We would love to hear your thoughts about our site and services, please take our survey here.
I'm not sure if this deal would involve significant dilution. The HBR is at around 5x MCAP hence the significant debt and equity engineering and dilution. Although this deal looks like a doubling or a little more than that of BOPD, I think it will be a lot easier for Jadestone to pay for. Firstly they will back date revenues from the completion date with these going to Woodside, and they will significantly expand the RBL. As Akatara is likely on stream by then cash gen will have improved and the RBL will also increase thanks to Akatara and CWLH barrels. They seem to be fairly late life barrels with production running to early 2030's, and there was comment elsewhere online that there had been a Woodside write down on the assets due to lower than expected returns on additional drilling. So maybe a less expensive purchase than suggested by headline barrels.
The point is Rookie that the price today is reflecting the risk of the transaction not happening at all/getting cancelled, which has to be a possibility and then we are back to the £2.20-2.40 range. As the deal firms up later in the year the price will move closer to £3.60 or could move to a small premium once FTSE 100 status is in sight
One reason for depressed share price may be that if you hold rkh in your ISA the warrants sit outside it so you have to buy the warrants then sell the shares, transfer the cash to your ISA, and then if you want rkh shares buy them from your ISA. Personally I just bought the warrants a few weeks back, sold the shares and took the profit and popped the cash back into my ISA as wasn't worth paying another round of dealing costs rebuying the shares. All ISA holders are faced with this, and at least I had the warm afterglow that I was helping fund the company, even if I was depressing the share price (temporarily)
I think the SP will recover in January once this is out of the way and folk can see that there is the potential for good news flow next year. Nice to see JOG get their deal over the line... fingers crossed for RKH in 24.
One key 2024 date is what happens with Shenandoah. Don't see Navitas committing to FID on Sea Lion until the oil and gas are flowing from Shenandoah and think first oil there is tabled as late 24 but that may be subject to the usual start ups delays
Agree this is a great buying opportunity. Haven't done the numbers but the RBL and cash raise plus Tyrus cash were designed to cover just such an issue as modelling the impact of a further production outage at Montara was I imagine a condition of the RBL. It's the uncertainty and appearance that management are not on top of things that has caused the loss in confidence. I hope the CEO stays, and when production hits 25-30k per day in late 24 this bump in the road will look pretty small. Good opportunity to make 5x as company could be worth $800-$1bn by 2025
Does anyone understand why Neptune has been sold for $4.9bn dollars, has $1.5bn net debt, production of 135000 per day (granted with a 75% gas to oil mix), and HBR has 200000 bpd, closing in on zero net debt and a current valuation of c $2.3bn. They do have 40% production in Norway but its not like the tax is less there than UK. Its hard to make sense of.
The 7th June presentation updates on Akatara and states it is on track for 2024 H1 first gas.
I'm now over the comms disaster and Board poor faith on being upfront to smaller shareholders. However they faced a possible existential cash crunch and the 20% or so dilution has been more than offset by the chance to buy a great company with growing production and a premium to Brent at almost half price. I've topped up here as only see share price recovery from here starting at the AGM. In some senses the whole debacle over Montara exposed risk shareholders were not aware of but then it happened to BP too. Going forwards risk is considerably diminished with RBL in place which more than covers the cash dip prior to Akatara coming on line and allows for delay on this project or further service loss at another field. Once the market sees that risk is dealt with then I am confident this will track much higher as Montara stabilises, new production comes on, and deals get done. I still think this will become a $1bn business by 2026 if oil prices are at a reasonable level at that time.
I think a number in posters are missing the point. JSE are building a business here, its not about short term shareholder returns. Last year they looked like they were awash with cash (until Montara struck) and they had earlier in the year decided to do a £20m buyback. I'd rather have seen them keep growing the business, and I hope they don't repeat it again unless there really is nothing to buy. A modest and growing dividend is fine. The modest amount of borrowing to ride through the lumpy Akatara gas Capex is just what you want to see them doing as the return on that investment is excellent & flows through in 24/25 by which time this is likely to be a 25-35k bopd business with good profitability and no debt. The shares are a steal for the lth's as the short termers run away.
Hunt is learning a basic economics lesson about making investment in a sector uneconomic. Whatever changes are announced this week will be a reflection of reality. Its very easy for Labour to criticise from the touchline and say they will go further or reverse changes, but if they get into power, they will find it hard to go further than Hunt has gone with EPL
One reason this has gone down, in addition to the sinking price of gas, is AA's statement on 18th Jan.
"While we continue to actively look for value accretive acquisitions in the North Sea and Europe, the asymmetry created by these tax regimes makes this challenging.
If we cannot identify worthwhile transactions to pursue, we will consider returning cash to shareholders during this year."
Most people back AA because he is a deal maker, and in this sense when he says there may not be any deals to be done, then its no surprise that the share price sinks as it then gets valued at the cash he potentially proposes to return, rather than having the deal making growth premium.
I think he'll give it til the Autumn to see if there is any easing of the tax regime but don't see the share price doing much over next 6 months.
To be fair I think the buybacks finished because the authorised programme completed but agree with all other points in your post, and this should have plenty of good news flow from here with plenty of cash generation for organic growth and acquisitions once Montara back on
I'm hanging on in here, was really surprised how comprehensive the vote was. Somebody must think there is more value here or maybe that the Israelis will tweak the deal if nothing else.
The alternative case is that if a CEO with 27 years experience in the business thought there was significantly more value he would have probably said so, unless he just can't wait to put his feet up! I'm surprised the share price isn't more volatile.
Don't understand why Malcy thought February anticipated re-start = another delay, maybe he didn't read the RNS properly. Story looks really strong from here, original 22 forecast with Montara was 15.5-18.5k boepd, so that should be baseline going forward but you can add in the Aussie BP assets at 2.5k and then Akatara comes on stream in 2024 at around 5k per day so this is well on the way to 25k production or more in 24, and very profitable production at that. Can see this doubling from recent lows.
Don't see a deal getting into the home straight until there is clarity on the Energy levy, which with no floor there isn't. I doubt anyone is going to invest or provide finance to this project without a floor on Hunt's levy.
HBR looks like one way ticket to 350 or worse until uncertainty on any further 'north sea' windfall tax measures is clarified on 31st October. After that and with trading statement coming soon after I'd expect a big bounce probably back to 450 or better
JSE will have a lot of explaining to do on 20th Sept. The disappointment is that they are missing out on maximising production when oil prices are high. But essentially when this is out of the way they are in great shape and heading well to production of 25k bpd in 2024 with current assists and assuming Maari goes ahead. This strikes me as a great buying opportunity and thank goodness they have diversity of production and will increase that diversity over net couple of years.