The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
That is not entirely true NotSure....
In the Marnavi SPV rns, we have never had details of how a project will be financed and how a deal will be structured... ie. upfront payment, 30% SPV ownership, services fee, telling us the next steps to a deal.
2 months since the SPV RNS, so i would say the window for the next update is wide open.
Indications at the AGM were that the project would be worth $25m (currency not specified but i'll assume $) for 10 years. So a project worth $250m.
We are also told there is a pipeline of similar projects.
Not in this for the assets they have got..... rather the ones they ae about to get and subsequent ones to that.
Agree smokin... the mcap here was £12m plus before GTW was even heard of.... the drop from there has been largely due to AIM mechanics and the shafting placing, for what is really a small dilution. We have had 2 really positive bits of news with Siemens and the SPV since then. It's not unreasonable to expect £50m MCAP from a couple of GTW deals, and when they are announced there will be a nice re-rate I am sure. It's been a fair few weeks since the SPV RNS now, so it is reasonable to expect that the window for the next bit of news is wide open.
I don't really think many of us care which projects the 2 they refer to are, any project will be value adding whether it's Ketch and Schooner or Tom and Jerry...
Yes the OGA official status is that they are due to be decommissioned. But one of the concerns DNO had which led them to the takeover was that they didn't have the cash available to finance the decommissioning. And since then they have also had a rejection of the plan to bury some of the subsurface cables, increasing cost and complexity further. Secondly, what business sense is there in going ahead with a project that has zero income and high current cost, when you could monetise that asset, defer and/or reduce that cost?? I am struggling to find a commercial reason why they would choose to go ahead? So perhaps if you are certain of what will happen could you explain why rather than just put down any positive outcomes that MFDevCo might achieve?
To simply say there is a decom plan in place, and we havn't heard about a deal yet so it must have slipped away has zero substance.
Cobra..... there are plenty of opportunities to go around. I believe the Siemens agreement is attractive to asset owners.
But there is more to just having deep pockets and being able to buy projects, buy the tech..... you still have to make the project commercial. This is where MFDevCo come in and where they add value. The SPV rns talks about packaging up investible projects. I believe there is a lot of inteligence and ability in MFDevCo, and more obviously the partners they are woring with, and its about progressing the right projects with the right economics. You are seeing from MFDevCo that it is not simple to complete on a deal, any other companies will have the same problems and issues, but once MFDevCo announce one deal, their ability to go after subsequent deals will improve.
Cobra i think there are something like 400 fields in the North Sea alone where GTW could be a solution. Some of these targets are assets that are end of life, and can no longer be produced economically under conventional methods. Others have never been producing and GTW could be a solution to make that possible. I recommend spending some time researching the plan for the extension of the North Sea offshore power grid. There will be significant investment in renewables over the coming years. What this means is more projects will come into the scope of GTW as a solution because more fields will be close enough to the grid. For example there are some fields that still have significant gas reserves, but closure of transportation pipelines has led them to stop producing.
Transportation of Gas is a significant cost and can be a logistical nightmare, electricity as the output using a nearby grid changes the economics and practicalities. The USP is electricity as an output. The USP is lower cost, cleaner energy. The USP is low capex. The USP is that it uses existing infrastructure, proven and assessed reserves. The USP is that it places a value on fields that would otherwise be decommissioned, and it defers decommissioning cost because assets that would otherwise be subject to 10s of million £s of decom costs can be extended. They have a presentation on their website, they have published some content on this, but i admit they could have done a better job with this.
There is a lot of material regarding the north sea decommissioning problem, and the OGA are fully supportive of cleaner energy, renewables. As pointed out in one of the MFDevCO tweets, gas is seen as a gateway energy source to cleaner energy. With electricity as an output, you are not so reliant on demand for gas or gas prices for the economics of a project. Whatevfer you may think about future oil and gas demand, one thing for sure is that demand for electricity will continue to grow as the population increases, technology continues to evolve, and replacements for dirty energy are sought.
So GTW deals with assets that are otherwise unable to produce, it resolves or delays the decommissioning cost and problem, it provides a cleaner energy source, it provides a lower cost energy source, it offers electricity as an output which deals with demand issues that coal as a power source is still over reliant upon. One of the things MFDevCo would talk about in their project design is hubs and clusters. Collaboration and synergies with assets in close proximity are all key to unlocking value from Marginal or stranded resources. MFDevCo is able to offer a solution which satisfies all of the above.
Roy,
Firstly, to be fair, whilst I admit the twitter spurt was a bit of a cringe fest in the end how all of a sudden there is tweet overload, PIs are going to pick up on things like this almost instantly. Simon isn't going to be sat there looking around waiting for things like this. So it’s not surprising that it was mentioned by PIs before Simon. They always seem to have the attitude that it will sell itself once they deliver, but as we know their delivery timescale is not suiting the market. I am disappointed they have not done a better job in marketing this as an investment.
Actually the reason they have not named a project is because of NDAs and to protect the economics of deals...... if certain details got out they could make them more expensive. No business in any industry goes around talking about potential targets before they are completed. Actually what they are trying to achieve is to obtain something that would be of significant value to us that is no longer of value to someone else. We don’t have the resources to pay top dollar for projects, we need to get them at the right price within limitations of finances and economics of making a return. If they go around talking up projects telling everyone what they plan to do with it and how much they plan to make, that may add to its value and the cost of acquiring that project. People talk like it’s easy to go out there and get a project for the right price. The best way to maximise returns is to acquire something as cheap as possible, add as much value as possible, to satisfy a demand for a product and achieve the best price. I believe the GTW strategy fits this requirement very well.
That is part of the make-up of MFDevCo strategy, they can pitch for and assess multiple projects they are not tied down to one. The downside is we get very little information, the upside is that when a deal is announced the re-rate is likely to be significant, and it is likely to make further deals much easier to progress. We all knew this when we bought in so we should not be surprised.
Worth noting Marnavi was originally announced as a partner and then the SPV was announced revealing a greater involvement in the SPV. The SPV RNS also mentions the 70% non MFDevCo equity will be Marnavi and other investor(s)s if required.... You will see from below extract of Siemens RNS that they are much more than a supplier.
"Siemens is working with MFDevCo with an initial focus on UK projects but is also keen to investigate other projects that MFDevCo is pursuing worldwide.
Under the terms of the collaboration agreement, Siemens will provide information and support to MFDevCo to secure identified gas to wire projects in return for an exclusive first option ("right of first refusal") to provide certain equipment and services to those MFDevCo projects on terms acceptable to both parties. This commitment by Siemens to project evaluation and design will be critical as MFDevCo finalises its assessment of the technical and economic feasibility of selected projects and provides the independent verification required to demonstrate deliverability to both partners and investors.
The initial term of the agreement is two years; however, both parties are viewing this as the basis for a long-term working relationship"
I think for those that understand it is very interesting to see what is happening with Siemens..... it may well be they have announced this now ahead of an imminent GTW deal. I am sure many will tell you that our GTW deal is too small to dictate an announcement like this, but as i pointed out earlier, the market for Siemens would get bigger if the GTW concept is taken up by more O&G companies as more turbines will be required, so the first deal could not only be a pathway to more deals for MFDevCo but also a pathway to a larger market for Siemens.
So quite rightly there is a great deal of interest.....
Marbur you appear to have missed an RNS with the result of the Open offer..... where an acceptable take up was achieved taking into account the open market price was cheaper
smokinjoe - MFDevCo are involved with Siemens.... per Feb RNS.... clearly not involved in their spin off...!
This is the point i made earlier about about why GTW is bang on point.
"Gas predicted to become the bridging fuel to a cleaner energy future & will be crucial in meeting global energy demand. Lisa Davis, CEO of Siemens' Gas & Power recognised that "global electrification continues to be vital to economic and environmental progress around the world"
How many other companies are talking about it Cobra? How many projects are currently live and up and running? With the OGA highlighting it as key to the North Sea, how many others have said they are working on it?
One thing i do know is that when companies spin off businesses, for whatever reason they do it for, they put a lot of focus into those business on positioning them for growth potential in order to achieve the best listing price. In the grand scheme of things, the MFDevCo agreement may not be commercially significant to Siemens on its own.... but they are currently only producing turbines at less than 25% of their capacity. There are hundreds of GTW opportunities, MFDevCo may get only a fraction of those, but Siemens market as a supplier may reach out to several other companies that might jump on the GTW bandwagon. So MFDevCo leading the way to prove the concept could be much bigger for Siemens than maybe 2/3 projects for MFDevCo might give them. SO they would be very much aligned to making this a success.
The Siemens news on spinning off their Gas and power energy business with their renewables business could be a very timely revelation. GTW projects are clearly going to be a part of that, and specifically the agreement with MFDevCo could lead to a lucrative partnership. Thier recent announcement regarding their SeaFloat floating power plants appears to follow similar technologies that our GTW projects will use.
Siemens involvement with our GTW projects is beyond that of a supplier. They are involved in design and DD and appraisal. I do wonder if they may be a little more involved than they have currently let on and perhaps could be involved in equity ownership of the SPV or involved in the financing in some other way. This announcement could be a milestone out the way ahead of a deal being announced.
MFDevCo are bang on point with where the future of O&G and energy supply is going, and with the future plan of the North Sea. As disappointing as it is that we are yet to get a big Brazil deal or any other conventional or Marginal Deal finalised, MFDevCo are ahead of the curve on this cleaner energy approach on the focus on electricity as an output rather than oil or gas is clearly where the big O&G companies are planning for the future with recent announcements from the likes of Shell, and this is a very exciting space to be in.
Many people just want to see verification via the first project that MFDevCo are capable of this. Having a name like Siemens involved will no doubt attract potential new projects. Things really can move along very quickly once that first project is announced. There is so much growth potential here. I am really confident that the first deal is fast approaching, and this will just be the start of it. It has been a bumpy ride but there are good times ahead for NUOG shareholders i do believe.
How much will it be up when they announce the GTW deals??? You certainly can't count that high.......!!!!
So what some people bought some shares and some people sold them. Whatever their reasons are unless there has been bad news which there hasn’t so what....?!?! How about the fact that the company are actually communicating deals and next steps to 2 GTW deals that could land any day...? Isn’t that more important than whatever agenda individuals may have?
52% not bad considering share price.... glad they have got this published ASAP.
Path clear for news now.....
Well if open offer not fully subscribed that’s less dilution.... it’s been handled really poorly so be good to get it out the way. I don’t think they need the additional funds, I think the upfront purchase of projects by the spv will put sizeable funds into mfdevco.. project worth £250m....if upfront payment was something like 2% that’s £5m, and they have a number of projects being negotiated. Since the agm I got the sense they were not concerned about future funding... the shafting of a small raise can be quickly unwound here and some
Royscot..... well where is the seed finance and the SPV project finance that’s going to pay for everything coming from if nobody is putting it up.....?!