Member Info for ps200306

What would be the point of legal action anyway? The market cap must have been over a billion dollars at some point. I don't know how many shares were traded at the heady heights, but the number of people who could claim they were bamboozled into buying at excessive prices must be large. The share price has fallen 98% from those heights. I know I'm down well over half a million quid. Paper losses of disgruntled investors must run to tens or hundreds of millions.

Two questions ... 1) do you think anyone that could be sued actually has that sort of money to make you whole again? 2) how would a court assess your losses? How much *should* you have paid for your shares? Does such a question even make sense? -- as I'm sure you've heard, the value of your investment may go down as well as up.

A millisecond of rational thought will tell you that no law suit is going to bring your money back. So what's the point? If it's a vendetta against SOU employees past or present then, as has been pointed out, the only thing it can possibly achieve is to hurt the company and your own future prospects. So what's *really* the point? Nothing matters other than that the company conducts itself appropriately going forward. For example, conflicts of interest of creditor directors *are* of concern. However, the CEO already issued assurances on that score.

So to anyone claiming to represent the interests of shareholders, I'd like to ask: WHAT ARE YOU TRYING TO ACHIEVE?

"So you agree that video does state a genuine case even though you think you have found a better one."

No. An argument based on incoherent premises is a bad argument, even if it accidentally comes to some valid conclusions. Mills makes a number of dumb arguments without providing any comparatives. For example, the energy conversion efficiency of wind turbines and solar panels is a red herring. What about the thermal efficiency of, say, coal fired power plants? In principle it could hit a theoretical limit of 45% -- the same efficiency that Mills cites for existing wind turbines -- but in practice it's much worse, averaging only about 33% and hasn't changed in a decade. Nuclear does no better. Natural gas is even worse in simple cycle plants, but has improved on average because of combined turbine and steam cycles. If energy conversion efficiency was a relevant metric then wind power would win hands down. Mills is therefore spouting complete nonsense. He goes on to make an argument for negative environmental consequences of wind and solar without once mentioning the CO2 elephant in the room. Nor does he mention any other low carbon options. With his qualifications he's hardly that ignorant, so I put it down to ideological bias and/or financial incentives. Basically he's a mouthpiece for vested interests.

I think a better case against wind and solar is its comparison to small modular nuclear. Here's an interesting (Amerocentric) presentation from the pro-nuclear side:

https://www.youtube.com/watch?v=V2KNqluP8M0

I don't think either side is good at discussing its own shortcomings. The obvious one about modular nuclear is that it doesn't exist yet. Without production line commodification it will not achieve lower costs of production and certification. That is quite a few years away. It also needs to move the dial on public perception or it will go nowhere even if it's the better option.

On the other hand, we at least know that modular nukes are well within the bounds of achievable technology. It's an engineering issue, not a scientific one. The same can't be said of grid-scale storage for renewables without which they cannot hope to achieve the penetration desired. Battery chemistry is simply not going to achieve orders of magnitude improvement in energy density. Well-understood basic science involving the reduction potentials of metal ions tells us that. Electrolysis of water is inefficient and in any case would need a whole new hydrogen economy built around it. Pumped hydro is efficient where natural geography permits, but there are not enough suitable sites to meet the storage need.

This means that the renewable grid will either be ropy as hell (i.e. intermittent and unreliable), or it will be matched by equivalent amounts of fossil fuel backup, or it will need continental scale distribution networks to reduce the chance that the wind stops blowing or the sun stops shining everywhere at once. All three scenarios add enormous costs to the touted prices of solar panels or wind turbines. It also means that those technologies can never be decentralised power sources as is claimed. Modular nukes are way better on that score.

What it all adds up to is that Greenies will keep on selling hopium to the masses while beating them with the climate change stick. Governments will keep on making undeliverable promises, knowing that they will be someone else's problem to climb down from. (Does anyone really think the UK will stop selling ICE vehicles in 2030? -- not a chance). The actual practical options -- safe modular nukes and sequestration of fossil carbon via the Allam cycle -- will be ignored for ideological reasons.

Well, those videos cost $25k a pop. Someone's gotta pay for them, and a media company posing as a university with no paying students doesn't have too many options. It's not exactly scholarly stuff either. There are no comparative metrics. And of the five "rare earth metals" listed only one of them -- Dysprosium -- is actually in that category, with an arguable case for the platinum group element, Iridium.

davefrench, sure, we could have a speculative frenzy where greater fools replace the ones currently holding the can. Then the new fools could blame the new CEO, just as everyone here blames the old one even though we willingly handed our money to lesser fools. I don't think it will happen, and it would be preferable if we focused on true value. Personally, I hope we avoid dividends as it would be a tax disaster for me on top of the capital losses.

Hi ericnat,
You may be right. However, we are where we are partly because we've already failed to find a partner to take us to pipeline development. That abortive deal was reportedly worth 19p per share with "further exploration upside". If we ever get back to that level it will be fantastic. But 50-80p? ... not much chance I would think. Apart from anything else, there are 60% more shares on issue now. Also bear in mind that seismic has turned out to be no predictor of reservoir permeability in Morocco. That's what scuppered the previous drills, and the same was true all the way back to SBK-1 in 2000, long before SOU.

Those numbers were speculative based on multi-Tcf potential. After three failed wells in a row I doubt anyone believes that, even if the gas is there, SOU will be the one to unlock it. We will never see those prices again. And SOU has not only failed on finding gas, but on retrieving the stuff it HAS found. Just two years ago we were supposed to be flowing 60 Mmcf/day right around now. That would have unlocked significant value, but we are still waiting and -- realistically -- will be for several more years.

https://www.edisongroup.com/sound-energy-well-result-highlights-reservoir-variability-in-morocco/

ericnat, I sincerely hope you're right. First hurdle will be turning these HOTs into signed contracts at end of March. Plus sorting out the bondholders and taxman. Many a slip 'twixt cup and lip, and all that. Potential SOU partners have a habit of vanishing into thin air. Don't know if I can bear to suspend disbelief yet again, but here's hoping.

ericnat, don't forget that SOU only own 47% of the Tendrara concession, so revenue should be scaled down accordingly. If the share subscription for the gas purchaser goes ahead, there will be around 1.7 billion shares on issue. I expect we would have to take on further dilution to raise money for Phase 2 development if that ever happens. Obviously that's a lot better than a kick in the teeth and suffering a total loss. Not sure if I ever see me getting back to break even of 15p, but there's an outside chance.

Interested to see your calculation ericnat. I make it less than a third of that.

First I will eat a slice of humble pie -- I predicted there would be no significant news, and this is definitely significant. That doesn't mean we're out of the shark-infested waters by a long shot. Even if everything went perfectly it would be a long, long road back to breakeven for me and, I suspect, many others. From bitter experience I don't trust SOU as far as I could kick 'em, and that goes for Graham too.

Here's my take, open to correction. SOU had planned to be funded up to March 2021 on foot of the last raise in June. Only about 80% of that planned raise (share placing + broker option) was taken up, so it's not clear if SOU has funding through the 31-Mar end of the currently exclusivity arrangements. Let's optimistically assume they have. They then need to find working capital to take them through to LNG production, which could presumably be early to mid 2022. Additionally, they have to come up with $7m for the LNG plant supplier before any revenue starts flowing.

The HOT with the gas purchaser (RNS 29 June) appears to be still alive, and extended to the same date as the LNG plant discussions. That arrangement would bring in £2m ($2.5m) by way of a share subscription, and a $13.5m loan. That, by the way, highlights the mess they are in with the bondholders. The loan from the gas purchaser would be at an 11.5% coupon over 12 years. Why would the bondholders accept anything less, let alone the derisory 2% proposed by Graham? The existing bond coupon is at 5% on €28.8m ($35m).

There are other unknown unknowns, such as what additional works are required for LNG. The contract with the plant supplier definitely doesn't cover all of them. Then there's the tax bill and what will come of it.

Let's suppose the bond somehow gets rolled over at the existing 5%. Let's suppose the share subscription and loan from the gas purchaser covers all costs up to when LNG starts flowing. Let's suppose they manage to ramp up to the 11 MMcf/day to meet the volume commitment to the purchaser. That equates to revenue of roughly $30m annually. Out of that, the daily plant rate tots up to $13m. The coupons on the bond and loan are another $2.5m. SOU running costs are probably on the order of $5m. So gross margin after costs and operating expenses is under $10m (about a ha'penny per share if we manage to avoid any more dilution). Meanwhile SOU will have debts of $50m and a need to raise more than $100m more if it is to proceed with eventual pipeline development. That's still a mountain to climb.

At least JP isn't ramming it down our throat and telling us about his housemaid going sick.

HH: "I note that you don’t post and repost your filtered list anymore, PS326473&8333@7£9"

That's right. The trolls and rampers that used to infest this board have largely disappeared. People seem to have forgotten how much of the irrational exuberance about this share was generated by their fellow travellers.

Levelup: "Ps, how do you know there isn’t any evidence of fraud? ... I can think of several statements."

Let's have them then. Bear in mind that your quote from the Companies Act refers to reports and (official) statements. An expression of an opinion is unlikely to be a prosecutable offence. So all the talk of golden tickets and four figures not cutting it are just opinions. A four-figure SP would *still* be a possibility if SOU were to hit paydirt, even with the low end of the basin estimates, even with a realistic (European instead of Moroccan) gas price, and even with the dilution that SOU has suffered. You'd have to show that the basic modelling was intentionally fraudulent, not just that a CEO was over-exuberant about its implications in a statement of opinion.

Even if the gas is there I no longer think SOU are going to be ones to find it. They took a risk and it didn't work out. But again, unless they lied about the COS on the last three wells it would be hard to accuse of them of outright imprudence or recklessness. It's the market, not the company, that has decided to value the share so low as to make it difficult for SOU to raise the money for LNG development. Even now there is enough value in the Horst for many holders -- me included -- to break even. Unfortunately, getting to there from where we are looks to be insuperable task because of the financial position.

Utility1, you have it exactly right. We have seen no evidence of fraud. Marco's position on the board may indeed represent a conflict of interest but there is nothing illegal about it per se. More than 10% of S&P 500 companies have creditors on their boards. I commend trellis's efforts to hold the board to account. But this talk of lawsuits is poppy**** unless there is solid evidence of fraudulent activity. Those fantasising about putting JP behind bars need to stop whinging and start acting like grown ups. I say that as someone who is down many hundreds of thousands here.

I'm not one for conspiracy theories but it's a bit odd how SOU managed to waste nearly a year selecting a buyer who turned out not to be serious, and now probably another year failing to find a funder for LNG. It's almost as if they've been biding their time waiting for the bond to fall due. But as I say, I don't go in for conspiracies. I'm sure it's all just bad luck.

To get a deal done Graham would have to find someone to front tens of millions with the tax bill and bondholders still hanging over him. Zero chance before Christmas, and probably no chance after it either. Only question is whether he'll even bother to update shareholders about the lack of progress. I'm certainly not anticipating any good news.

ericnat: "Interesting snippet from a Morocco today"

Hi ericnat, would you mind saying what the source was. Couldn't parse "a Morocco".

Nothing unclear about it. No new licences. Existing licences will be honoured.

Of course it's Graham's fault. He should have had the bondholders lined up behind him before the meeting. If he didn't, what the hell was he doing providing them with such an ultimatum? Why would they accept? Is SOU depending on charity from bondholder philanthropists now?

At this point you have to be joking ST123. How are we not crocked at this point -- no money to develop the LNG, no money to pay the intransigent bondholders, no money to pay the tax bill, no money to keep the lights on, no ability to raise any money at current market cap, and no credibility with any lender given the current state of affairs?

The horst gas is like the One Ton Depot of Scott's Antarctic expedition -- agonisingly close, yet just out of reach given current resources. We know how that worked out for Scott. And he didn't even have a pack of circling vultures looking to take the provisions for themselves.

I notice SOU has gotten very shy on Twitter. At over two months, it's the longest Twitter hiatus since Graham came on the scene. Maybe it's out of embarrassment that nobody turned up to the bondholder meeting. All eyes on tomorrow's meeting with the reduced quorum. But really we need news about financing for the LNG project. Nothing else will dig SOU out of the hole it's in.