The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Comertoes, please can you explain how buys can be more (or less) than sells. Every sell has a buy on the other side and vice versa, is it not? meaning that the number has to be the same or am I missing something egregious?
Given that the share price is falling, we can safely assume that there have been more aggressive sellers than buyers today. But rest assured, the number of shares bought = number of shares sold
Much,
PMO acquiring RKH in an all-share deal is not going to be accepted by RKH shareholders. A large part of the shareholder base are in it for the eventual big rewards when the oil starts flowing and the rest of the Falklands acerage is explored and developed. We are not going to accept a pittance when phase I is sanctioned. I, for one, would like to see the oil flow from phase 1 before selling my RKH holdings. I have been in the stock a few years and very happy to wait for another 6-7 years.
And yes, any merger/acquisition will need shareholder approval!
GS,
The article says "That could partly fund the about $1.5 billion cost to develop the project and nudge Premier and Rockhopper toward a final investment decision." which I take to mean that the expectation is that the stake sell will help the move towards FID. So, stake sell and then FID rather than the other ways around which people here have mentioned. TD might or might not have spoken about it, but we all know how reliable his or SM's words are - weren't we supposed to have done FID by Feb this year??
The article was posted by Bloomberg, one of the most respected financial news outlets. They must have followed protocols and spoken to the people involved (again who didn't want to be named - so clearly insiders).
So, either the valuation of this property is much lower than the bulls on this board are hoping for or it is at par or lower than that suggested by the current share price of RKH.
Which one is more likely to be right?
Premier Oil Said to Put 30% Stake in Falkland Project for Sale
The stake could be worth more than $100 million, sources say
Premier, Rockhopper could use the money to fund the project
By Kelly Gilblom and Dinesh Nair
(Bloomberg) -- Premier Oil Plc and partner Rockhopper Exploration Plc are selling a stake in their Sea Lion project in the Falkland Island, which could provide the companies with the funds to start long-awaited drilling, according to people familiar with the matter.
The U.K. explorers are seeking to sell 30% of Sea Lion, which is likely to be valued at more than $100 million, the people said, asking not to be named because the matter is private. That could partly fund the about $1.5 billion cost to develop the project and nudge Premier and Rockhopper toward a final investment decision.
This is in Bloomberg professional - the first news item on PMO LN. I can't see any open source article to link to.
The article says that the UK explorers are seeking to sell 30% of Sea Lion which is likely to be valued at more than $100mn, people said asking not to be named. It also says that Premier has hired advisory firm Kirk Lovegrove and Co, set up in Nov 2018 by former Citigroup employees for the sale.
Anyone else who has a Bloomberg professional subscription can validate the above.
fecm, GS might be referring to the filing of the formal application to UKEF. The formal application is the first step to getting UKEF backing and then on to FID. Hopefully. But just the application doesn't do much, in my opinion. They might as well refuse.
GS, correct me if I am wrong.
Muchaboutmoney,
One question. What are you smoking?
PMO will get £500-700mn for its share in Zama?? C'mon you gotta be smoking something.
Why do you think they will sell? I reckon they will hold on to Zama. They want to be involved in Mexico and have another block close by, so an ownership stake in Zama adds value to them, much more than just the value of the field will suggest. And yes, it is nowhere close to £500mn.
Not picking up on anyone fecm - just cold, hard facts. sorry if it bothers you
And yes, please don't point to some report by sell-side brokers, especially edison who actually take money from the companies that they publish on. Why? because they don't have many brokerage clients and none who would pay them for their research. You can get a few numbers from their reports, but I won't invest my hard earned money on their say-so.
As to why I am comparing numbers that go 2 years back. Well, what does anyone else have? I am at least quoting from the company (and not some random lowly rated sell-side report). And pray, what has changed since 2017? The oil price is up a bit. PMO has a lot better b/s. RKH is in the same shthole. The project is still going to be project financed. And yes, capex cost estimates have gone up from $1.5bn to $1.6bn. What else has changed since then?
Nothing dramatic has changed since 2017, so a perfectly valid comparison methinks
If my memory serves me right, then in August 2017, when the Brent oil price was close to $55, PMO made a comment saying that at these prices SL is not doable. RKH dropped to an 18 handle following that comment.
So surfit, yes SL might be profitable at $50 even if barely, but given the terms of the agreement where PMO gives a capex carry to RKH, at $50 or even at $60, I think, SL won't go ahead. Unless the deal is sweetened heavily by very low interest rates courtesy the UKEF. my 2 cents.
The FEED started in 2014, right? Or was it a year earlier? They must have the record for the fastest completion of FEED on record. They are the Usain Bolt of FEED completers. Only 5-6years.
And Godders, don't forget what Mr. McManus said in the AGM - we didn't put the clause in which would have forced PMO to act by a certain date or relinquish their claims. They just didn't think that was necessary or just plain forgot. They could have required PMO to act by a certain date or relinquish their claim. But no, they just plain forgot or didn't know (can't believe that) or there was something else involved, which is being hidden from shareholders. How much money did the lawyers charge I wonder.
Will we have shareholder lawsuits against Moody and co (including the departed McManus)if this doesn't work? Not putting in this clause with Premier looks like pure and simple incompetence and/or fraud.
Corbyn is demanding an election. There is a chance it might happen. If it does, then he might come into power. If so, what are the chances of UKEF giving any funds to this venture? I also think the chances of the UK govt. even lending non-monetary support to this venture becomes remote. We might hear about the las malvinas from the future PM soon
and to top it off, we need to ink trade deals with all major nations. Won't the South American countries ask for their pound of flesh by asking us to withdraw from the Falklands?
Apologies fiinvestor. I was responding to Carrot's email.
Isn't it a fact however that most people in the RKH AGM were pensioners? I have nothing against age, it might actually be a positive for wisdom but does mean that the average holder has a very different time horizon for investment.
And that's the reason that a lot of people are so impatient. They can't wait. Tick tock tick tock. life ticking away. It is ticking away for everyone but for some they might not be there to enjoy the benefits, if any, of oil flowing Rockhopper's way from the Falklands.
Maybe also the reason the old geezer from the Falklands was so angry at TD at PMO's agm.
Time is precious
Fib, no matter what advice you get from solicitors and other experts in any field, arithmetic always wins. Every time. And arithmetic says that the breakeven for the funder is 30% or less probability of win. Now, you might want to build in fees, cost of risk and all that. But fact remains that the breakeven is closer to 25% probability of win - I am using real numbers quoted by Sam here. You can put more numbers in and finetune the breakeven probability of success. The only thing is, with higher payout, the breakeven chance of success goes down. That is, for a solicitor it makes sense to take a NWNF case on lower chance of payout.
You might disagree or believe that it is 60%, 95% whatever. There are no constraints to your belief. You can even believe the chance of success is 100%. But mathematics says it is much closer to 30%.
Redon, where do you get the 95% number from? Did you pluck it out of thin air because it sounds so big, oh so close to 100% but not there?? :-)
Think about it this way - Sam said that the external funder for the litigation will spend $8-10mn. He also said that if they win $50m, half will go to the funder and if they win $100, $35mn will go to the funder. So, for the external funder to take up this case on a no-win no-fee basis, the probability of a win * payout >= probability of loss * (amount put in).
say the award is $50m and half goes to the funder. x is the probability of win. costs = $10m
So, x*25 = (1-x)*10, x=35%
which is what Nigel has come out with. Let's say that if the award is more, then that's the profit. So the funder thinks that the probability of an award > 35%. That's what we should assume as the chances of this ICSID arbitration.