Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
It doesn't make sense because the investment is just another of many investments, but it is a surprise that a 250 company is not putting out an RNS when its sp drops 20%
its frustrating that these 'judges' will no doubt need all the time available, when surely after several years they know what their decision is. I have not a shadow of doubt that they will need the extension to October whilst they swim in the med over the summer. You would have thought they would have moved on from Uni days of submitting the essay 10 mins before the deadline..... but I'm forgetting that the longer they go on the more they get paid, so yes they will agonise and prevaricate all summer!!
When DEC had their issue with methane leaks the shares tanked and a week later were back close to level before the report, so looks a pretty minor issue, well dealt with. Meantime the cash is rolling in, what a great time to be unhedged. Unfortunate incident but a great buying opportunity.
Its hard to know if its a good deal but Capricorn/Cairn are a bit of a frontier player, and I think this is all about Kenya, and increasing the Ghana production rate. At high oil prices CNE would have to pay premiums to buy into good opportunities i.e the India money came at a bad time. TLW can't secure a Kenya farm in because no one likes the state of the awful balance sheet. So the deal gets Cairn shareholders into Kenya at a good price plus the other opportunities in Mauritania,Guyana etc, and for TLW it removes the financial straightjacket/balance sheet fix they are in, allowing Kenya to happen (probably still with a farm in partner) and Ghana to happen faster.
For CNE shareholders its frustrating having been stiffed on the tender offer (manipulated entirely by the professionals). Well done those who got the 230p, but at least the wasteful buyback is now suspended and the cash will be heading towards potentially producing assets. It would be nice to know a bit more on the Kenya arrangement with the authorities there, tax regime, profitability of production there.
https://www.nasdaq.com/articles/bp-seeks-potential-buyer-for-foinaven-oilfield-in-north-sea
Reason for shutdown was age of FPSO. Field still has 200 m barrels of oil, and AA's team at RockRose originally bought into the field. Viaro/RockRose sold it because BP as operator decided to shutdown in low $ oil environment. It did produce a bit of gas , but yes mainly oil, but its a new world now.
Perhaps Kistos will be interested to pick this up off BP. Used to be part owned by RockRose, who sold their share back to BP after production was suspended due to ageing FPSO. Did produce at 12k bpd so perfect size, though mostly oil I think so might not fit with low carbon badge.
HBR SP would be higher If they hadn't had so many operational issues, lower than expected production, Tolmount delay, Dunottar result, Kirk departure and of course poorly handled capital markets day and Divi announcement.
In the background they have probably made the right calls because they have made clear by exiting Sea Lion that there aren't going to be speculative projects but rather ruthless focus on return on capital invested, near field. If you are hoping to be valued like an AkerBP/ Lundin then you need to have the discipline and behaviour of one.... which is a move on from the PMO days... and takes time to change sentiment, just as its taken time for sentiment on the super majors to change. The journey to a Barclays type valuation will happen but its just going to take time, rigour and discipline and proving to the market again and again that you are really good at making money, driving down debt and good investment decisions to maintain production.
Could be a bumpy few weeks for the shares... as well highlighted by Surfit that production is running below expectation, and Q11-B looks flaky. The other odd thing is forecast production post acquisition - quoting 13.8k boe/d at 31 Dec pro forma. Would have been helpful to have had a 2022 forecast.
Long term still looks pretty good.
Does anyone understand the Egypt revenues?
Release states:
"Oil and gas revenue in Egypt from acquisition completion on 23 September to 31 December was US$56m, from net entitlement production of 1.5 mmboe of which ~38% was liquids. Oil sales averaged US$77.5/boe and gas sales averaged US$2.9/mcf. "
Assuming production is approx 35,000 boe per day (low end), then in 100 days between two above dates entitlement production should be approx 3.5 mmboe, or was the deal structured so they would not see all the revenue in 2021?
It would have been nice to see a revenue forecast for 2022 or at least a free cash forecast at an assumed oil price.
Does anyone understand these Egypt figures better please.
They seem to have accelerated the pace of the buyback. Latest yesterday 180,000 odd shares. 2 or 3 times as many as earlier in the month. Maybe that indicates that the Indian Gov money is coming soon.
The problem today is that many thought they might be debt free by 2024 and if they had got Tolmount under way in Q4 2021 that might have been the case. Too many things have just shifted a little to the right including having to rely on Tolmount to make 2022 production when its still not live (the reserves adjustment is a little painful too). All weigh on the overall good news that they are making a lot of money, will pay a dividend, and have a clear strategy around near field development and becoming big in another area --- S East Asia for sure--
The SP will continue to do better as they become more investable for institutional cash. The exit from Sea Lion is part of that plan.
Tolmount and Buzzard great as short term catalysts. It will be interesting to see what they say about the strategy at capital markets day. Previously they had said they want to be a scale player in 2 regions i.e. one other than North Sea. My guess is they favour the Far East and growth markets that want the product. Think they will sell Zama and exit Mexico post FID (they have already existed licences at Burgos), and you will see further investment and acquisitions only in N Sea and Far East around Vietnam, Malaysia, Indonesia and Andamans. No idea who they could buy out there to get some more scale.
Great post. DEC is exceeding its obligations and has long term agreements on retirement and plugging of wells, and are getting more efficient at it.
Bloomberg would be best to head to Iraq or other parts of the Middle East and focus on gas flaring if they want to help save the planet.
I know its easy to say so but you shouldn't be investing if you don't know what a company is doing, and I am talking about institutional and other investors. The DEC model has always been clear that they take wells that inefficient players no longer want and extract more from them than others would have done. They are doing mankind a service and rewarding shareholders in running these wells for longer than others would have done. The report seems to focus unfairly on wells that they purchased more recently and of course its damaging to the share price but the sell off today is massively overdone. This business has a good model and knows how to make money, you won't get a better opportunity to safely make a dime than buying at this level with a 11% dividend and a growing business.
This FT post is really interesting, particularly for those invested in Jadestone as an LTH. I hold these so confess an interest but do recommend LT investors take a look at Jadestone if looking for a growth story exposed to better oil prices and strong markets with good management.
This rise still seems like something is happening behind the scenes perhaps on the drilling front or discussions with KRG that someone knows something about, though you could easily explain it as a delayed partial catch up with OP events.
Bet you wish you hadn't sold out! Mind you they will probably release a bad RNS and you'll be laughing.