Member Info for Soder

20-1 is a good outcome. 6-9 is sweet spot as keep its away from penny share volatility and not optically so expensive you lose the retail bid. I think will be just fine and positions it towards a ftse 100 play.

Static Current Valuation (excludes FCF generated in the year)
Basic valuation based on Enterprise Value (EV) = Mkt Cap + net debt
Hence, mkt cap = EV – net debt
Mkt cap = share price 8 number of shares
O&G companies trade on between 4.5-6x EV/EBITDA multiple which gives the following share price valuation at 4.5x/5.0x/5.5x EV/EBITDA
4.5x: 4.5 * 2.366bvn (EBITDA) = $10.646bn EV. Less net debt $2.9bn gives implied equity value of $7.745bn which is £5.533bn in gbp = 30p price per share
5.0x: 5 * 2.366bvn (EBITDA) = $11.829bn EV. Less net debt $2.9bn gives implied equity value of $8.929 bn which is £6.378bn in gbp = 34p price per share
5.5x: 5.5 * 2.366bvn (EBITDA) = $13.011bn EV. Less net debt $2.9bn gives implied equity value of $10.111bn which is £7.223bn in gbp = 39p price per share
6.0x: 6 * 2.366bvn (EBITDA) = $14.195bn EV. Less net debt $2.9bn gives implied equity value of $11.294bn which is £8.068bn in gbp = 44p price per share


YE 21 Valuation - Taking into account the cashflow generated over the year and subsequent reduction in net debt
4.5x: 31p a share
5.0x: 36p a share
5.5X: 40p a share
6.0x: 45p a share

VALUATION RANGE 30-45p a share versus current 21p price. Conclusion. Keep buying.

My latest cash model output update if anyone wants a look…

Assumptions
FX rate 1.4 average for the year
2021 production 207k boe per day (is the mid point of the company’s 200-215k guidance)
50% oil and 50% gas production
2021 Hedges (as provided by the company on 1 April when the deal closed). 22m bbl oil at $58 bbl and 25m boe gas at 44p a therm
2022 hedges (as above – company has provided). 12m bbl oil at $60 bbl and 25m boe gas at 44p a therm
Average realised unhedged oil price for 2021 $65. Despite the current oil px being $72 bbl the average spot for brent YTD is $63. I am assuming we remain elevated and being conservative at $65.
Average realised unhedged gas price for 2021 50p a therm. UK nat gas futures currently trading at 63.2p a therm versus ~40p in January so taking midpoint of this.
Gas price conversion from pence per therm to $ per bbl: 58.14 therms is the same as 1 bbl oil equivalent (boe). FX rate 1.4 gets you from pence per therm to $ per boe. I.e. 50p per therm is 0.5*1.4(FX)*58.14 = $40.7 boe
Opex per barrel $15 (company have stated “will be less than $15 bbl” so I am being conservative)
Fixed costs of $182m for combined biz (assuming no synergies so being conservative)
Opening Net Debt 2.9bn (provided by company at close)
Cost of debt 5% (company said will be <5% post close)
Number of shares in issue (pre consolidation) = 18,510,652,139
Dividend: will pay out 30% of FCF
Other cash costs in cashflow statement $150m (conservative guestimate)

Sales:
207k boe daily production x 360 days = 74.52m boe total pro forma production for 2021
50% oil / 50% gas gives oil production as 37.26m bbl and Gas as 37.26m boe for 2021
Hedged oil revs = 22m *$58 = $1.276bn
Hedged gas revs = 25m * $35.8 (which is the $ boe equiv of 44p a therm) = $895m
Unhedged oil revs = (37.26m-22m) *$65 = $991m
Unhedged gas revs = (37.26m-25m)* $40.7 = 502.66m
TOTAL GROUP PRO FORMA REVS FOR 2021 = $3.666bn

Costs
opex per bbl * total production = 15* 74.52 = $1.118bn
fixed costs 182m

GIVES EBITDAX: 3.666-1.118-0.182 = $2.365bn

Free Cashflow
Free cashflow pre dividend = EBITDAX – cash interest – tax – delta working capital – capex- other cash costs below the line. I have no view on WC so I assume will be zero delta
FCF = 2.366bn - 0.145bn (5% * 2.9bn net debt)- 0 (no tax) – 0 (no change in WC) – 1.1bn – 0.15bn
= $970.76m of glorious pro forma FCF

Dividend
30% of 970.76m = $291.228m
In GBP = 291/1.4 = £208.02m
Payout per share in GBP = £208.02m / 18510.652139m shares = £0.011 per share.
This is 5.4% yield at the current share price of 21p

YEAR END 2021 CLOSING NET DEBT OF
= opening net debt at start of 2021 of $3.2bn – FCF after paying div of $679.532m
= $2.52bn

Bonker - if you want a stock with oil px beta of 1 why dont you just buy oil instead via futures?

But....this will get to 30 plus post results. The cashflow will be huge and they are creating huge equity value via turbo repayment of that rcf at the moment.

I see you mention tullow...if you want some real yeeee haaaaw go for eco Atlantic. Give tullow have refinanced and the oil px is giving them extra capex headroom they will announce a Guyana drill program in h2. They don’t even have to drill it but the moment they announce that plan to in 2022 eco will double.

How can anyone possibly know that? What price they paying? How they financing? What adds to overall group financials? Synergies? Biz plan.

This is not a game of pin the tail in the donkey.

Cos it’s no longer a over levered oil play for the befit of punters and small cap bandits.

Half production is gas. Loads of production is hedged. It won’t rocket up when oil prices fall but it won’t crater when they drop either.

It’s a better biz. Albeit undervalued. But it’s not gonna zip around like tullow and enquest etc as it’s doesn’t have so much levered (via balance sheet) exposure to the rising oil price.

The call on Friday was so ESG heavy which is super super critical at the moment for any institutional involvement in any company. Add to that an oil company and they need to clearly set out what they are doing so the institutional investor base can rate them on an esg scorecard. It’s essentially a rating but not a credit rating, an ESG rating

It all makes sense now why that was done. I think they will have some large institutions looking at this deal with them to participate in the financing. That could be banks, could be equity funds etc. But there is no way they could pull this deal off without ticking the esg box.

Well done Savannah. Well done.

I eat my words and apologise for negativity post call on Friday.

Why the focus on when they start drilling? The option value on this share is triggered just when they say they will. But now. Wait for that announcement. You don’t have to wait for the drilling it even if they find oil. You likely make 2x just on the prospect of oil from a drill plan. That WILL happen this year and likely v v soon.

I’m struggling for any conclusion. Not following at all. Both are actually reputable within the markets they operate. And I can assure you of their research offerings.

I’m a patient investor when I expect to be. But if I want to buy steady stable cashflows with no va va voom I will be large cap stocks or utilities. I’m here for growth and a ride. This company is not doing what it says on the tin. At least if I’m in national grid or Exxon I will get a divi with my static no growth share price.

Agreed. Even better given the majors are puking assets for pennies would be M&A. The potential IRRs are once in a life time opportunities to bolt on production for two fist fulls of **** all.

Agreed. I can’t even be bothered to waste my Friday night listening to this. On the call now and I’ve just wasted an hour of my life with him repeating what he has said many many times. This is ******.

This is boring as hell. Heard it all before as this is all he has to say.

This is truly bizarre. They picked Thai date to release. They didn’t have to. They put their own time line in place and now have everyone on a call waiting for them and they haven’t even turned up yet. This is beyond amateur. Tin pot.

I detect you may be sat there in a pair of wet pampers? Maybe BP and She’ll are more for you. You seem on edge.

From the trading update.

FY 2020 Unaudited Financial Highlights



· FY 2020 Total Revenues1 of US$235.9m (up 23% on FY 2019 pro-forma Total Revenues of US$192.1m) which are ahead of the Company's previously issued FY 2020 guidance of 'Total Revenues of greater than US$200.0m';

· Group cash balance of US$106.0m2 (up 121% versus FY 2019 year-end Group cash balance of US$48.1m) and net debt of US$408.7m3 (down 16% versus FY 2019 year-end Group net debt of US$484.0) as at 31 December 2020;

· Total cash collections from the Company's Nigerian assets rose 11% year-on-year to US$187.4m (FY2019 pro-forma cash collections of US$168.8m); and

· The Company reiterates guidance on the remaining items to report for FY 2020:

o Group Depreciation, Depletion and Amortisation guidance of US$35.0m - US$37.0m;

o Group Administrative and Operating Costs4 guidance of US$43.0m - US$47.0m; and

· FY 2020 Capital Expenditure guidance is modified to less than US$13m from US$8.0-10.0m, primarily due to the acceleration of previously assumed 2021 expenditure into 2020 for commercial reasons.

They already released last years numbers. Who cares.

The market needs outlook and the future.

Just wondering if may get something at US open. Only reason for that would be that a deal with a US listed business. I really can’t see any other reason why they have not just dropped the results. There is no big secret as they already released them via the trading update.

Baffled.

72 includes dhsc as gasman said.

I agree with analysis though. Even if you strip out the cash earned from dhsc in q4. Like all of it. This sp is cheap to the point of ridiculous.

There won’t be any excuse for delaying. It’s one co tract which they can take a provision on. If they take a provision on the whole thing it’s better than doing nothing.