IF (part 1)11 Jun 2021 04:32
Plausible events that could trigger a CEG SP surge, with the caveat I’m not predicting it will, nor posting a DEFCON 1 nuclear ramp:
Firstly, lets deal with MCap rather than SP, and work backwards. Secondly six IFs are needed, for all the CEG ducks to line up:
1. If the Bahamas license is renewed on 1/7/21
2. If the Percy-1 autopsy meets expectations
3. If a farm-in happens involving a free Bahamas drill and cash for at least 33% of $150m back-costs paid: $50m
4. If CEG retains 25% of the Bahamas asset
5. If CEG states it will self-fund a Uruguay spud from point 3 cash (>1Bboe)
6. If Trinidad + Suriname = TOTAL success
Based on analysts’ predictions leading to the 2020 Percy-1 spud, the MCap was estimated to reach c£200m. Due to the LOL overhang and EA court case, it only reached £110m on 21/1/21 (2.35p x 4.7B shares). Note: On 4/2/11 it peaked at 25.7p/£220m Mcap. And in Aug 2018 reached £156m when a major was in the data room pre CERP merger.
Key point 1: What if an RNS states a major is in the data room again? Undisputed fact: £156m Mcap was reached with the HOPE of a farm-in. If this precedent is repeated = 20p SP.
IF 1-6 happen?
(a) Uruguay spud 2022, 100% owned, fully funded. I’ve used Percy-1 analysts’ pre-spud value of £200m, as Uru-1 is its twin.
(b) Bahamas Percy-2 spud, 25% owned, free drill(s). £200m (Xref key point 1)
(c) Valuation of ex-CERP assets? In Dec 2020 Auctus proposed £250m-300m MCap for ex-CERP assets alone. If CEG reaches 2500/boed end 2021, with 4000/boed in 2022 and $25m/yr free cash, as PoO is higher, I’ll use Auctus’ £300m valuation.
(d) Positive market sentiment knowing an OO/Placing/CLN will unlikely ever happen creates uplift to MCap. My guess: £50m
Key point 2: A + B + C + D = £750m Mcap. 1B shares inc Bizzell, warrants, options and a Stena settlement = 75p SP. BUT, to be conservative let’s call it 50p.
As I’m having an ‘IF’ fest, I’ll use a few more using Kipling’s words, with minor edits …
‘…..If you can make one heap of all your winnings and risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings never breathe a word about your loss;
If you can talk with CEG de-rampers and keep your virtue, or walk with Kings—nor lose the common touch,
If neither shorters nor ex-LTHs can hurt you, if all men count with you, but none too much;
If you can fill the unforgiving minute with sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it, and which is more you’ll be a Man, my son…..’
Key point 3: The above 50p-75p SP is NOT a prediction on my part nor a mega ramp. It is fair analysis based on past performance, precedent and pro-analyst opinions caveated with many IFs. Frankly, we’ll all be ecstatic if SP reaches 10p soon and 20p in 2022.
IMHO. DYOR. GLA.
Starchild
https://www.lse.co.uk/profiles/starchild/
Part 2 tomorrow. The cunning plan itself: how a major can recoup most of