The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
FYI - LSE Share Trades tab currently and erroneously showing trades as if value of 87e shares is circa £1 rather than circa 1p.
If only...
GLA
SA
From the Q&A lastJuly:
Q There has been recent talk on the message boards regarding possible consolidation. Can you advise if this is something you may consider in the near future or if your thoughts on this remain unchanged (ie. That it would do more harm than good and there for isn't something you'd consider at this stage).
A We have made our position on this VERY clear. We will not consolidate unless forced to or there is a clear value point on which to do it (which usually means reserves and production).
I was expecting to see a reference to a 15% “haircut” (reduction in Mcap) but I suspect I’d need to trawl a couple of video presentations to find it. Maybe someone else has a better memory than me as to when DW said it (potentially more than once).
GLA
SA
Couldn’t agree more moneyhawk. I’m sure (more) Institutional investors will come on board when our market cap is more substantial. A consolidation won’t change that overnight, and would cost us a circa 15% “haircut”, in Dave’s view.
GLA
SA
Very pleased with the RNS confirming that the deal is a few documents away from completion. It feels like our horse is now five lengths clear at the furlong pole and, although I’ll partake in a small celebration tonight, I’ll leave a nice bottle in reserve for when we cross the winning line. I guess one benefit of turning one piece of good news into two (or more) RNSs, whether by accident or design, is that it gives new and retuning PIs a chance to get back onboard and avoids a spike. I like the way they got the phrase “ramping up” into the RNS too ;)
After a necessary and lengthy spell of silence, we could now be in a period of steady news flow; hopefully all good.
GLA
SA
PS I’m not going to speculate how long this final furlong will take...
A good article, Brom, thanks as ever for posting the link. The following passage caught my eye “an attractive addition to our expanding North Slope position”. No suggestion that it’s the final piece in their jigsaw, so there’s scope for us to be the next announcement (on Thursday), although the chances of our FO partner being CP (my hunch) must now have receded as, surely, our deal would have been tabled at the same CP approvals meeting as the Caelus deal?
GLA
SA
It might be time for tin hats on this BB if we see twelve dry holes, Brom. But it does prove the need for patience in oil exploration.
Phrontist 16:55
The pedant in me cant resist reiterating “the FOURTH Thursday” as, last month, there were five Thursdays and the RNS came on the 23rd, not the 30th. Academic (like a lot of pedantic points) as, this month there are only four Thursdays. In short, yes 27th is my stab at predicting D-Day! By my reckoning, I’ve got a 6/1 chance of claiming the bragging rights :)
My hunch is that a consortium would have taken even longer to pull a joint bid together but, if they’re familiar partners (as you suggest) it would keep delays to a minimum.
On balance, I’ll stick with a win double on CP announcing on the 27th.
It’s good to dream...
SA
For what it’s worth, I’m also in the CP camp. Furthermore, I’ll have a stab at the timing of the RNS! I’d speculatively go for next Thursday (27th) on no other basis than it’s the fourth Thursday of the month and that’s when last month’s RNS came. Could it be that the relevant final approval board recurs on the same pattern each month?
All speculation of course but I for one am remaining patient right to the end of the month for an announcement.
GLA
SA
Thanks for your comments Brom/C99, On balance, I think I'll stick with letting HL manage things in future. It provides me with the one-stop-shop approach for the part of my portfolio that I manage myself. The DIY approach sounds potentially better if I timed the market well but, conversely, could magnify the risk if the SP moved the other way (we live in hope).
Thanks again,
SA
I also have no great issues with HL. In this instance, what they did was in accordance with my instructions (albeit over a few days, straddling Easter, rather than hours) and at a minimal impact to my holding. The issue I raised was that their original (verbal) advice was that a B&I transaction would be sold at the Bid (0.75p using todays spread) and bought back at the Offer (0.85p) and I clearly didn't want to suffer such an impact. As I'd suspected, that advice was wrong but, as Brom says (and I worked 42 years in a large Corporate), you will get some variability in verbal advice in such large scale operations.
BTW, if I were to conduct DIY B&Is in the future, how do I avoid selling at the prevailing Bid and buying back at the prevailing Offer prices (and suffering a circa 13% haircut, using today's spread as an example)?
Many thanks,
SA
LeMajor 16:56,
Yes, they always seem to show as a pair of sells. I presume, in the nature of a B&I, they have to be sold before they are repurchased, so that probably pegs the pair of transactions to the bid price. Would be interesting to see if there would be any tangible difference in the market if each B&I pair was reported as buys.
Brom 17:19,
Yes, well thanks and I hope you are too now, sorry to hear your recent news. Incidentally, the B&I was handled by HL, and their Customer Service team initially advised that the B&I would be bought and sold at the full bid/offer spread. Although I didn’t believe this, I took the precaution of B&I-ing a smaller holding by way of a test, hence 88e transfer not happening sooner. All’s well that ends well. I’ve shared my feedback with them today ;) first time I’ve had reason to doubt them.
GLA
SA
The two circa 1.3m transactions this afternoon is my Bed & ISA transfer. Both are showing as sells but, clearly, the second should be shown as a buy.
Now roll on some good news...
GLA
For what it's worth, I fancy PLEASANT COMPANY in the big un. It reminds me of this BB ... most of the time.
GLA
BB32/J111JAS,
I find myself agreeing with a lot of what you’ve both said. I can certainly sense the nervousness on the BB in recent days and I too am underwater and needing a slightly longer snorkel to breathe the oxygen up at the giddy heights of 1.3p (in my case) to break-even.
If we stick to the facts, DW’s last RNS/quote said “The progression of the farm-out process to the preferred bidder phase is encouraging but no deal is done until it is done. The team at 88 Energy continues to advance the status of all our Alaskan projects resulting in substantial value add activity throughout 2019.” Rightly or wrongly, I interpret this as typical DW caution in saying as much as he is allowed to say, whilst signalling the residual risk in closing the deal. We are asset rich and cash poor, but if push comes to shove the Farm Out option is good for us and the full take over (necessarily complicated with the Burgundy involvement) is not the worst thing that could happen. The former put us on a creamy curve trajectory and the latter would unlock (lower) value, but quicker. BB32 is right IMO to reference PB’s passing as I feel sure that we’d all have drawn confidence from some of his wise words in the past year had he survived to continue his contribution.
In summary, I speculate that the preferred bidder is putting the deal through the final stages of their internal governance, probably to a board that holds monthly meetings. I hope that meeting is before our AGM.
GLA
I think he has a qwerky teyboard ??
GLA
Do they observe April Fools Day in Australia? If so, would we really want an ANN/RNS on Monday ;-)
GLA
I agree Picardy. Furthermore, if there was any risk to the "logistical timeline to enable drilling of multiple wells in the 2020 operating season" (wording extracted from previous RNS), I think DW would be duty bound to declare it.
Progress but we're not there yet, I read it as DW caution ... rather than DW cautious optimism!
GLA
The last RNS from 88e on this subject was entitled "Final Report" and concluded with the line "Winx-1 will now be plugged and abandoned." That sounds fairly definitive to me.
But DYOR.
I think I’d now conclude that the FO isn’t close to final agreement/announcement otherwise it would surely have been announced in conjunction with the Winx news to stabilise the SP and mitigate the ensuing volatility.
Three other irons in the fire ...
This is a good discussion topic. The prospect of Winx has been known about for months, so it's not new news to the Farm Out negotiations at this stage. What is becoming known now is the scope and scale of that potential. An outline FO deal, with or without some agreed proportion of Winx could have been drafted (long) before Winx spud. So personally, I don't buy the notion what Winx has delayed the FO ... unless, of course, the scale of Winx is greater than anyone dared to draft ...
GLA