Member Info for spike501

The dividend will increase by 20% simply by virtue of the fact it will be paid 12 months instead of 12, and the year over year increase will be even higher as the monthly payout was increased in the year.

The yield is now around 9%, dividend yield is clearly not driving this share, the market is essentially doubting the sustainability of the dividend, so increasing it further is unlikely to do much and if anything given the current softening if oil prices could look reckless.

It would look even worse to increase the dividend only to reduce it again in future, and I certainly wouldn't be paying out special dividends as they do nothing for SP. If the board feel there is excess capital, use it for buybacks, but more likely keep it to ensure the dividend can be maintained if oil prices and cashflow do soften further.

My view is they need to ditch the North Sea and focus on Canada only - its an unloved sector, serenity is now small, its an uncertain money pit of development investment and as Tony highlights it has a lot of costs.

Very significant news, I’ve been critical recently but this is hugely significant.

1. Removes any risk of a default on the upcoming note maturity.
2. Gives a tick for corporate governance from an independent source
3. Favourable financing rates - this is proper development finance not speculative notes.
4. Gives a clear path to the next increase in production up to around 60000 Oz per year.
5. Given the prepayments they have made, their free cashflow generated in the next 2 years should almost fully cover the development anyway - it allows for acceleration and not just cash in, cash out development, but net debt in 2 years time should be reasonably minimal.

Big step forward

"They pilot drilling the area it's normal practice if they strike they plug ready for main rig terminal to arrive to extract imho"

Not really - depending on the results of this exploration well, there will be an appraisal drilling campaign that is anticipated in 2024 (as per latest presentation), which will then inform the Field Development plan.

""They did keep to the mid-Nov spud date which is a plus. " - ! ! !

They missed the September date. Get real."

Who cares what they hit and missed - they are not the Operator on this and North Sea operations especially this time of year are tricky.

This is standard on AIM Oil and gas exploration shares - speculators look to try and get in on a pre-drill run-up and then take gains before the drill result is announced. I'm not sure why anybody was expecting different.

I wouldn't necessarily expect strength or weakness from now on in - just volatility.

It means that they don't intend to keep this well to be a potential production well in the future, so instead will plug it up and abandon. Absolutely standard for the first well on a new prospect.

Its in the half year report

"As of 30 June 2022, the Company had cash balances of US$1.1m. A loan in principal has been agreed with Bank Center Credit in Kazakhstan, there are sufficient projected funds from this and from current trading to meet the Company’s medium term plans. This includes the repayment of the US$10m bonds that are due for repayment in December 2022"

Is it Kazakh Government backed funding - I don't recall that?

They need to close the funding - thats all that matters now. They have the bonds expiring at the end of this year and are relying on the funding to repay those bonds.

Unsurprisingly there is a complete lack of trust at the moment, hence the SP being where it is.

"They detail those commodity price falls and attribute it 'primarily' as the cause. Gas (@ c52% of volume) is 8.8% down; if all prices were down by that amount then why is the NOI now down by a further 14%?"

NOI is net margin - if gross prices are down by 8.8%, the net margin will be down further by a factor of what the net to gross is. If my gross selling price is $100 and my net margin is $50, then a 10% drop in my gross price results in a 20% decrease in my net margin.

Next year there is likely to be substantially more demand for LNG than this year. A substantial amount of the filling of European storage this year came from Russian gas, prior to the shut down in early September, where as next year it has to be assumed almost zero will come from Russia - thats a huge amount of supply to be replaced. Additionally China was releasing gas from its strategic stores and export it as LNG, so 2023 will likely also see China import substantially more.

The main question will be whether AECO bottlenecks can be reduced to get the actual gas out of Alberta.

Maari would have provided a net cash injection, likely covering the cost of initial investment- it was a deal done when oil was in the dumps so the terms were exceptional, there is unlikely to be anything available on similar terms at the moment.

They've shovelled all free cashflow out for "advance payments" to contractors so have hardly any cash on the balance sheet - they have bonds expiring in 3 months time, which they are supposed to be refinancing with an expanded bank facility, but given the reduction in gold price in recent months, I can imagine its still being reviewed.

The money can’t be claimed back, it’s an offset against the various supplementary charges for UK oil and gas - I’m not even sure it’s any benefit to EOG as the supplementary charges are offshore only I believe.

I’m not sure why you think EOG could enter the market and repurchase 390million shares at the current price. They’d have to tender it, they would be fees involved and it would spike the price.

Not that they would anyway - why would management risk their gravy train?

Of course a substantial discovery would have been positive, but this has cost very little and now I3E can go back to being a Canadian cash producer with some great assets with the cost and politics of an expensive North Sea development sat over it. I’m sure it won’t be pretty today but I think it will quickly recover

I'm amused Edgein has used the Centrica example - a transaction from 2012, when the North Sea was pretty hot, between two giants (Centrica and Total) for assets that were already producing 9,000boepd.

As if that is any sort of benchmark - producing assets, can't be compared to pre development assets as you say.

Anyway, lets get the result first and then worry about valuation - its just further de-risking along the way.

“watch planet of the humans documentary - all renewables have a bigger carbon footprint than fossil fuels“

The film was factually and scientifically illiterate on this point. There are enough studies and evidence showing renewables have a substantially lower (as in 75%+) lifecycle carbon footprint than fossil fuels.

Planet of the Humans was to renewables what Gasland was to fracking.

"All of this would have been different if we had invested heavily in oil and gas whilst the others were not, we would have security, storage and probably even be a net exporter whilst the prices are high"

Who is we? Tax allowances for drilling in the UKCS are relatively generous, more so now, and tax rates are globally mid range. The UK Continental shelf is a mature high cost basin in long term decline that could only be slightly slowed and not stopped - its simply not an attractive destination for majors as there are limited large fields to exploit and periods of low oil and gas prices have dampened investment. There was never any chance of being a net exporter again and environmentalism is a long way down the list for why UKCS doesn't get investment, nor why production declines won't be prevented.

There could have been more storage, but its still a European gas wholesale market, not a UK market only so storage needs to be looked in the context of total European storage not UK storage - its also something of a hindsight view, storage would be more akin to being insured against a lightning strike then insured against a burglary but unfortunately lightning has struck.

I’d not call the Government complacent - incompetent would be a much better description.

For the first time since 2001 I’d vote Labour - fortunately I don’t live in the UK so don’t have to.

I doubt it, the Tories are toast

“See my previous post which says - custodial risk applies to any stocks held in online accounts“

Don’t be ridiculous - cash can be at risk due to co-mingling and creditor priority but shares are ring fenced and protected in a bankruptcy