Post from other site;
"Brilliant news from a different news media source;Now it's a matter of interest and costs that CNE shouldnt let go ;
hTTps://www.cnbctv18.com/videos/legal/retro-tax-row-govt-considers-paying-back-rs-7600-crore-to-cairn-energy-assessing-implications-of-such-move-say-sources-9926911.htm/amp?__twitter_impression=true"Meanwhile, CNBC-TV18 has learnt from sources, who didn't wish to be identified, in the finance ministry that the government is considering to pay back Rs 7,600 crore and is also assessing the implications of such a move.As Cairn Energy approaches various international courts to attach Indian assets abroad, the finance ministry sources indicated that the government is considering an amicable solution to payback Rs 7,600 crore to Cairn Energy.According to the sources, any payment to the company will be without interest and penalty and currently, the government is discussing the matter with Cairn Energy. They said India is waiting to hear back from the company.
Re Egypt WD assets;
"Cashflow from Operations (CFFO) contribution: average CFFO[1] for previous three reported years (2017 - 2019) was ~US$140 million net to the interests being acquired by Cairn"
So net $140mn at 35-40 kboepd rates. This bumps up above $200mn net cash flow for 50-55 kboepd. The max net capex per year needed to get to 50kboepd and sustain that production is $100 mn for next two years. So simple calcs say you get c. $100 mn FCF on a sustainable long term basis, even at low oil and gas prices. In 2020, net capex spent was only $50mn.
And then Cairn has more than $400 mn cash from Kraken and Catcher sale that will be used to acquire another cash flowing asset and assuming if those new assets are able to generate similar cash flow as Egypt assets, then you have more than $200 mn FCF coming off the production business before any further production growth in the assets.
And if $100 mn for exploration per year then you have $100 mn FCF per year on a steady state basis, if my calcs above are right...
And then there is the small matter of $1 bn that , as reported India has just recently offered Cairn to settled the arbitration award. From this weeks RNS it seems Aegon reducing their stake is giving an opportunity for all of us to load up...
Don't think there is any other low risk high reward opportunity in the listed UK E&P sector... does anyone has any other stock idea?
dyor
Rags - That's in Rupees but the amount is at the date of recovery. So Rs. Will be converted to $ at the date they had seized and sold the holding and not when they would be paying back which is a depreciated currency 7 years on. They offered initially $300mn, and now c.$1bn and waiting for a counter offer from Cairn. Imo this all seems like the classic street shop bargaining tactic where they offer the lowest, then the second highest and then one final offer which is take it or leave it.
They don't have much options really as the distressed recovery funds that Cairn might sell the award to, will not bother to negotiate with the gov at all and will go after everything the gov owns abroad to recover the full face value of the award.
That was a fast turn. They are saying they might offer to pay $1bn to Cairn. Cairn should push for at least $1.5 bn assuming CNE might have to pay tax on the proceeds which is what India argued about, being that Cairn didn't pay tax anywhere in the world on the original proceeds. Would Cairn accept $1bn? Full recovery means at least over £2.5- £3 per share total value and if we include other Egyptian business and $400mn from UK NS sale, we are looking at £4 per share value for CNE?
ALL IMO
At 50kboepd net to cairn - that's 16 kbopd oil production that could be sold close to market prices. That's equivalent to Current Catcher and Kraken production forecast ?! Maybe market hasn't digested the acquisition very well because of different regime economics?
Completely agree. The IR should be informed of these concerns. Wonder if the board even thought about these things, some of whom have been in the positions for over a decade? Been too comfortable in the cushions on the laurels of the past... Worst of all that customer might not pay timely when oil gas prices are low so I'm not sure what benefit is the low opex if the customer wouldnt pay on time when oil and gas prices are low.
IMO Cne needs new direction and possibly new management especially if you as management come up with a counter cyclical acquisition as this, during once in a generation oil price environment as in 2020, when it was a perfect buyers market.
Frankly India don't care about those bits. Investors will still invest as the pool of low risk high reward options disappear in a low interest rate environment.
Indias settlement proposal mentioned in a news article meant cairn would receive $300mn immediately. But I'm guessing cairn is looking for at least the principal amount of $1.2bn. The $1.7 bn figure will be $1.8bn by the end of this year with interest accruing, so at least the award is earning $80mn interest as it stays unpaid. And one of managements biggest kpi for 2021 is recovery of the India proceeds. September results should hopefully give a good recovery timeline so that the award moves from contingent asset to the balance sheet with an estimated value for it. I think cairn would want a lump sum amount rather than smaller chunks of the recovery so it could return a big part of it to the shareholders (at least £1 per share return is possible) and the rest along with current cash and undrawn RBL to get a big asset which might fund regular dividends but also sizable exploration. If Suriname turns out big, cairn could be the next Hess.
What we need in the meantime is another acquisition to pivot the story from the recovery process. Tamar would have been a great asset addition but mubadla swooped in. My guess is cairn sold UK assets to fund the $1.1 bn price tag of Tamar but Tamar went to the uae. Cairn needs a big asset with the cash that's burning a hole - an asset hopefully with more oil production than just gas.
IMO dyor
It's a simple majority of 50% of votes required to get approval from the shareholders for the acquisition. Some posters on here like ragstorich, ad, etc. have summarized well the western desert assets value.
INDIA proceeds recovery will turn the market around for cne - there is 100%+ return just on the recovery and it's a matter of how fast we can monetize or reach a deal with India.
Cne should look to recover let's say $200-300mn per year through asset seizing and return that as dividends as monetization might be at a big discount. Waited 7+ years might as well milk the award fully.
Then use Egypt and possibly Tamar or leviathan stake acquisition as springboard for Suriname and Mauritania drilling?
Anyone on here has regular contacts with IR to get their thoughts on the price action or do they only entertain IIs?
All imo