Member Info for Soundingoff

We always have these discussions and the question to ask is why do we need to drill again? History/past experience may tell us that, and if we were talking about say a TE9 and TE10 target on a stranded piece of land, then I would agree. But we're not. We're talking about a huge area of land with many potential targets, some of them with world class potential on their own. That's before you factor in fiscal and political advantages.

If you look at Cove, you will actually see how limited the potential there was compared with what we have. They only made 4 drills at that point, of which 3 were successful and the rest was seismic. We have ten drills on our license. How many of them are usable to combine with the seismic? We can't answer that.

How much do our suitors want that potential?

eric- We are now in a closed period. The Board are dealing with deals/agreements that would not allow director dealing, such as the GSA, Sidi etc.

JP advised back in April that it is unlikely Sound would see another open period where the directors could deal.

I do get it and IMO it's mostly down to traders or those looking to amass cheap shares. Historical charts show we have these swings and there are plenty trading those swings to make some cash. As you said a while back, Sound is a trader's share ;)

Investors are becoming increasingly short term in their outlook IMO. And that applies to all sectors. Sell on boredom is rife on many shares I own or follow.

For a multitude of reasons I don't think OGIF would sell a single share.

Fantastic, thanks for your research.

Some great posts today Myosotis.

Many see this increase in Capex as an underestimation by CF, and to some degree I agree. Whilst they result in the same outcome, it appears to me this has much more to do with reducing the risk profile to ensure Stage 2 finance is agreed than a basic oversight. Either way, payback will take longer.

I don't deal in share plans that often, but my thoughts are follows for JP specifically:

The options (when exercised) will attract income tax and NI (47%) on the amount above the option price. This will effectively be treated as salary. So if they were left unexercised until the company sale, the income tax and NI would be considerable. Options that have been previously exercised and are now fully paid shares would only be subject to CGT at 20%.

However the difference (% of tax paid) is not as large as it would appear, because to exercise the option he has to sell shares that he already holds to pay the tax and also has to find the funds to purchase the options in the first place.

On some very quick calculations, at £3 per share he'd be less than 10% better off. As you can imagine, as the figures get larger (£ per share received), the saving reduces as you sold shares originally to gain more shares.

Personally I can see more benefit in an early conversion to allow for tax planning purposes or for some sort of shared risk sale before or after TE9.

I would caveat this because I don't have any knowledge as to whether there are any special schemes that could be used to circumnavigate any of this. Unlikely though.

Those Veyrons are big cars Andy. Not easy to park.

Spooky. I was just thinking that you'd probably appear with an update on the SP!

Having given the plan some thought today (after 250 had to bring it up YET again ;) ), it could be quite an interesting move by JP.

We know that without the trading plan he would no longer be able to sell any shares.

If JP had some expectation that there could be a shared-risk sale, based on the seismic and TE9/10/11/12, with their various outcomes, then this plan would allow him to be able to sell or transfer (to spouse/children/trusts) shares at various SP levels. Us PIs would have flexibility here, so why not JP? A deal could be done pre drilling or for those far more cautious, a deal after a successful TE9 on the remaining drills (etc).

I know I viewed the trading plan from an entirely binary perspective previously.

Only my thoughts. Who knows...

We've had quite a few clients who have suffered from substandard materials coming out of Eastern Europe and the Far East. Metal has certainly been one of the main culprits. Good for UK based businesses though.

'This price of course is the price paid by ONE to the operator of the assets. How much of that will fall through to the SOU investors is something that neither JP or JJ have addressed yet.'

We have been guided by JJ that at $8 per scuff, our assets are worth £1.50 per recoverable TCF on an NPV10 basis. Changing the $ per scuff by $1 will change the NPV value by 20%. So in my view the gas percentages are not relevant for investors right now as they are already factored into the calculations.

Agreed Fellrunner, I can't see how signing the GSA causes problems right now.

Spot on regarding the signing of the licence Ponkey. It says a lot that we have had the licence extended when it didn't need to be right now. My own opinion is it's there to facilitate the sale of the company. That is in the interests of Sound and the shareholders, ONHYM, Schlumberger, Enegas and of course Morocco.

When you take all the quotes, information and evidence together, I'm certain that we have an invite-only data room set up, with potential suitors already taking interest.

Informal offers? That's harder to say, but it would be foolish to discount any course of action right now IMO.

Ozzie- The context was a straightforward explanation by JJ on the value of each TCF and was added on to one of the team making the point of how much bigger TE10 (onwards) is inTCF terms than what we currently have 'banked'.

There was no suggestion NPV8 is a more appropriate calculation moving forward. Although IMO it could be argued that the TE5 horst should be valued on NPV8 basis or something more appropriate.

I think it's highly unlikely the asset would be sold over the business. Bear in mind that this was only discussed in the context of disclosure to the market, rather the sale of the asset.

PNE- The dividend would not be taxable if held within an ISA.

PNE- In relation to my discussion to JP, we were effectively talking about risk sharing, rather than deferred payments. I think JP has also said he doesn't like the idea of the normal version of deferred consideration.

So my idea of this would only be a very short term deferral and it would be based on our drill plan which would be executed by us in partnership.

Just another idea to throw into the pot.

No nothing was said about another FSC.

They've had a lot of time to deliberate TE9 and I expect that everything has been done to mitigate the risk as much as possible.