. The Italfluid contract looked reasonably competitive with that. Especially when you consider it's a leasing arrangement. If you don't have up front funds to pay for something you expect to have to pay more, which puts SOU somewhat over a barrel.

sounder: "Go away. You publicly made your call. Ta ta. "

Not gonna happen. What are you, five? Grow up.

ericnat, far be it from me to accuse someone else of being too negative ;-)
But those others you mentioned -- Exim, Sinmarco, Simest -- don't get an additional slice of the Tendrara Pie. As Graham pointed out, Italfluid's financing (outside of what is already in the agreement) is none of SOU's business. Those are part of Italfluid's costs in getting the LNG plant to operation. Italfluid get paid some upfront money plus the ongoing plant lease cost. That's all already accounted for. They get $5m up front, $2m on deployment, and another $65m over five years. That's a handsome return on their costs, but how they finance those costs is up to them.

Yep, that's what I said when I bought a million at the current price a year ago. Also what I said when I bought a million at 10p six months before that. And half a million at 90p 18 months before that. And all the other times. Best of luck.

Didn't forget it ericnat, I just ignored it as a rounding error. Whatever way you look at it, SOU is the better part of a decade away from being debt free. Probably more significant is that I ignored the exploration potential. I have no doubt that if/when Graham comes up with new company valuation he promised, it will feature the fabled 30 Tcf in there. It may well be that new investors factor that into their calculations. And -- I say this tongue in cheek -- it's possible that those investors will engage in a buying frenzy that would take us to the 15p that would have made me whole instead of my 90%+ losses. I would love to have entertained the thought of stepping off the sinking ship into a lifeboat full of cash. But depending on people not knowing how to do a hard-headed valuation (like, I am afraid, many on here) is not my idea of good sense.

Yep, double post :-(
Anyway I got the daily LNG plant lease cost wrong in the first one.