Member Info for PUTUP

"Buybacks are never an efficient use of capital. Period."

They are a return of capital. A tax effective dividend. Doof!

"how those high averages came into being. I can tell you one thing , It was not because folk bought at a high SP"

WTF?

In uncertain times they stopped returning cash to shareholders. The question is what should they do now? With a strong balance sheet (large cash position) and good cash flow generation at today's oil price they should, first and foremost, be MUCH more aggressive in developing the field and, post that, keep buying the stock. The last thing they should do is buy the bond back.

You also seem to think they can repay the bond at par at will. They'd have to buy the bonds at market prices. There may well be no willing sellers at reasonable prices. And, yes, it's quite likely that those who provided the emergency capital in the restructuring also own (or at least did own) the shares. But it doesn't matter who owns the bonds. Whoever does will always expect a market price for the asset they hold. Given a maturity of less than 3 years and the good cash flow generation of the company, it will almost certainly have a value well in excess of par. Perhaps you should have tried to buy some of the bonds a few years back?

Jeez Straycat. Keep your view. There was no cash loss, just a return of capital (just like a special dividend). You really have no idea. Oh and I don't need to look up corporate governance - I've advised on it for 35 years. Carry on. Keep whining or whatever. We'll keep pushing for more buybacks as a great use of excess cash.

The exploitation of stupidity by commonsense is one of the things that makes the world go round.

Good luck to you.

Nothing unexpected. Good basic update. Steady as she goes and with a bit more confidence given current oil price and COVID fog clearing. Keep reaping the cash.

How's SM, Goodnight Charlie feeling? Any day now aye?

"BUT when the decision was taken to cancel them they suddenly had no value whatsoever. As a consequence they could/should/were removed from the Company’s asset register resulting in a LOSS of ca. $49.1m (without any formal RNS confirming the timing of the cancellation btw!)."

Who thee f*ck cares about an accounting entry that has no bearing on the company's ability to produce cash? When was thee last time that book value was of any relevance in valuing any non-financial company let alone a high-risk, developmental oil company? Straycat you obviously have no professional expertise and you don't understand these basic concepts you really shouldn't be playing around inn the stock market. LMAO!

@Invstrat

Cancellation makes no difference to the value of remaining shares (the value of which is the equity value of the company). The adjustment to value occurs at the time they were purchased - when the cash was paid out and the 'in circulation' share count fell.

@highlander1970.

Planet reality.

The company can return capital via ordinary/special dividends or via buybacks. Ignoring the taxation of dividends vs taxation of gains/losses on shares for a moment, if when a company does a buyback each shareholder sells to the company pro rata to their holding and at the same price then that's EXACTLY the same as a special dividend - regardless of the price at which it is conducted at. The price is of no consequence. Now, when the company does open market purchases such as via a VWAP programme each individual investor faces a decision: whether to sell to the company bid and collect their pro rata (or higher) share of the return of capital OR not to sell and in effect reinvest the capital that would otherwise be returned to them. That decision is for each and every investor alone and it is a decision that they have to live with the consequences of. The effect on the value of all equity holders interests collectively is the same regardless of whichever price the company buys at. Individual investors, however, are making decisions (whether consciously or not) to invest more or less in the company - and those decisions are 'on them.'

Whether to return capital to shareholders - you seem to object to any returns of capital to equity holders regardless how conducted - or repay debt is another issue. Manageable leverage increases equity returns. IMO the company's leverage is very manageable given its cash flow production. The company did the right thing during the midst of the covid crisis of preserving capital. Now that things are rosier it would be a shame to invest at a measly 10% less tax return (if not less) by buying back the bond. Better to give the excess capital to those who sell into the buyback bid because they think they can invest the money elsewhere for better return.

A better question to ask yourself is whether the bond could be refinanced for a lower interest rate... Maybe, but then they'd have to buy the bond back from holders and it would surely trade at better than par in such circumstances which might well negate the whole exercise.

"more top ups brings the high average down each time you do it"

Only if you're out of the money on your holding. For some of us, top ups dilute the weighted average cost of the position...but putting more money to work can still be a good idea.

LMAO what a load of *******s. SM, GN Charlie, only a few more days before your BS is exposed. Meanwhile, the rest of us will invest based on fundamentals.

"They should have been deleted from the shares on issue forthwith"

Anyone with half a brain doesn't count the treasury stock as shares in circulation. And for fully diluted shares in circulation only those required to meet in the money stock options. Cancellation is an accounting issue with no impact on company value.
Get over it.

SM reincarnate?

The buy back was an efficient return of capital to shareholders. Nothing more. Those that sold into it took their capital back. Those that didn't invested more. Don't blame the company because you didn't sell into the programme. Bring on the next one. Repaying the debt would be stupid given the cash flow generation of the company.

Well written article. I look forward to the initiation of the already approved next buyback.

"City and Large Institutions don't share that view and are buying shares like there is no tomorrow"

This one cracked me up. Which large institutions are buying like there's no tomorrow? There aren't many in the top 10 to begin with. Hof Horneman's ownership hasn't moved since September. Astaris distributed its fund assets. UBS has increased its ownership a bit this quarter which is good. Dimensional basically constant. Brightsphere reduced. Schroders ticked up 0.2%. Fiera dropped off. Hardly partying like it's 1999. Keep it real SS else you devalue your positive contributions.

Schroders have been around for quite some time. Only recently they slipped off the top 10. In July/August for example they were there with 2.35%.

The balance isn't missing. The company only publishes the first 10 lines of Orient's work. You can get more lines if you pay for it...

I don't need you to. I will say, though, that with respect to my opinion of your opinion you rank a few notches above the likes of Carpatthis. Carry on expressing your views.

A lot of teachers, doctors etc need to be paid first. It will take quite some time before they get to the IOC IMO but the stock doesn't need it to progress nicely from here over the course of the next year.

"My target" "I don't expect"

What more do you need?

sees Schroders return to the top 10 as Fiera slides of the list. Other than that, little change.

Plus a falling pound as Brexit realities bite