The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Is now at 10.00am tomorrow. I’ll update here if anything of interest arises. Although as we all know, nothing material can or will be mentioned but i always think it’s good to keep the channel of comms open for a regular discussion and Q&A.
Just had tie to skim read the full note from this morning and the change in guidance in this RNS compacted to previous guidance makes very positive reading. Bullet pointed below:-
Royalty rate down 1%
Operating & transport cost down $0.5 per boe
Net operating income up $15m
EBITDA up $13m
CAPEX flat
Dividend flat
These are very positive metric change and with a strengthening POO and hopefully strengthening AECO pricing as we close out 2023, I thin we could see a nice little rise to the SP. We need to get the capital restructure put to bed now and have Q3 dividend signed off. Hopefully we have been working on a bit of M&A inorganic growth and maybe see an announcement in 2H and with POO strengthening, I hope we are working on quite an aggressive drilling program for 2024.
With our quality acreage and over 500 drill ready locations, I’d like to see us sell part of our assets or bring in a big partner for a free carry. If we go it alone, we are not making a dent in the opportunity we have if we only drill circa 20 gross wells per annum.
Very happy with my investment here and am holding tight to what I have.
MS has always said aquire when commodity prices low and drill when high. In todays RNS he said “ Price volatility has also resulted in potential opportunities for growth via M&A”. Is it possible that they are working on a M&A deal that hey started when WTI was sub $70 and agreed an economic interest date from that time. that’s how these kinds of things tend to work and hopefully we will see news on the M&A from ASAP. Am a bigger fan of M&A, so long as no dilution. Compared to buyback or increased dividends at this stage of the business development. I would still like to dump Serenity though and move HQ to Canada and significantly cut our G&A costs.
With our conservative reservoir managent approach i am hoping that well decline rates are not too onerous. As we bold on new wells at hopefully IPR’s of 300 to 500boepd, could anybody kindly let me know any ballpark figures that we should work on for current well decline rates?
I know it’s only crumbs but we could possibly see a tick up today. Interesting little battle between WA’s selling and PI’s buying.
Got enough dry powder for an additional 100k but when to push the button? Decisions decisions.
Zengas - as you know in my eyes you are the misted highly respected poster of all. But how would you feel about any possible deal completing in Gabon if we had signed an SPA a few days ago? With these very high value deals, and I call them ‘spray and prey deals’, surely we can only try so many times before we seriously need to review the strategy. What looks like a good deal today can turn in to a nightmare deal tomorrow in Africa.
Your posts are absolutely amazing but with your vast knowledge, I’d like to see a bit more on your views of risk in addition to the few caveats you always include. Absolutely, I will be ex tactic if SS concludes successfully but after Chad and now Niger, more and more pressure is building on closing this deal. Should it fail, what next? We could well find ourselves in another RTO situation and back to back suspension, leading to another 6 to 12 months on no dealing on the share. While there is so much unrest in the continent shareholders need to be able to buy or sell their shares for a decent window of time.
Agreed Accugas is the jewel in the crown but until we close something else, we are still really a 1 trick pony + a bit from Cotco. We can not keep spending $15-$20m on risky transactions if SS fails. AK is making a killing here with his huge salary, buying equity at 19.35p (when we were not allowed) and is it him who has the option of 100m shares at 23p.
As I’’ve said before and I know Rome was not built in a day, we floated 9 years ago at 56p and at the moment, we are sitting with a flaky suspended share price of 26p.
It’s great that AK wants to change the whole power model in Africa, improve GDP, increase life expectancy etc etc etc, but at some point he needs to realise that people and companies far far bigger than him have tried to do this for decades with minimal success.
Yes you and others can shoot me down but my spreadsheet shows me MASSIVE profits on some of the forecasted projections of SP but it also shows me a very bad number should tings not go in our favour.
Ready, steady go - take aim and fire at me guys, I have very broad shoulders!
Either Nigeria or begin diversifying from Africa. Yes it would be a huge strategic decision but there is no way all this unrest in Africa is going away anytime soon and will probably get a lot worse before it gets better. As we are (or at least seem to be) struggling to get Government approval in stable jurisdictions, I seriously think it might be time to be looking at assets in other continents.
The post below is from EagleHasLanded from over in the other place. I think it’s a half decent reply from Joe but some of the item lines he mentions may be small numbers in the overall scheme of things. I’d like to see the management and consultant bonuses broken down. IMVHO consultants charge very high fees already so I personally don’t think they should get bonuses, they should just get paid for what they do! Mates????????
These are all around Cameroon, hope one does not happen there or more importantly in Nigeria or South Sudan.
Gabon: Army officers say they are taking power https://www.bbc.co.uk/news/world-africa-66654965
Arrow Exploration Corp - oil and gas company with projects in Colombia and Canada - Swings to pretax income of USD2.1 million in the first half of 2023 from a loss of USD4.7 million the previous year as the company records significantly higher revenue in the period. Revenue more than doubles to USD17.3 million from USD8.4 million the year prior. Average corporate production in the half more than doubled to 2,169 barrel of oil equivalent per day from 980 boed the year prior. Realized corporate oil operating netbacks rose to USD44.21 per barrel thanks to increased production allowing operating cost to be spread over more barrels.
More on Arrow tomorrow but this is a very sound set of figures that reinforce my optimism about their current drilling programme and the build up of production as promised at the time of arrival into the London market. My Target Price remains at 50p and I’m looking forward to interviewing Marshall Abbott when he comes to London shortly.
Oh and PS from me - PANR up 25% on a decent reserves report today. I think that the market will not be able to ignore a strong reserves report from Arrow in the same way that they ignore positive drilling news.
Time will tell - we will see soon enough.
1 No “PLEASED to announce” always means a poor or average RNS coming. On this occasion it was average and as expected.
2 Thought MA would have been a bit more upbeat with his comments with doubling revenue, production and moving from negative (-$.01m) operating cashflow to positive ($4.9m) cashflow. Hopefully MA saving himself for media interviews post CN3 results next week and Proactive presentation on 7/9/23.
3 Big take away for me is consistent 100 feet thick Ubaque, especially as CN2 drilled south of CN1 and CN3 drilled north of CN1. Reserves report will be material to AXL and quite possibly transformational.
Not surprised or concerned with SP reaction today, it just gives a good price to buy in but it could quite possibly go lower this week before big news flow next week. Am watching closely for buys coming in especially in Canada although their volumes very low. We need to do something about that.
To come
CN3 results
Media interviews and pre station in London nest week
Reserves report update September
2nd rig bought in soon
More wells before Christmas
Warrants out of the way within 2 months with hopefully good news on how they are exercised
Hopefully 4kboepd by end of year
Q3 and Q4 will be far bet as we can expect netback way higher than $44 with rising POO
3 bagger within 12 months for me.
Were CN1 & 2 reported to us within 6 weeks of spud? I think they may have been and if so we could get CN3 RNS anytime now as 6 weeks from spud is this coming Thursday.
Other news within the next few weeks, hopefully reserves update in September and some good news on the 60m or so outstanding warrants. Oh and a 2nd rig to be brought in during Q4. So All in all, quite a lot to look forward to before Santa comes.
With POO hovering around $80, some $8 higher that the latest figure published by the company and gas up over 4% today, hopefully we will be in a good position for the dividend checks to pass allowing the 1st quarterly payment to be made in October. I really do think the hat we’re at the bottom for the SP and dividend payments and am hoping to see strong increases on both over the next 12 months or so.
As at some point we may be acquiring or being acquired, I thought it worth putting this quick post together with regards recent purchase prices of per 2P and per flowing barrel. Zengas is an absolutely fantastic poster on the SAVE board and put 2 really good posts together on 26th August. Well worth a read for background info and this will give us some sort of a benchmark as and when and if we end up buying or being bought.
Without wanting to sound negative (as I clearly want SS to complete and after all this time, I think it will) but if it does not, I hope AK has another deal, oven ready that does not constitute and mandate us going into another back to back RTO.
Naively I’ve always though that RTO’s were determined on market cap alone but having gone through this one and read a lot of stuff, it seems that the rules that determine an RTO are numerous and complex. If it were market cap alone, we’re currently sitting at around £350m ($440m), so on my old measure any acquisition less than that that would be fine. In theory that would allow a decent bit of business to be bought. But to be honest, if we don’t complete on SS, I have no idea how any subsequent purchase would be measured for RTO calculation. I do think that AK will have done a VAST amount of work on at least one more deal.
Finally I know he says that a small deal comes with as much hassle as a if deal so we only do big deals. Is SS does not complete, his stance does not wash with me and I think we should bolt on a few smaller acquisitions without more suspensions. I’m tired of being suspended and in my opinion we should not go in anymore very longwinded, uncertain and expensive RTO’s.
We floated in 2014 at 56p and we deserve see some progress to get us over that price and off to the races soon.
$730m seems cheap for 45kboepd to me, especially compared to our $1.25bn for 50k-60kboepd from Petronas. Is this because they only have between 82mboe and 131mboe of reserves at current production rates? Maybe somebody else with more knowledge than me could give their views / comparisons to the deal we are trying to secure in South Sudan.