Member Info for ps200306

Thanks partridge. Those are the numbers I would have guessed from the RNS, but nice to have a bit more confirmation (albeit unofficial). I had hoped to get an answer to the more important question -- why do have to give away the other 9% at the buyer's whim if we don't need the money. Was that really the best deal we could get? Maybe SOU reckons the more money they have for drilling the better our chances, even with a lower percentage of EM. Or maybe the buyer just has us over a barrel.

I tried to ask SOU how the optional 9% makes any sense, but no dice.
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In the Marketing Process Update RNS of 06-Nov, it was anticipated that Sound Energy would retain a 23.3% share of the Eastern Morocco Portfolio under the proposed transaction. There would be an option for the purchaser to purchase another 9% of SOU’s remaining interest on the same proportional terms. Two things have confused me and other SOU investors with whom I have discussed this.

The “carry” portion of the purchase price presumably reflects SOU’s retained interest of 23%. If that interest is reduced, SOU’s share of infrastructure costs should reduce in proportion. Does this mean SOU would be refunded some portion of the estimated $58m “carry” from the initial transaction in the event of its interest being further reduced?

The second question is more fundamental. If the initial transaction gets SOU to first gas with a carry on all required infrastructure, how could it be in SOU’s best interest to see a further reduction in its share of Eastern Morocco? It would seem both unnecessary and financially counterproductive from SOU’s point of view.

I understand that you cannot comment on details of the ongoing transaction negotiations, or on the thoughts of the purchaser. However, it would be useful for shareholders to understand the rationale behind these aspects from SOU’s side.

Best regards,
ps200306
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Hi ps200306

Apologies if I cannot give more details of the transaction as it stands but perhaps the following helps. If the proposed buyer elected to trigger the option to acquire a further 9% interest there would be an adjustment to ensure that Sound Energy would receive the same proportionate gross (cash and carry) consideration from the proposed transaction. The exact details of the arrangement will be fully worked through during the exclusivity period but it is the intent that Sound Energy would see the same proportionate value from the transaction whether it be a farm down of 24.2% or 33.2%.

Kind regards,
Sarah

Manyana, just to set the record straight -- I am not moaning, I am hopping mad. You must be extraordinarily credulous. Of McCoss you said:

* So, ask again, your question "what is McCoss doing as Senior Independent Director of Providence?" He obviously believes there is more in Providence than most of the moaners on here think, otherwise he would be off spending his fat salary. *

And of Plunkett:

* Pat Plunkett was involved in raising the funds which were over $3billion at one stage so don't you think he has the credibility to do the same for Barryroe? Until you hear to the contrary surly you should give them the benefit of the doubt? *

I presume you have read the Irish Times article which excoriated TO'R last month:

https://www.irishtimes.com/business/energy-and-resources/tony-o-reilly-staked-it-all-on-a-chinese-mirage-1.4040341

I doubt they could have painted a worse picture without being sued for libel. TO'R has presided over a 99% fall in share price, has taken seven million of shareholder's money in salary, and has wasted four years entertaining chancers, first with Sequa, then with APEC. And you don't think any of this rubs off on Plunkett and McCoss, both of whom have been on the Providence board throughout the entire APEC debacle, from beginning to end?

As the IT said, TO'R "staked his reputation before shareholders last month on his backers finally coming good". It is now two months since those backers missed the final deadline. Somebody from Providence owes shareholders a bloody good explanation. And I don't mean your apparent preferred explanation -- that the APEC money is surely still in the pipeline because nobody has told us it isn't. Get real! And you keep banging on about how McCoss and Plunkett are obviously going to save the day, as if nothing had happened and their credibility wasn't so obviously shot, along with TO'R? Quite extraordinary!

Manyana, the current board stood by while PVR were hoodwinked by a brass plate operation of no substance. They did nothing to check that APEC had the promised funds until well over a year after they first started negotiating. And you talk of credibility? I'm afraid Bronx's assessment of you is accurate.

Agree, ericnat, this deal could be quite exciting if we kept the 23%. Unfortunately it's hard to see why the purchaser wouldn't take the extra 9%. It is the most inexplicable part of the deal -- all upside for the purchaser and downside for SOU.

Manyana, it doesn't matter a whit whether "there is more in Providence" if it can't be got out of the ground. And so far Angus McCoss has got diddly squat . Even Tone has his 20 ml vial from seven years ago, which is worth a grand total of around 3c. I know there's an oil industry definition of "3C reserves" but that sure as hell ain't it.

Exactly. If SOU were to start paying a dependable 1.5p - 2p dividend per year the share price must rise to reflect at least a discounted valuation on that. That is bare minimum -- SOU at 14% share of the horst gas with no further discoveries. Assuming SOU don't pay any dividend with proceeds of the current sale transaction they will also have funds for further drilling. It's not going to be the "four figures" we may have dreamed of, but it's far from negligible. People with high averages will take a hit -- I expect to myself -- but it ain't curtains.

Thank you Ian_. I would like to think you will get back some of your hard-earned too. In my wilder speculation, if SOU retained 23% of the horst and managed to discover the same amount of gas again through exploration, I could see it being worth 40p. A long shot that I have not dwelt on, but not totally beyond the bounds.

Just did my last averaging down. All the way from 95p to 25p now. Still more than six times the current share price. And I have way, WAY more of these tarnished tickets than I ever planned to in a million years. I am betting on the horst gas being worth 12p to Sound assuming we end up with 14%. That leaves me 50% down with a vague chance of doing better. Painful, but not as much as a total loss (which still can't be ruled out).

The whole hog, eh? So far TO'R can't even deliver a mouldy oul' crúibín.

ericnat17, unfortunately that $30m drops by 40% if/when we relinquish another 9%. However, even at that you are looking at a possible dividend of GBP 1.5p per share per year over 15 years. That's assuming no further discovery and maximum dilution. I can live with that if I have to.

And now I better stop talking this turkey up, as I have a chunky buy order outstanding.

LOL. All I am hoping for is the merest tidbit of information. While you are hoping for -- nay, *expecting* -- a knight with shining drill bits, a large bag full of cash and a spare semi-submersible to sweep you off your feet. I'll leave it to others to decide which of us is living in the real world.

Yep. Share is tanking. Sell sell sell. (To me).

Manyana, you've a great penchant for putting words in people's mouths. I nowhere suggested that TO'R is obliged to tell us anything. I said there was nothing stopping him from doing so. Sure, he can keep investors in the dark for as long as he wants if there is no new price sensitive information. But he might want to consider that they are the self same poor suckers he might be trying to raise further cash from in the not too distant.

The only reason I can think of is more sinister -- break the news to shareholders gently that they'll only be retaining 14% of the asset, with the consequent implications for future returns. They get to keep talking about 23% (as they did in the FSC) when 14% sounds pretty much guaranteed.

Roke, that's a helluva percentage just to get a move on the purchaser, who should already be highly incentivised to get going as fast as possible.

Re: Q & no A, the most disappointing to me was that there was no information about why the optional 9% was necessary. The most pertinent question didn't even get a comprehensible answer let alone shed any light ...

"RichDennis: I appreciate you cannot speak for the incoming party - BUT - in what scenario would they not exercise the option for the additional 9%? The RNS suggests the 9% would be available on the same terms as the original tranche so with any success with the drill bit surely it would be a certainty to exercise?"

"Sound Energy (Administrator): As you rightly point out, unfortunately we cannot comment on third parties."

Uh, what??? On the other hand, I'm satisfied that the purchaser is likely to an established company and not some total fly-by-night. With the share price down another 10% I'm likely to top up yet again and take my average down to 28p (not bad considering I started buying at 96p). I expect to have to wait years and still lose a packet but, notwithstanding the doom and gloom on here, I reckon there's a half decent chance of getting something back.

Manyana, you are either deluded or insanely optimistic. No decision before three months was up??? For a start, PVR were in an exclusive deal with APEC until the end of September, so no clock was even ticking on possible other discussions. Since then we have had total radio silence. Nothing is stopping PVR from informing the market what avenues they are now pursuing or intend to pursue. For all we know, TO'R is still making a futile phone call to APEC at 4am every day, like a pathetic jilted lover. And as you say, even the majors with which PVR has partnered on other projects have expressed no interest in Barryroe in the last five years, which says a lot for their confidence. So we basically don't know if the bauld Tony is even courting anyone else let alone in earnest discussions. Given that, I'd say no news is no news. And frankly I'm not expecting any news. We'll get a non-committal Christmas message, and a plea for more cash in the spring to top up Tony's tan.

All of the APEC deal was subject to the necessary consents. Any talks with another partner would be similarly caveated, and the possibility of a judicial review could be taken into account. Given the typical lengthy nature of any such negotiations, the idea that the start of talks with another farminee had to wait until three months after site survey approval makes no sense. After all the same possibility of a judicial review hung over the APEC deal which was actually ongoing.

In five years, TO'R has come up with two supremely dodgy farm-in partners, neither of whom ultimately stumped up the cash. And neither of them were actual oil companies let alone majors -- they were just middlemen providing finance (or not, as it turned out). The probability of TO'R pulling a rabbit out of the hat at this late stage is low. I would put it at maybe 5%. Potential partners will be watching the Irish Green agenda with unease, an economic downturn with negative impact on oil prices is in the offing, and -- for whatever reason -- TO'R and Barryroe just don't seem to be attractive to any suitors. There is a high likelihood that PVR will go out with a whimper, with vultures waiting to pick over the carcass.

JackSpade, you can't have been here very long. These guys have *never* gotten their act together after years of pathetic attempts.

"The CEO's belated realisation came as a real shock to him and his traumatised shareholders"

Not to mention his staff who all lost their jobs. And his landlord who lost a tenant for those swishy offices. Perhaps the biggest loss was loss of face for TO'R. And the shareholders would probably like to lose *all* of TO'R, not just his face. Perhaps he could just disappear, like the Cheshire Cat, leaving only his tan behind.