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We are already seeing growing coverage of the potential of GTW, as well as general wide coverage from North Sea and move towards cleaner energy, as well as pieces on the decommissioning problem. When this deal lands it will achieve widespread coverage and acclaim, and the reach of this news will go far beyond the normal audience of potential investors.
They appear to be very close to pulling this off. It is crazy to be at a 2 year low when they are so close to delivering that all important first project we have been waiting for.
Looks like MFDevCo website has been updated with GTW details at the forefront of their business model...
With timing of article it looks like they are getting ready for something....
http://mfdevco.com/our-business/Gas-to-wire
I think the last sentence sums up SP potential nicely...
"Management is reluctant to talk numbers at this stage but with Nu-Oil’s market cap currently just £3.4mln at 0.23p it is not going to take much to shift the dial."
I think it's worth considering a couple of things here.....
A lot of the research and comment from the likes of LT, myself and others is largely based on the operational potential of the the company we are invested in. We know that there are complications in O&G and things take considerable time. Many agree on the potential of the operational company that is being built.
The second and more complicated side is the plc, unfortunatley delays and complications cost us dearly and for all the progress they believe they are making in terms of progression to a deal, it means nothing to us if the NUOG share price is sliding. I believe they have done a fine job positioning themselves to deliver value through GTW and other projects, although are obviosuly well behind on delivering. I believe they have done a terrible job with the plc, the way they raise funds and the lack of protection for shareholder wealth. Unfortunatley markets are harsh and we have experienced the harshest side of it, fuelled by our BODs actions of lack of.
But.... i believe that the prospect once they start delivering projects is so attractive that it will quickly unwind the damage caused and bring us all into profit. With the success of finally delivering the proof of concept, and the riches that it will bring, i believe once the pressure is off that we will start to see NUOG run very differently. I would like to see the entity structure dealt with quickly which would greatly help our future outlook. What will go in our favour is the ability for them to be the gift that keeps on giving in terms of building a portfolio and repeating the model with the pipeline of projects they are already assessing, along with new ones that come to the table.
So as much as many of us are still very optimistic of the future, believe me we have equally been critical of the way we have been continually let down. The reason we are at this lowly price is the events leading up to and proceeding the heavily discounted placing and the delays that some can no longer take. But the dillution was small. And the prospect of projects remains the same.
You may think you are calling it right at the moment, but LT, Mcadder and others will have the last laugh when they look at the value of their holding after multiple projects are delivered.
It is amazing how many people are asking for information that has already been communicated.....
The SPV RNS is the clearest yet in terms of what is required to get a financed deal over the line.
What about the interim charimans statement (Royscot you were asking for the quartleryly updaye earlier. 29th March.
I am excited by the potential of MFDevCo's business model and the pace at which negotiations are progressing with operators
In particular, MFDevCo is concentrating efforts to agree Heads of Terms for two identified priority GTW opportunities, with respect to which discussions with operators are moving quickly. While I am not in a position to predict when those negotiations will conclude successfully or not MFDevCo is aggressively pursuing both oil and GTW opportunities and the Company will update the market accordingly.
As announced on 28 March 2019, MFDevCo has agreed a letter of intent to establish a funding vehicle to finance gas-to-wire projects, in which it is proposed that MFDevCo will hold a 30% interest. Efforts to establish this special purpose vehicle ("SPV") are designed to ensure financing is available to conclude Heads of Terms on the two gas to wire targets which are most advanced. Under the proposed terms, MFDevCo will receive up-front payment for projects and will be further paid for managing projects from the point at which any transaction with the SPV is agreed.
Go back a little further to year end report:
We continue to negotiate a number of specific opportunities at different stages of the 'commercialisation cycle'; we have submitted proposals which are being considered and we are hopeful that we will be able to update shareholders with positive developments in due course. Our marginal field proposals span a range from larger scale opportunities to more standard repeatable and smaller projects, resources are being applied proportionally as required.
Nice post LT, thanks for sharing the contents of your chat.
There really is a sense that they are shortly about to put the past well and truly in the past and move forward to the deal and delivery stage and building a portfolio of projects.
As much as we can talk about the past, there is no doubt as an investor this has been a very bumpy ride, their ability to generate or even hold value for investors has been very poor, their ability to run a plc has been very poor, and there have certainly been enough operational failures; but, what is without question is when they start getting signed deals there is very high potential for added value here. But, the success of projects will only go so far to reverse sentiment, they also need to start improving their performance as a plc. Prove to the market that they can run an investible business as well as impressing the industry with their project capabilities. I do believe that things are improving here, and the success of projects will make things much easier, and sentiment and investability in the company can change very quickly.
I do really think that they are very well positioned with a strategy with GTW that tackles some very real governmental and global issues, and is a fantastic hedge in the energy sector in the fact that they will be dealing in electricity as an output, not oil or gas, which some of the majors are already looking towards. I still think that people have not grasped the potential of GTW to add value for us. Many see this as a consolation prize to bigger things, however, the fact that this provides a cleaner energy source, partially tackles the decom problem not just in the North Sea but globally, maximises extraction of proven resources, addresses electricity supply and demand issues, is cheaper and quick to market and an easily repeatable model can lead us to quickly building a portfolio. The structure again may disappoint on first glance, but the upfront payment along with 2 other revenue sources is an exciting prospect. I think this can also open up doors to help achieve other goals with acquiring and progressing other assets, as the money starts coming into the bank, security for finance in other areas becomes easier. Perhaps they can even fund GHs from the upfront payments.
It’s clear this is an important time for the company, with the SPV and finance clearly at the business end of discussions, and then we can expect this coveted first project or two to put us in a different league. GLA
Regarding potential upside from here, there are a couple of things to take into account.....
Its worth remembering that the drop in share price is largely due to a very small dilution at a very big discount (as well as lack of progress). So the unwinding of this on good news will not be too damaging to those that are sitting at a loss.
The key is how transparent the financials will be when the deal is announced. The upfront purchase price will be key. I expect this to be significant and will mean a sizeable cash inflow for MFDevCo from day 1 of a multi year project. This IMO will likely put to be fears of a further placing any time soon.
The final thing is this will be the first deal of a portfolio of projects. This has the ability to add 10s of millions to the MCAP on each individual project. The expectation of further projects after the first will be high, and if they can deliver even 1 more this year and have others close to follow next year, it will position us well.
I have always been careful not to put a potential sp or valuation on this, but i strongly believe losses will quickly be unwound into profit making positions, and any buys at this price will do extremely well.
The SPV is a project financing vehicle which they intend to package up multiple investible projects. The SPV is not project specific. I think there are 3 seperate parts not 2; SPV set up, finance, project acquisition.
So MFDevCo need an SPV ready to offer the packaged project for acquisition by the SPV, the SPV needs finance in place to fund the acquisition.
I believe the LOI was expected to lead to a conclusion of the SPV within 3 months. And i expect this will lead to the HoT for the 2 priority targets shortly after.
Royscot..... you do not need to point out no news all the time... people have other ways of working that out....
The fact the share price hasn't done several hundred % yet for example. There's also an RNS feed and an alert service.
Who said May was a milestone...? I think you will find that they have told us they are setting up an SPV to conclude finance and deals.... please tell me where it says by 29th of May? My understanding is there was a 3 month window, of which we are now in the 3rd month.
Note 11 page 19 - DNO inherited circa $400m of retirement obligations from the Faroe takeover, 5 assets i think. Plus some of the assets were only part owned therefore it's only partial cost of the full decommissioning bill.
Gives you an idea of the scale of the opportunity when talking about extending asset life and deferral of costs.
https://ml-eu.globenewswire.com/Resource/Download/f6a3925a-c89f-404c-8283-afa11558048c
This is coming very close to getting exciting for us now... It has been 2 months since the SPV announcement. HoT on 2 priority projects to follow. The upfront payment or the initial sales price i expect to be a game changer for us. And the ability to replicate the model and the level of interest that has been and will be generated can lead to a profitable portfolio.
"for each project the SPV purchases: the initial sales price; payment for services to manage projects; and project revenues as a result of its proposed 30% equity holding in the entity."
"the Board believes that GTW will position MFDevCo as a first mover in a market with global opportunities and we anticipate significant support from governments based on the market dynamics at play"
Comments taken from GS chairman's statement.
Yes you would have to review all your provisions by the balance sheet date.
There is a tax break element, but again you would prefer to delay the decom as much as possible.
The desire and need to maximise North Sea resources, reduce decom liablity and move to cleaner energy will lead to new ways of doing deals.
YT that’s not correct there will be balance sheet improvement as the liability is measured at present value of the best estimate of cost. 10 year deferral and a reasonable assumption it will be cheaper in 10 years plus the present value discount will result in a review of the carrying value of the decom liability. IFRIC1.
But cash flow is king in any case and to defer material expenditure for 10 years is always beneficial.
In fact if you look at Faroe annual reports you will find a release of an accrual for a previous asset they sold.... I can’t remember the name havnt got time to look it up think began with J.
Appears to be a lot going on on multiple opportunities..... further evidence that Siemens are more than just a supplier of turbines.
Worst case scenario for the rest of this year appears to be completion of the 2 projects mentioned in the last RNS. I believe the SPV had a 3 month period to close, and its 2 months down, so we really should be expecting this in the next few weeks. SPV and finance go hand in hand and then onto HoT. This should add an 8 figure sum to MCAP.
Best case scenario we could have further GTW projects complete in the second half of the year. Plus potential for other projects to progress like Brazil.
Its disappointing that many of us have to unwind losses before making profit, but the growth potential still remains very attractive. Sentiment will turn on a sixpense when the RNS lands and the abgility ro replicate the model quickly with other projects can make this the gift that keeps giving over the next few years. Proof of concept in the first porject is very important, and this will get wide coverage when the news lands, beyond the reach that your average AIM stock would touch. IMO
Oh dear MFDevCo have spent a day talking to interested parties about how good GTW is going to be.....
Boo boo they have fucked is over so bad... how dare they spend a day with our partners talking to players in the industry.... shouldn’t they be busy on holiday or going bust or something....
I really can’t wait for MFDevCo to land this deal and see how much value this is going to add for us.
It's all about whether they can package a deal as investible with the right return.... remember the assets they are going after are no longer wanted and have significant cash flow requirement for decommissioning....
I don't think it's the asset owners that need to be convinced, its the ones putting the money up.... so i would say is nailed on if finance is in place.
I don't think we will need to imagine for much longer......
They must be progressing with SPV set up and finance.... then its a deal
Royscot thank you for ensuring there is something more boring than waiting for news
They are trying to build a successful upstream Oil & Gas company, not trying to sell plastic toys on ebay!!!!
They are currently working on a deal that at the AGM they said is worth 25m (currency not specified, i assume $) per year for 10 years; $250m for the mathmatically challenged. And that's just the first of a pipeline of projects.
Whatever the net value to NUOG after divying up of the various cuts, the average office space per head per month in Manchester is about £300. I wouldn't worry about it.