Petro Matad funded for its drilling programme which should see production start next year. Watch the full video here.
LP appears driven to build up an attractive portfolio of assets with high IRR/ short payback periods & strong positive cashflow.
Liked the conviction in his statement that "this will be an oil field development"
Good confident interview.
LP has previously discussed and again today briefly touched upon the corporate business plan and model that they are working too for any proposed aquisitions.
>They must be either existing operations, previous operations or near production categorisation. (I.e no widcat exploration here.)
>They must be non operated assets, I.e ADV with look for a JV on a 50/50 basis with an existing operator.
>There must exist an opportunity to return value to shareholders from a short payback period and high IRR.
LP has discussed realising net 20,000bopd production and Based on a flat oil price assumption of US$60/bbl, during the first full year which would generate a gross annual cash flow of c.US$375m net to the JV (US$187m net to ADV.
The next two aquisitions planned LP has previously described a 'Buffalo style' in their nature.
So if over the next few months we end up with 2 or possibly 3 live projects all with Net NPV of circa 200m
We could result in a total NPV of circa £600m
That mid tier company territory whichever way you look at it.
Advance Energy CEO discusses his life and career and the exciting opportunities he sees at #ADV
Welcome onboard BP.
Another He1 holder getting in early here I see.
The Calibre and track record of the management team assembled here at ADV is simply outstanding for a junior operator and it really does set them apart from their peers.
Buffalo-10 is merely the first of further planned aquisitions off the runway.
By the time the other aquisitions are concluded later this year providing further valuation enhancements, i suspect this SP will already be multiples.
This is why many on here view ADV as a Mid tier Operator in the making for (presently) Junior explorer money.
Good to see you on here.
Check out the sensitivity analysis from the research note on fhe company website.
It states the breakeven at $18
Naturally, with the early year cash flow and project IRRs so high, two key variables in our
model to which Buffalo is most sensitive include peak production and oil price."
"Our model shows Buffalo remaining robust at very low oil prices, with a project breakeven
price of US$18/bbl."
The $30/bbl I belive KS is referring to is what LP discussed in one of his interviews when asked about what price of oil would be to enable the FID (final investment decision) to proceed with the bank finance and he said something along the lines that even at $30/bbl they would still be able to proceed with the development finance so strong are the project economics.
The development plan envisages a simple three well tie back to a floating storage vessel via a
wellhead platform or mobile production unit (MOPU).
Importantly, the facilities are being
designed to handle far higher fluid flow rates than the original BHP development, with its
nameplate capacity of 75,000 bbls/d, or more, including at least 40,000 bopd oil capacity,
allowing production to continue at commercial rates later in the field’s life.
The facilities will likely be leased, which has a number of advantages.
Firstly, it reduces the upfront capex
required to reach first oil, and secondly, under the terms of the PSC operating costs can be
recovered in the year incurred, which improves the returns
ADV longer term prospects far exceed anything else mentioned on here, JV in place already on their first high quality project in a non-speculative known oil field with a development finance offer already in place.
With the other aquisitions coming on stream before the year end we are definitely looking at a multi-bagger from the present entry.
Present market cap is little over the cost of B-10 + Cash.
> Large proven resource base:
For a brownfield development Buffalo has substantial remaining potential. To date the field has recovered under 20% of the estimated 106 mmbbls oil initially in place, in sharp contrast to local analogues which have produced in excess of 60%. In its mid-case, independent auditor RISC estimates ultimate total recovery at 52%, meaning gross remaining potential of 34.3 mmbbls (2C).
> Audited probability of appraisal well success 95%: Advance plans to reinitiate production
from Buffalo, the first step being the drilling a new appraisal well, Buffalo-10. Given that this
new well will be drilled into a known highly productive reservoir, RISC has estimated a 95%
chance of success on the well.
> Attractive valuation:
Based on Carnarvon’s preliminary field development plan, Advance’s 50% stake will yield peak net production of c.19,000 bopd, with annual net cash flow of c.US$187m at US$60/bbl Brent, and over US$200m at US$65/bbl.
This leads to impressive project IRRs of 106% at US$60/bbl oil. We value barrels in the ground at US$12.2/bbl, implying net unrisked value of US$209m (12.6p/shr).
> BoD with plenty of experience, (shell/BP etc) also have injected significant amounts of their own cash into the company so are aligned with shareholders.
As someone else mentioned. ADV are just at the start of becoming a mid tier company.
Initial broker target of 12.6p does not factor in the further potential aquisitions that have been discussed landing prior to the end of 2021.
The potential from the present entry is very significant.
Can be a dangerous game to ask questions like that with some emotive posters about.
ADV edges it for me as the more quality proposition both near term and longer term.
The ADV BoD all individually have an exemplary track record of success over numerous previous proven projects that have delivered impressive returns across a number of assets prior to effectively establishing a New Co at ADV last year and then succesfully raising both all the funds required for the B-10 well and additional cash for further aquisitions later this year. JV agteement in place and bank funding secured in principle for the field development on a successful drill. 95% C.o.S and it really doesn't get much better than that. The impressive 14,000+bopd and significant free cash flow on a discounted basis is also what help takes it for me.
No reason why CHAR shouldn't also go on a decent run as we have seen & the recent presentation sets out the business case and has clearly attracted some more interest.
Clearly fans of both on here.
Good post. Some realism at last.
So, if I'm flush with 100m to put into a company with a market cap of just over £100m, what discount (and it will have to be a hefty one) do you think I would want in return for my £100m in cash?
What percentage ownership will I demand in return for my injection of £100m capital into this business that is presently worth just over £100m and therefore what does that dillution look like for existing holders?
I'll be happy with an open offer to run in parallel to my capital injection so that existing PI's can also participate and get the benefit of the same discount negotiated.
So, what discount will the placing & open offer be at to incentivise the take up?
Only sensible answers please.
Solid Proof from the 'ramping crew' that a rights issue is incoming at a HEAVY discount
Just incase you don't know how a rights issue works (Which seems to be practically every desperate holder left holding the baby here)
"Rights are usually priced at a discount to the prevailing share price to encourage take up. The more money a company wants or needs to raise the ‘heavier’ the issue "
Enjoy the next 16 weeks of sleepless nights ahead of Dillution Day. (D DAY)
What a great Xmas present for all holders here.
No wonder the Canadians are dumping stock hard and fast.
Still scaling in here and really don't want this getting any exposure whatsover sub 4p+ as simillar to you I have some other positions which once matured I will be lumping in here.
Mid tier producer in the making
Don't forget LP mentioned that they are working on closing at least 1 if not 2 further 'Buffalo-10' style deals by Year End 2021.
Further Major catalysts due to drop in alongside the multiple pre drill updates and spud.
More upside available here at ADV imo, from both a lower entry, less risk and ownership of a v strong non speculative asset with more capable BoD with a demonstrable track record of success.
Add the further planned multiple aquisitions into the mix and its not difficult to see a updated broker note being released with a 20p target for ADV at some stage which wouldn't be a huge jump from the present unrisked 14.4p & 12.6p research notes already published based on $60 oil
10 x bagger prospect here just like ZPHR was this time last year.
Good to see a few of the early crew from both ZPHR and He1 in here already.
Clearly.know how to spot multibag opportunities.
The smart money moved on the day the company was found to have misled shareholders.
RNS from last Auguest stated:
"Closing of the Facility, targeted for end of the calendar year 2020, remains subject to completion of due diligence in form and substance satisfactory to the MLAs, final credit approvals and execution of definitive Facility documentation."
Once it became clear they had massively missed the deadline most with half a brain understand that these finance offers aren't open ended and perhaps the due diligence uncovered some much bigger issues.
Hence NO DEAL.
All previous offers made by the syndicated lenders don't stay on tbe table for ever and a day.
They are time bound and required the company to raise the necessary $141m by way of equity.
This HAS NOT happened.
Once the BoD threw that BS placing in earlier this year it proved the appetite in the market for a mass equity raise just wasn't there.
If they ever manage to get the full amount away it will inevitable be at a significant discount to the present SP.
But as each day passes its now looking more ikely they'll throw another BS placing in of say $25m and just kick the project into the long grass for another year or two.
I posted that if there was a limit it would have to be removed and surely an RNS on a vote on such actions will need to land prior to any such deal.
I also estimated that around a further 2 billion new shares will need to be issued if a deal is to be concluded in the present fiscal year.
But no RNS?
If they go about this in a half arsed manner and don't rise the $141m equity required as part of the terms of any term loan the SP here is going to tank.
Why is no one asking these questions?
It's just bizarre, but that's what happens in AIM Co's when the BoD is left to operate unchecked.
Questions should be asked.
No point waiting a further 12 months getting fobbed off.
Ask the damn question now!!!!!
Just demand some straight answers, even if the response isn't what you want to hear.
Something just isn't right here and if you think differently that is your call, but it doesn't take thus long to run a book building exercise.
It just doest.
The delays suggest something has gone badly badly wrong behind the scenes.
Common sense should tell you that.