Member Info for ps200306

Lots of confidence. SP down 9%.

By the same token when Graham predicted FID in H2 it could have landed in October. So that would make us three months late now? Let's be serious. We've only been given two periods -- H2 2020, which we missed, and Q1 2021. It's more or less an iron rule of projects that they expand to fill the time available (at least). So we are three months behind.

As for the right deal later rather than the wrong deal now, that is a false dichotomy that would be worthy of a Tory spindoctor. I'd like the right deal four weeks ago, thanks very much. The fact of the matter is that there's no guarantee of the right deal later ... or ever. And if complexity is your excuse, all it means is that Graham misjudged it back in June -- another alarm bell.

"What and whose track record are you on about PS etc? If it is Lyons (as it should be), then in his time at SOU he has done nothing to make me distrust him."

Firstly, a company is not merely its CEO. So SOU's overall track record is not good. But yes, I am specifically talking about Mr. Lyon too. On June 29th he informed us that "the Company aims to take a Final Investment Decision, subject to the approval of the Concession joint venture partners, during H2 2020". I am not aware of any new extenuating circumstances that cropped up in H2, apart from the tax bill. Covid was already in full swing, and we knew all the pieces of the jigsaw would have to come together at the same time as flagged by Graham in a Q&A. So now we are three months behind on a six month plan. We have not concluded a deal with the gas purchaser, we have not signed up the LNG plant provider and we have not restructured the Eurobond, all of which were stated as corporate objectives for 2020. Instead we are told that we are working to a new deadline, which happens to coincide with when SOU have told us they will run out of money. Maybe you'd like to offer some excuses on Graham's behalf, seeing as he hasn't provided any himself.

Yeah, sure. They managed to milk investors each of the last two years on the pretext that FID was imminent.

We've no evidence the bondholders aren't willing to extend. They're just not willing to extend at the 2% coupon offered by SOU, when they're currently getting 5%. Why would they? SOU has offered 11% on the loan its trying to raise from the gas purchaser. I'm sure the bondholders have noticed a slight discrepancy there. Not that I have any sympathy for them. They have made an absolute killing on it. For a start the bond was issued at a 32% discount to par, which basically means they will get back $10m more than they put in. Then there is around $8m in interest payments over five years. Then there was a ton of warrants which, had they exercised them at the top of the market could have netted them around $60m. And at the end of all that they are still owed the €28.8m (which includes that $10m discount). I've no doubt they'd love to keep their money in such a cash cow, but not at the rate SOU recently offered. SOU is over a barrel and if they don't play ball the bondholders have recourse to their assets.

LOL. Have you actually *looked* at SOU's 5 year graph? Any optimism I had has been soundly (pun intended) beaten out of me. I did my most aggressive averaging down at the time of SOU's 10p placing in June 2019 when the conclusion of monetisation was promised by the end of that year. 2020 was just a rinse and repeat -- another announcement of FID along with another raise. After a year and half I'm still down over 90% and we've had a 70% dilution. You still think this turkey's gonna fly? I applaud your optimism, I really do. In Graham we trust, yada yada. I'm just intrigued by what you're basing it on, 'cos it certainly ain't the track record.

"Can the delay in any communications from either parties re the tax demand be deemed as positive or negative?"

It can be deemed as SOU's normal behaviour of never hitting a deadline. We were supposed to have FID in H2 2020. That announcement was only three days before the start of H2 so you might think they could get it right. Nope, more of the same that we have seen with both drilling and with monetisation of the assets. The difference this time is that there is no second chance if they miss the March deadline. With SOU's track record, I am not hopeful.

PVR has been an accessory to torture too ... of its long-suffering PIs ;-)

The situation is the same as it was three months ago, six months ago, and nine months ago, apart from the additional problem of the tax bill hanging over us. Either we find a source of cash in the form of a loan to get us to first gas or it is curtains. (Having to resort to an equity raise is equally curtains for existing PIs as it would dilute us to oblivion). Graham hasn't been very specific about how much of the costs to first gas would be covered by the approximately $16m of loan+equity being sought from the gas purchaser. He says it will be "most", i.e. not all. So SOU will still need to raise cash from somewhere. We need to sort out the bondholders, the taxman, the plant supplier, the purchaser, and STILL raise some cash. And several of those things are interdependent, e.g. the purchaser isn't going to put up a loan without a guarantee that SOU has the wherewithal to get to first gas. It's a huge ask and we have sixty days. Graham is obviously not going to make market-sensitive announcements at a Q&A, so I expect more the "progress is continuing" sort of message.

The bond value is a good deal higher than the current market cap. Throw in a bunch of warrants and costs and you'd be talking 75% dilution before you raise any money for LNG. Who in their right mind would buy the shares anyway? We've a little over 60 days before this company goes out with a whimper.

The failed drills are water under the bridge. What is of more concern is the glacial rate of progress since the decision to monetise the assets in May 2019. The latest date for concluding discussions now takes us into April 2021. SOU will be running on empty by that time, with little ability to raise funds. Make or break time.

Yep, SP seems to reflect a bit of optimism. Bit of a bargain on Euronext at the moment with euro price equal to sterling price on LSE.

True, Roofer, there's a lot to be said for not hanging around. By the time this comes good I'll have been here for ten years.

Best of luck, but a paltry 40%? This share is going up 1500% from where it is now.

We've been down that rabbit hole before. The Celtic Interconnector will not provide *any* power. Its aims are "improving security of supply, reducing consumer electricity costs and supporting the development of renewable energy". It is a load balancing exercise. It will certainly allow us to do more with what we've already got (for a cost of a billion euro). However, presenting it as if it is 700 MW of new supply is downright daft.

Nice to also see the Brent price above $55. The field economics that Linn talked about earlier last year were predicated on $55 oil, although he claimed it was still viable at $40. Anything above $55 is an additional bonus and the net value per barrel increases significantly faster than the oil price, being based on the marginal price over cost of extraction.

I wondered if GRH would magically appear at the mention of seismic ;-)

Anyway, back to ericnat... that 570m was dollars, not pounds. And while it is true that it won't cost $200m to get the gas out -- SOU estimated the pipeline cost at $60m -- that is completely and utterly beside the point, as can be easily seen from the numbers I already provided. We have a bond valued at €28m and we are hoping for a loan of $13m from the gas purchaser. For the simple expedient of rolling that bond over and obtaining the loan, SOU offered 245m warrants and 160m shares respectively. Over four hundred million news shares is nearly a third of the company. If the gas is worth $570m then we just gave the best part of $200m away JUST FOR ROLLING OVER AN EXISTING LOAN AND GETTING A DOWN PAYMENT ON LNG. That doesn't build any pipeline, which is nearly five times the cost of the gas purchaser loan. Stop talking as if we have $200m in the bank and are dreaming about what to spend it on. We are over a barrel and nobody is handing out free money without expecting to take a large slice of the returns.

As to "when I sold out" ... I am holding an eye watering number of SOU shares. I feel sorry for you if you think that owning SOU shares mandates that the holder must don rose-tinted spectacles, stuff their fingers in their ears, and ignore simple arithmetic.

Huh??? How does the year-old news on environmental approval for a pipeline we can't afford to build have any bearing on our current predicament?

Billions of dollars of gas, 150 million sterling valuation ... could you be any less vague about how you are arriving at those numbers?

Here's the facts: seismic in Morocco has turned out to be about as useful as a water diviner's twig. After the results we had at TE-8, TE-9, TE-10 the mind boggles as to how that reality has not set in for some people. Mind you, the same air of unreality was evident in Sound's own RNS release on the TE-8 results, when they announced that their Saturn MDT tool could not make measurements because of low permeability, yet the sands "are believed to be permeable " (by whom, why???). Permeability is the Achille's heel of the Moroccan TAGI and seismic can't measure it. It's almost a moot point as currently SOU can't afford to drill a single other well let alone another three consecutive dusters.

So let's turn to the assets we know about. The single available external certification of the TE-5 horst gives "a mid case GOIP for the TE-5 horst alone of 0.65 Tcf; a 2C (mid case) recoverable, contingent resource for the TE-5 horst of 377 Bcf". At $8/Mcf and with SOU currently holding 47%, that is a value of $1.48 bn or, after applying a ten-year 10% NPV discount, around $570m. So the contention that we have billions of dollars worth of gas is quite simply wrong, even if it was free to get out of the ground (it ISN'T) and we had no debt (we DO).

Ok, let's look at the shares on issue. Currently, if you look it up, it's 1.3 billion. That's up a fair whack on two years ago, since SOU has been using every blip of alleged good news to raise more money. However, look at what's in the pipeline -- even just the stuff we know about. The failed attempt to woo the bondholders promised them 245 million cheap warrants. The provisional HoT with the gas buyer promised them 160 million shares. Even if: SOU manages to retain its 47% interest, the bond holders extract no further pound of flesh, the tax man doesn't take a slice, and SOU doesn't fling shares around like confetti in further raises ... there will be 1.7 billion shares on issue just to get us to first LNG. And let's face it, first LNG doesn't even make enough revenue to pay our debts off rapidly. It provides breathing room at best, to decide what the next phase of the journey is.

The idea what someone would pay 150m Sterling ($200m) for SOU where we are now seems completely outlandish to me. And even if they did, dividing by 1.7 bn shares gives 9p per share ... not going to set the world on fire for many PIs. Glancing back over the history, less than three years ago people were topping up furiously at over 30p, seeing an opportunity in the dip after the TE-8 failure and believing the share price was more than underpinned by the horst value. Negative commenters were lambasted by people still claiming the share price was easily going to hit £10.00. The last thing we want to be doing right now is providing more fanciful valuations backed up by zero evidence.

I have thanked Trellis in the past for his efforts, based purely on the effort he has been prepared to put in for no recompense. But my question has not been answered: WHAT IS HE TRYING TO ACHIEVE? I have no interest in some vague "justice" which nobody has bothered to define. That's why I haven't been part of SAG since the early days. Plain and simply I am looking to recoup some losses. In my opinion the best chance of that is to let the current board try to monetise the very real assets we have. I think that's a pretty slim chance too -- among other things because there is a good chance of PIs being diluted to the point where returns are minimal, as has already been happening -- but it's the only game in town.