Member Info for Soundingoff

I'm afraid that latest one is pure fantasy trellis. If you think that suggestion would float JP's boat, you're sorely mistaken.

Please Jones, allow some reasoned debate here. You aren't even invested and your intentions are quite clear.

Owli-

The data room point is incorrect. Using Cove as the example, a huge amount of drilling and seismic was ongoing when Cove were in secret discussions with interested parties. The bidding there was quite intense because of the continued drilling success.

If the process is done right, then it can be kept secret. As you say, there are numerous examples, and again Cove is another.

It is one of a number of options open to us. That's why we are not in a position of weakness. However we have been told repeatedly that a larger entity now needs to take Tendrara forward, not us. Moving forward with the final drill would be a different matter.

Wanting to work commercially with Sound and at the same time constantly criticising the CEO on a chat board...

Yes Shaun, I had a theory that 250 was GRH and that's proved it beyond all doubt. A rather sad affair with this and the Scotforth debacle.

testpack- One point on the IIs. I appreciate you want to play this down and are suggesting CIP have 12% of the institutional holding. However that's incorrect. I believe at last count they had 1.85% and would have to notify if they purchased further. All we know is that no one Institution has 3% or more of our stock. The increase in Institutions was around 40 million shares or 4% last quarter. We don't know where we currently stand.

I give back what I get Jones.

If you'd like to use Cove as an example:

The Rovuma field was INDEPENDENTLY (one for trellis there) valued and the data was released to the market. At one point the share price allocated to the asset (less cash) by the market was a 1/6th of the independent valuation. The real irony though was that the data room was open in private and the institutional investors didn't know about it. One was even selling down at (with hindsight) silly prices.

The share price increased over time, albeit quite erratically. Some would say the SP movements were designed to scare. Either way, the SP finally caught up.

I haven't given you a 50p valuation Jones, it's just an example to get the brain cells working.

The real question isn't why it happens, but if it happens. Based on experience and following the markets, it happens. If you can tell me why it happens I would really appreciate it. I'm clearly not bright enough to know why, but bright enough to know it happens and to capitalise on it.

Why are multiple companies across many sectors sitting with an MCap at 1/3rd or less of their NPV?

Why does the share price of a FTSE listed company fluctuate by 20% in one day without any price sensitive news or significant volume?

Lots of other questions we could ask. Sometimes the best you can do is to recognise the patterns.

The reason why I refer to the 27p is because of the recent TE7 update. This is an answer to some of the questions in your previous posts. The change in metrics will uplift the value of the Horst due to significantly reduced Capex and Opex.

To expand on the analogy used by Ponkey. And I do accept it's just a bit of fun, there's LOTS of things wrong with it...

A property owner was offering to sell a plot of land that had planning permission to build one house.

The house would be valued at £500,000 when built.

Seller: ' I'd like "£500,000 please"

Buyer: "Why would I buy this, I'll be break-even on the property when I come to sell?"

Seller: "There's room for another 30 houses. I've got planning position for one but there's no reason why they won't give you planning for more, my next door neighbour has done the same."

That's the same as us selling Tendrara for roughly 50p i.e. the Horst at an undiscounted value.

Risk vs reward.

trellis- I'll come back to you on that one. But I'd like you to understand my position on the Horst as this makes up 50% of your figure:

The TE5 Horst has an NPV10 valuation of approx 27p. This is an industry recognised calculation. These assets sell (in conditions we experience as Sound Energy investors) close to NPV10 value.This will result in any buyer experiencing a 10% return on their investment. Of course there can be deviations from this but that is accepted by the O&G industry. I've explained my reasoning to you on this matter repeatedly. This development is very close to plug and play, with a GSA offer and FEED almost complete. Many developments sell at NPV10 and are far behind ours in progress. You can be as negative as you like, but the reality is positive for our development.

Indeed it does pay to be realistic and commercial. Realism comes from real life scenarios.

We have sufficient cash to negotiate and if we decide to drill we may need a small raise. The bigger issue is of course TE5. We have options- we could just sell the Horst and crack on.

Out in the real world with that realism, plenty of companies have to sell because they cannot develop, exactly the same position as us. The reality is they don't get bad deals because the Buyer knows if they have the funding they can get a great return. All this talk of a distressed sale is nonsense. An example for you is Circle Oil. They were in administration and still received 40% of the NPV of their assets. That's our SP now.

And the share price really isn't a great indicator. Again the reality is that there is often a large disconnect between SP and NPV. Often when value is not easily calculated or emotions are at play.

Its' all very well saying big O&G is ruthless, but irrelevant if you have no data to back it up. If you can find some examples please do post them.

No offence wh0s, but I'm glad you're not negotiating for us! Risk vs reward means both parties take some risk. There's very little risk at those prices for the buyer.

Yes it's been pathetic whilst they've been testing the beta. They need the get the old version working first.

LSE was showing us in auction until the uncrossing trade?

We were in auction for £9 of shares.

It's good to run your own figures like partridge has, as it helps you consider how and why the NPV of the Horst could change. Sound have (or had?) a staff member who was tasked with modelling all this data. It's complicated and there are many variables as discussed below, including the modelling of the gas price. Pleasingly we have a GSA offer, which reduces the risk for a buyer. The main point to note is that our NPV10 valuation of circa 27p is an industry standard calculation. From the advice given we have been conservative with these calculations and the recent TE7 RNS highlights that. A buyer will take their own view of the Horst, but it will help no one if our figures are not in line with expectations. Whilst timelines and drill targets have been missed, the correlation of our technical reports has been reconfirmed a number of times by 3rd parties, so I don't expect this to be any different.

Agreed trademeup. Given the importance of the asset to Sound’s direct stakeholders and indirect, including Schlumberger, ONHYM and the Country itself, I would hope the process has been planned to be as efficient as possible.

I think we have to bear in mind trellis, that the chance of corkage is going to be higher on your 1955 Rothchild than a bottle of Echo Falls. Higher risk for higher reward. The cellar still has a stock of lower risk wines with of course a lower value. You are making the mistake of judging your cellar only by those centerpiece wines. In case you're not sure what Echo Falls is:

https://www.tesco.com/groceries/en-GB/products/286132066

I've never touched a drop, but it would be advisable to use your usual scepticism when considering the delicious comment in the advertisement. Other wines are available.

I agree to some extent, but you're arguing with yourself wh0s, I haven't posted that. I only note that risked value to consider our position right now.

What you have to remember is there is also the potential on top of those immediate drills. I invested here because of the potential scale of Tendrara. Drilling has disappointed bu the scale is still there. No one here can say what that is worth to a buyer.

It all depends on where you view us as being with the data room seaton. My view is it's been open for some time. As keeptofacts has noted, decisions need to be made by end of year and that doesn't give a buyer much time. Strategically it also works for us if we can get it done within 3 months to retain staff and move forward with TE11. If it's going to happen, then I expect it to be sooner than your timelines. But as you say, we can only estimate.