Member Info for Soundingoff

n4a- If you plan to continue investing in O&G, I would suggest you look further into the process of field development and the use of NPV10. As an example, why is the asset risked at 10%?

I suppose you have to put it in context Longwait. Seismic per se won't be worth much. However what we are trying to monetise is an inventory of assets ranging from TE5 and the associated prospective assets (total 1TCF GOIP), through appraisal and exploration targets and ending with what's left in the basin model and the associated seismic/grad. Sidi separate of course. It's pretty easy to risk those and decide what you're wiling to pay with reference to the risk and reward. As you know, suggesting those assets over and above the Horst are worthless is plain daft. Anyone with any experience in O&G will know they have value. They question is how much. And then it's complicated further by any contingency built into a deal.

Risked NPV calculations support these values, but of course a sale price could vary considerably from NPV, both up or down. Regarding the TE5 horst, there are many recent sales of similar developments where a small discount is applied to the NPV10 value. Discounting a discounted asset is incorrect as this stage of development.

'Where is the value now In SOU ??
I am one of the past investors and my only interest now is to help prevent rampers from persuading people to A) stay onboard and b) buy more !'

I've read some moronic statements on this board, but that takes the biscuit.

Thanks Exploration. It's not really much of a valid comparison then. You're scraping the barrel this morning wh0s.

Wh0s- I get it, you have a problem with Sound, but let's try and work within what we know. We have valuations of the Horst where COS is not relevant for our discussions. We also have a GSA offer if we want it. Production by 2021.

It's rather silly making stuff up. If you want to be credible, post something credible. What's your assessment of the Lekoil offer. I am genuinely interested, unlike yourself.

Is that recent Wh0s? There's not much info online. Obviously it's meaningless without COS, oil and gas sale rates, GSA (;)), years to potential production if successful and the terms of the farmout. Obviously you're only paraphrasing, but what did your indepth study find?

I think we only have to look at the recent AMER offer to see that your assertion isn't true. Information often leaks, but not always. Though we have had what appears to be a large buy order hoovering up any PI sales for the last week. Does that count?

It appears that most PI/broker sells are being bought up immediately by L2 orders, suggesting a large buy order. This has been going on for a week or so. Very hard to be certain of anything though, given the manipulation in the stock market.

SDX 6 month results put things into perspective. They have just announced their 12 drill programme in Morocco which is targetting 15bcf GOIP. The TE5 development is 650bcf GOIP and is at the last stages prior to sign-off, worth approximately $350m NPV10.

'Crude owes him a lot for making him money during the period of being the unofficial P.I representative here and whilst crying on stage. Its a 'natural' human instinct.'

What I like about Crude, is that even though he hasn't done the things people suggest (he was very clear when he sold to clear his mortgage), he ignores these sad internet stalkers.

These orders appear to have been mopping up any PI/broker sells late last week/early this week. They link in with the drops to 6p and also validate the SP stability.

Exploration- Maybe you should be working for Schlumberger given you appear know more than them?

I'm curious, do you have any links to Graham (GRH) and 250SWB?

For years, the talk has always been about independence from Algeria and the Gas to Power project. I understand that gas is needed by 2021 to negate the need for a contract with Algeria. Therefore the timing is now very important. A few years ago it was not. Morocco clearly do not just want TE5, they want more, a really significant development. Sound Energy got their chance and have brought TE5 to this stage, albeit slower than we could have. But of course we know why, as we wanted to find more gas.

Time is up. It appears Morocco has acted with patience, but now they need a larger concern to try to develop the field.

This has been going on for a while now Fishy. Chunky PI?/broker sells immediately followed by L2 buys at the bid. Obviously they all show as a sell, but balance out. The question is whether this is part of a larger order(s) or MMs working their market etc.

'SO- do you recall the MC valuations during the sale process, and total price paid?? It is difficult to compare based only on SP without knowing shares in issue ( even discounting debt, cash in bank, tax benefits/liabilities ,infrastructure in place/required to be built etc)'

The valuations were expressed in £ per share trellis. Bear in mind this was a company sale (as opposed to our stated aim to sell the asset, with the caveat that a sale of the company is possible). Therefore the debts, cash , contingent tax assets etc were inherent in the price per share. I'm not sure how this impacts Cove as a case study compared to Sound (see my paragraph below)? As I noted, at the time that discussions were going on in secret, cash was a large percentage of the SP, with 24p of the 60p share price being cash. I don't know the cash balance on sale, but with ongoing operations and no cash raised in the interim, the cash would have clearly been less on sale.

I don't think it makes sense to use Cove as a comparison for value purposes, only to show that there was a significant disconnect between the SP and the eventual sale price. The price was arguably dragged up by the broker valuations (of the entire field), but as noted, it still lagged behind significantly. Though at this point, very close to sale, Institutions increased their holdings. The main point to consider is that we do not have a valuation over and above the Horst, and of course any sane investor would want one. We are in an almost unique situation, one that does not conform to the norm. Hopefully we will be put our of our misery soon and I will go back to investing in companies that are easy to value..!

I agree with what you're saying Sunday, but that is inherent within the calculations they use. That is why everything is risked and you are discounting a discount which isn't possible. I may as well start at £2 and then you can discount it to a £1... If any suitors are looking to bid, they will use incredibly complicated calculations based on the data Sound have collected (good and bad) and their own assumptions.

Below is a document which explains the risking. Pages 14 and 15 provide a good summary.

https://higherlogicdownload.s3.amazonaws.com/SPE/5fc0079d-67a5-4dd9-a56f-190534ef5d3d/UploadedImages/oct%204%20presentation.pdf

wh0s- Unsurprisingly, there are no examples of that sort of premium that I know of. As Longwait noted though, I'm only calculating the NPV on the limited data we have. A deal is something different.

jack- IMO the focus shouldn't be on premiums paid. There's a very clear link in O&G sales between NPV and sale price. As noted by Longwait and Doubler and my own research on O&G fields sold, significant changes in MCap can occur when data is released or a sale happens.

wh0s- Your summary of Cove doesn't really cover what happened. You're certainly right that there was some additional success during the period, although it's hard to gauge the impact.

As I'm sure you're aware, the marketing of the company started around 6 months prior to the official announcement. Around that time the asset value portion of the SP was 36p (24p cash, total SP 60p). During the unofficial sale period the SP hovered around this, up to 80p. During this period some IIs sold, even though the company was marketing the business with an eventual outcome of 240p. Even with the release of a broker note valuing the whole field (and Cove's 8.5% at 170p), the SP was only 110p.

What can we learn from Cove- Anything is possible, good or bad.

'If your estimate of 100p includes Sidi, how much is your estimate for Tendrara alone?'

Around £1 Longwait ;) I've been conservative using the Broker calculations.

Please trellis, I stated forward not into energy independence. Development of gas fields takes many years and hopefully we have started that for Morocco. The TE5 development will however allow Morocco independence from Algeria, that is a fact is it not? It's rather sad that you have to jump on these words like a rabid animal.