Adrian Hargrave, CEO of SEEEN, explains how the new funds will accelerate customer growth Watch the video here.
Rags - you are missing one very important attribute that cne has - sizable optionality. It is something almost all E&Ps can only dream of whether it's hbr Tlw genl or any other E&P.
Cne got EGY asset acquisition for $100 mn cash and c.$200mn debt. That's called leveraging a strong balance sheet unlike what you see at Tlw enq or even hbr. Cne can do 1:3 ratio for its cash to get producing and exploration assets via leveraging debt. If $100mn cash can get $350mn asset, could $300mn cash (from Kraken catcher sale) get an asset worth $900mn( $300mn k+c cash + $600 mn acquisition rbl /debt as done in EGY deal)? How would you price cne with $800mn debt ($200mn EGY acq debt +$600mn new acq debt) and massive producing assets alongside EGY?
£2bn market cap or £4 at the least? Of course cne needs to pull the big deal off in a good jurisdiction but that's an upside case not factored in - CNE have already said they are on a hunt for new deals after the EGY acquisition and k+c disposal. Cne was also recently in news for possibly bidding for Tamar field for $1bn. So possibly that's the size of next deal that cne is going after? So a realistic upside possibility?
If you say £1.2 bn cash value for cne - how much would you price in the below for in cne sp, ignoring possibility of other potential acquisitions?
1) Catcher and Kraken uncapped income?
2) Senegal 2023 first oil $100mn cash payment net to CNE?
3) Mexico oil discoveries and further exploration?
4) EGY exploration?
5) the big exploration plays - Suriname and Mauritania and possibly Ivory coast (Eni discovered a giant oilfield today)? Of course north sea as well?
£2bn valuation equivalent would be the least, if cne had been listed in the US market imo.
All IMO dyor
That breach is to be settled under the Indian laws. Cne is not going to go round again running after local legal cases. The trust factor with the gov is very low for cne given their past behavior. So best to not withdraw any enforcement actions until refund received? I think that is to be the case given that they are asking for an "Undertaking " and not explicitly withdrawal Which cne would not allow anyway.
The award is still there to be pursued even if CNE accepts the settlement and withdraws enforcement actions. I suppose if gov breaches contract and doesn't pay on time in full, cne could possibly resume the enforcement as the award itself is not being asked to be dissolved under this settlement? Even after the settlement it looks like cne would still have the award in its favor, what the gov is asking for is undertaking from cne to not enforce the award as part of the settlement? Lot of legal angles it seems?
Good to see the settlement can happen within weeks if cne agrees to the terms and refund received fast at once within the 30 day period. Next week's half year results call will shed more light on all this, hopefully coming to a close and cne receiving the full refund back to its parent uk company shortly thereafter.
All IMO dyor
Are normal procedural rules this complicated in most developing jurisdictions?
Hard to understand these rules... Whether they will be refunding in 30 days after submission of undertaking and then all case withdrawal can happen from cne side, or do cne needs to withdraw first all cases then a refund can happen or simultaneously? Very tricky to understand...
https://incometaxindia.gov.in/news/inviting-comments-on-the-draft-notification-dated28-08-2021.pdf
Delt has no cash to fund it's own share of the cne drills and in this week's interview their CEO said new funding would be required for any further drills.
Anyways CNEs drill with them will be in 2024 which is long way off and by then their cash would be gone and new equity might be raised possibly next year. Hence for them the market wasn't impressed much with the farm out . CNEs definitely got a good deal for the farm out.
All IMO dyor
Cne seems to have massive tax losses which might be able to shield almost all of the expected refund from the gov? Anyone can confirm from the below 2020 FY results excerpt ?
"During the year, Cairn made a UK ring fence profit which was fully offset by brought forward losses. At 31 December 2020, Cairn had total UK ring fence losses of US$486.3m and supplementary charge losses of US$409.8m. All of the UK ring fence losses (at the applicable tax rate of 30%) and the supplementary charge tax losses (at the applicable tax rate of 10%), and activated UK investment allowance and decommissioning liabilities of US$579.2m and US$2.3m respectively, are recognised as deferred tax assets only to the extent they fully offset the deferred tax liabilities of US$245.7m. The remainder of the decommissioning liability represents an unrecognised deferred tax asset of US$148.7m at 31 December 2020."
All IMO dyor
Very interesting precedent. Does this mean that if CNEs board settles for any given amount, the remaining balance of the award amount can be went after by any of the unsatisfied cne shareholders? Would the settlement need to be put to shareholders vote for it to be binding? If 10% of the shareholders vote no to the lower settlement amount, can they go after the 10% of the outstanding balance between what the gov might pay and what the arbitration award entitles? Devas shareholders seem to be going after lost profits with their $1bn + arbitration award while cne is just trying to recover what was confiscated?
Whitehat - you are missing a lot of important aspects. That interview is aimed at the domestic audience who cares about impact of a new legislation on their economy and fdi. Remember that cne had gotten caught up in a net that the gov had laid for Vodafone with the 2012 amendment. If you think about it gov change in amendment was the only way to fix all 17 legal issues in one swoop. Cne getting a special settlement would have meant all 17 asking for a tailored settlement to withdraw all cases.
And there is no connection between other 16 companies and cne. The gov will be aiming to settle all of them together under one template /format doesn't mean the cne settlement timeline is dependent on other companies. Remember - other 16 companies don't have any asset seizing cases ongoing, it's just cne. Cne has the leverage so with every passing day there is a chance of another news dropping which is similar to Paris asset seizing and hence why the rush by the gov. Never in recent memory, anyone has seen a legislation pass this fast I.e. within a week in India and become law with the president signing off. The last 2012 amendment after it was passed the president took 3 months to sign it off. This time it was a matter of days.
So I guess gov wants to do it fast, it all depends on if CNEs lawyers are all happy regarding the details of the settlement and timeline. All 16 will accept the deal because their main aim for litigation was to do with withdrawal of the tax demand which the gov has dropped now. These experts on the telly are the ones who all have been saying from the start that the 2012 demand was unfair and wrong.
And the counsel lady I think is also on the board of directors of Vedanta and main counsel for Vodafone. Their entire reason to go to arbitration was to get the tax demand withdrawn which has been achieved by this new amendment.
All IMO dyor
The farm in is not material enough for cne in terms of costs involved. Work commitments and expenditures seem minimal compared to Mexico or Suriname. Also it's offshore gas so might be tie in type short cycle focused acreages. Cne didn't RNS Mauritania acreage award as well.
After Egypt entry news, market hated the idea of CNE entering a political mine field. So good to see some distraction away towards Mexico discovery and now north sea exploration acreage. Egypt, irrespective of the value it has, is unlike cne. It's a type of jurisdiction where Investors would prefer having presence in Senegal or Ghana type jurisdictions over it, any day imo. Shareholders fully supported it but the market didn't like it one bit. Let's see what the next acquisition target would be.
All IMO dyor
Someone on the other board noted the jump in sp yesterday at the opening? Wonder if it was due to the possibility of North Sea expansion via exploration? Egypt entry the sp was clobbered, maybe the news of North Sea presence excited the market after all waffanting a 10% jump at the open yesterday? Could cne buy into some other production assets in North Sea? Something to offset the negative effect of Egypt presence possibly?
They will be withdrawing as well. The counsel for Vodafone and Vedanta are the same and she has said that Vodafone will be withdrawing ;
In this video interview she says that : interesting interview
https://twitter.com/cnbctv18news/status/1423253417246412801?s=21
Payment is to happen at once as soon as both come to an agreement - latest news articles already say this . Cne is not going to withdraw cases until all the money is received and settlement is done in full, on different legal aspects. India has a lot to worry, as time passes by different seizing lawsuits by cne will mature, to come up with a decision on seizing as French courts did. Cne has all the leverage - can either choose to settle with the amount or go ahead seizing and recovering which might give more than $1bn via recovery but on a longer timeline.
The other better option for cne could be if some debt recovery entity can provide cne with more than $1bn offered by India if they see they can recover much bigger amount. India has a lot of assets abroad, it's just a matter of time needed to recover as legal costs of recovery can be added to the total outstanding amount. So it's just time value of the recovery money.
All IMO
Don't think there will be an update before the half year results next month. Unless of course cne and India reach a binding agreement on the amount, currency and time line for the closure of the issue - which would take few weeks to say the least. Meanwhile we could hear from other cases that are being matured for seizing confirmation on other assets in different jurisdictions. All IMO
Thunder - this broker note will help you value, and some posts on the other board where some valuations have been shared by some posters just now.
The below link is from June by berenberg which now has been updated with price target of 235p.
https://www.lse.co.uk/news/CNE/berenberg-downgrades-cairn-energy-to-hold-cites-continued-uncertainty-around-award-payment-shsx1x6zcf6y69j.html
Ft article just out now ;
"The lower house of parliament on Friday approved a draft law introduced the previous day, cancelling a 2012 policy that enabled New Delhi to tax some foreign investments retrospectively. The upper house is expected to approve the law as early as next week."
https://amp.ft.com/content/0f73fe20-1925-488e-bb2f-e56dd08f1653?__twitter_impression=true
Flun - the law has already been passed today. What matters is government has agreed to pay at least $1bn to CNE. Before this news yesterday, market was pricing CNE on the basis that recovery of the $1.2bn + amount needs to be done via asset seizing and selling which would have taken some time. But with this law, it's confirmed that CNE will get at least $1bn from the government only by promising via an undertaking that CNE will withdraw all cases. CNE doesn't even need to withdraw the cases until they receive the money imo. The award and cases are leverage that CNE has against the government.
Market will build up in anticipation of the half year results in few weeks time when the details might be spilled out?
IMO dyor
Berenberg upgrades Cairn Energy from Hold to Buy and increases target price from GBp170 to GBp235.
https://www.godmode-trader.de/artikel/berenberg-stuft-cairn-energy-hoch,9652976