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Dick - I think Jasehem’s comment about reserves relates R3’s ability to reduce overall cost (Assuming that the cost overruns don’t continue) and thus extend the COP which in turn results in higher 2P’s. That is part of the strategy.
Do your own research and all in my opinion only
The problem with SQZ has always been that they are not proficient financial engineers and could never in a million years pull off a deal like AA did at KIST. As an aside, there is some great analysis of the KIST transaction by Javier Accion on Twitter which is well worth a read.
As mentioned before SQZ management are great operationally but appear not to be great financial market operators. The company’s balance sheet is hugely inefficient (what’s the point of all the cash and no debt if you don’t do a deal??) I had hoped this would change with the addition of Kiosk Kate but she has had her feet under the desk for a good while now and has nothing to show for it. To me this looks like a company that is probably best taken private where they can continue to make incremental operational improvements and not need to focus on landing another transformative deal that the public markets expect and that is also needed for the company’s continued survival as an independent.
Really hoping that we are able to pull a rabbit out of the hat with Shearwater/Andrew. We should hear about this shortly I imagine.
What would really be interesting, and I think this has been already mentioned by others on this board, would be a takeover/merger with KIST with AA taking over. That would certainly wake up this slightly sleepy company.
Happy weekend all. All in my opinion only and do your own research.
Recently I have come around to this view as well. Going forward hydrocarbon businesses with have a discount applied them similar to tobacco companies. Huge headwinds for the industry
100% agree on sharePs.
Legache - pls share where Gary mentioned this. I've checked his recent Tweets and can't find anything but may have missed it.
Legache,
Really not cool mate. Just a matter of days after exiting your position. If you have actual evidence please share it with all otherwise pls refrain from fear mongering.
Totally agree. Presumably the 125K figure (1.5 mln p.a.) is largely salaries.
According to today’s results they hold 7 mln cash (700k receivable) and they burn 1.5 mln p.a. or 20% per year of their total balance of cash and receivables. How can they pay themselves at that level when they’ve done nothing but look at a few deals?
Directors also have very little skin in the game - they collectively own just over 6% so the success of LBE is not vital to their livelihood especially since most if not all of the Directors earn more in compensation from LBE p.a. than the value of their respective equity positions in the company. For whose benefit is the company being run for?
All in my opinion only and do your own research
I agree NewKOTB that on the surface Shearwater does not appear to be a perfect fit however it is strategic vis-a-vis Columbus (Columbus production is processed on the Shearwater platform) and it is relatively close to Erskine. Perhaps, as you mention, Shell could be convinced to part with their stake.
Do your own research and all in my opinion
Chatter on Twitter that BP is “accepting final offers for North Sea energy assets”. Presumably this is with reference to Andrew/Shearwater.
Also that “Ithaca Energy in late stage talks for the Andrew asset”
Am very interested to see what level a deal gets done at. Can’t see the recently suggested USD 80 mln is accurate given the current market environment.
In my opinion only. Do your own research
Agreed NewKOTB but regardless it’s not a good look and there must have been a point during his tenure as COO and later CEO where he could have.
It’s concerning that many posters on here have much more of their own wealth tied up in SQZ than the CEO. I find it strange because usually most incoming CEOs who join a company with great prospects the first thing they want is an opportunity to get equity.
All in my opinion and due your own research
Precisely. This has always been a concern of mine that the only shares that MF owns are those he has received via SQZ’s long-term incentive program and none by spending his own cash.
MF - If you believe SQZ’s prospects are as good as you continually remind us/the market they are then why do you only hold 184,445 shares (as per 2019 annual report)? ACW has at least reached into his pocket at various points and bought shares and has serious skin in the game.
Agreed on IOG, OilMan1984. AA had his eye on them at RRE and tried to buy them on the cheap. I thought IOG would be first on the list for KIST.
Absolutely. Change will come ... it’s just a question of whether they will be its agents or whether they will be on the receiving end.
Also was seriously impressed that AA put together a deal of this size with only 30odd mln of cash in the bank. I was thinking the first one would be well under 100 mln
Exactly and this is exactly my concern about our management team - they are operationally excellent but not astute navigators of capital markets like AA.
I’m (sadly) not convinced we will even be competitive for Andrew/Shearwater ...
Well spotted NewKOTB.
Very interesting. BlackRock has also recently acquired a 5% stake in Gulf Keystone (see their TR-1 dated 11 Feb). Gulf Keystone is another takeover target.
All in my opinion only and do your own research
“ ... whilst our BoD put their slippers on and cover their knees with a nice fluffy, warming blanket and settle down in front of the fire for another year“
Lol Brilliant.
Couple of observations on the proposed KIST transaction:
-Debt/equity split is unknown and probably contingent on the appetite for the former. I would speculate (based only on my reading of the RNS) that Pareto is advising and thus some of the big Scandi institutions have already been sounded out.
- Big unknown is the size and pricing of the equity placement so it’s tough to know the impact on existing shareholders. I’m waiting to see that and other details before forming a view. Nevertheless, kudos to AA.
I agree with other posters that our BoD seems to lack the deal making verve and while operationally very very solid, we’re in danger of being taken out. I hope I’m wrong and that they are closing in on Andrew/Shearwater.
Thank you
Dexter - Your post mentions the potential problem being with R2. Did you mean R3?
All in my opinion only
Totally agree. Something has to give if they want to make an acquisition in this environment.
My strong preference is that this company continues as an independent but I think this is becoming less and less likely.
Hopefully we get some good news on Columbus and R3 shortly.
Good luck to all LTHs. All in my opinion only
I think it will be much more challenging for SQZ to get a deal over the line than many expect. Their criteria (gas, operated) plus a very high hurdle in terms of profitability means very few deals will fit. Speaking as a shareholder I’d rather have them buy quality assets that are slightly expensive than continuing to sit on the sidelines.
For me, the Shearwater/Andrew assets are the litmus test as they appear to be a great fit for them. If they continue with this ‘only at bargain basement valuations’ mentality they are going to end up with nothing and there are better growth opportunities with companies whose management understand that you don’t have to wait until the ‘perfect’ deal comes to grow your company through acquisitions.
I don’t think they have ever closed a deal that was competitive ... they’ve always used their BP connections to get a look in at North Sea assets that were ‘off market’ (Erskine and BKR). In the nearly four years since BRK was announced the company has sat on their hands and the share price reflects, in part, a lack of faith in them getting a deal done. Contrasted to KIST which is a cash shell that trades at a premium of approx 100% to it’s cash value because the market believes AA will deliver value creating transactions. In four years AA built RRE and our management was unable to get anything done despite the historic fall in oil and gas prices last year. No wonder why Mitch hasn’t reached into his pocket to buy SQZ shares ... he’s probably bought KIST!!!
In my opinion only.
It will be interesting to see whether there is another TR-1 for GRG ...