Member Info for Smythery

allis - you actually want us to sell down West Newton before proving it can flow, even though we have the cash in hand to do so?? That makes absolutely no sense at all. Please explain why you think that wouldn’t be an inordinately stupid thing to do.

You’d really want a dividend?? Share buyback would make far more sense given shares are trading with nothing at all in the price for WN, the other Corallian licenses, of Parta. Which is just really, really stupid.

Investor_Tester - it really wasn’t double that before. The $222m announced today is the CPR’s assessment of the value of RBD’s 56% stake. The previous gross NPV of $448m you refer to was for 100% of WN. The comparable number to the $448m in today’s report is $396m, which is an independent valuation. And the prospective resource is on top. And there is now nothing in the share price for either.

Pboo - the initial drills are not comparable at all, they were made with little understanding of the field. The updated CoS given today is based on in-depth third party expert analysis using actual core samples. If you don’t understand the difference then you’re probably investing in the wrong sector.

Dingodog1 - a small offshore project like Victory with a sale price agreed with the only bidder pre-war and pre-180 degree u-turn of Uk Govt policy on uk oil and gas production shouldn’t be comparable to interest/price achieved for a large onshore development like WN. As long as it flows of course….

I’m interested Barking, what do you think they should have done? They hired a reputable oil & gas independent advisor to hawk Victory to potential buyers, there appeared to be interest only from one, and they sold it for the best price offered. You think they should have cancelled the process and started it again when the war kicked off? We’d still be waiting for a deal in early 2023, we could not afford to wait. It was worth what the market would pay.

No - 2026 is somewhat irrelevant because of how little is in the RBD price for WN at these share price levels, but when a project can deliver first gas is absolutely relevant for its sale price, and thus value to RBD. A delay is not a good thing, but neither does it justify this share price fall from already miniscule levels.

Of course supply chain issues can get worse in 3 months, have you seen the state of the US fracking market? That Norwegian yards are already full? Boat costs spiking? Supply chain issues have been a major part of the inflation backdrop in general and oil and gas is worse than most. The delay in getting Victory cash won’t help either on that front, unfortunately.

No mention of the H123 drill in a medium term community liaison notice isn’t necessarily a bad sign, but I’d have been happier with a reiteration.

That’s the idea - step change in political and regulatory support for domestic supply, and Majors will be keen to invest and most importantly show they’re investing to stave off calls for a increase in the EPL windfall tax. But nothing is happening until it’s been proven the gas will flow, which as far as we know is still H123

What’s new
- first gas now 2026 vs 2025 previously. Negative.
- CPR to be published next week. Expected, but still positive given how little trust investors have at this stage

What’s not new
- that WN is a gas development, not oil. This has been 100% clear since the June 22 development plan
- pretty much anything else

Happy to hear alternative views, but this seems like a massive overreaction. There is clearly almost nothing in the share price for WN at these levels anyway, so how is a 1 year delay worth 20% from the shares? If you believe this project has value then this is a clear buying op into next week, as share price reaction does not correlate with any change in actual value. If you don’t believe in WN, why are you in the shares?

The CPR next week will be a genuine driver of value. Key to watch

- West Newton recoverable gas - last number we have is 203bcf from the 21st June 2022 WN development plan
- Prospective recoverable resource form the other prospects on the license, which were last given in the 13th Oct 2021 release - Ellerby 51.3bcf, Spring Hill 36bcf, Withersea 45.

Obviously at this stage it has to be good

The numbers to watch in the CPR will be

1. West Newton recoverable gas - last number we have is 203bcf from the 21st June 2022 WN development plan

2. Prospective recoverable resource form the other prospects on the license, which were last given in the 13th Oct 2021 release - Ellerby 51.3bcf, Spring Hill 36bcf, Withersea 45.6bcf

Needless to say, importance of the former far outweighs the latter

It is getting tiresome explaining the same thing over and over. Victory is a small undeveloped gas prospect, it is not a certainty to produce (Stifel for example valued it at a 25% chance of success) which has to be taken into account for the sale price, as does the very important fact there was only one bidder (it seems). What exactly would you have had RBD do in that scenario? They need the money and took the deal that was there.

The fact is that most posters on here don’t have the first idea how to ascribe a sale price to such an asset, and are throwing their toys out of the pram after being hit with reality. Show me other small, undeveloped gas prospects that have sold for hundreds of millions and I will retract my view.

The main point you’re forgetting is that BrokermanDan has a direct inside link to UJO and has leaked every significant story to do with WN before it’s public. If he’s not saying there’s a placement, then there’s no placement

Thanks Olivia, you make fair points about the difference between NPVs and sale/value ascribed to assets in share prices. My view:

Victory is a small, offshore UK gas prospect. The important parts of the sale process were conducted pre-Ukraine and well before the change to a new UK Government with strong support for UK O&G development. It seems it had only one bidder, likely the owner of the nearby infrastructure, and RBD needed a deal. The price offered was lower than hoped, but not much lower than anyone with even a passing knowledge of O&G M&A expected.

If, and I admit it’s a big if still, West Newton flows then the prospects for realising significant value from a sale are far higher, given its bigger size, location onshore and near infrastructure, vastly different gas price (structurally higher post invasion / permanent removal of Russian pipeline gas) and far more supportive political backdrop. Victory cash will be enough to prove it up (assuming it works) and there is almost nothing the current share price for its potential value.

The other Corallian licences can be sold on too. They are not going to get £776m, but they’re not worth nothing either. And there is almost nothing the current share price for them either.

Overall, can still be worth 2-3p within 12m. A bull case, for sure. But not a ridiculous one.

There’s no place for mature reflection here - you’ll be drowned out by the shouting of people who thought they knew how to value an undeveloped uk gas prospect by looking at forward curves and an NPV, but actually had no clue at all. And are now blaming that on RBD.

An early farm out without proving up the RPS flow analysis via a successful drill? A drill which we just raised the cash for via the Victory sale? Go on, please explain why that would be a good idea.

I assume that 11% return is Victory based on the £7.5m and the £12.7m, meaning you are yet another person who doesn’t understand numbers, unless you think the additional licenses we got from Corallian are worthless. They are not.

NoOneKnows - thanks for one of the only sensible comments made today

Jesus GP, not you as well. We didn’t just get £12.7m for £7.5m invested, we also got the other Corallian licences, have you looked at the presentation on them? They are worth a lot. The return made just on Victory, excluding the value of the other licences, will prob be 5x IC

Yet again - Victory is an undeveloped field. You have to build in a chance of success. The NPV given assumes the project is a success. A buyer does not.

As I’ve argued all along, plugging in forward curves to NPV numbers for a small undeveloped gas project was never close to realistic, nor were the posters who claimed the sale price would change mid-process as a result of increases in gas prices since Feb. Could RBD have binned the process and reopened it in the hope of a better price? Perhaps, but recall it started in Oct 21 so this would have added months with no guarantees of a better price. They took the sale that was on offer, at a price we all wish was higher but which has secured the future of the company.

We now have proof of concept that RBD can pick viable projects, which is vital. When adjusting for the other licences, which it’s clear have real value and are far more so since the Truss announcements, the sale price for Victory will be multiples of invested capital.

RBD now have cash to progress these other licences to farm down/sale and WN to sale in a dramatically better commodity and political/regulatory backdrop than when Victory sale process began.

RBD were never going to develop WN themselves, just progress it - with Victory cash they absolutely do not need to raise. We have proof of concept and cash to get the portfolio to further asset sales at higher prices within 6m or so. This is the beginning not the end, and 2-3p within 12m is still the target.

S.