Member Info for stephen11

Why small stakes often command premiums in late-stage farm downs

This is important for EME:

1. Once the large buyer commits, backing out is extremely expensive - Nations has signed carry obligations, CAPEX commitments, and timelines.

- They need EME’s 8.5% to clean up ownership before FID

they lose negotiating leverage — EME gains it.

2. Removing uncertainty before government approval - Indonesia will want clarity on final participants before approving the development plan.

- A small 8.5% “floating” stake is undesirable - premium buyout.

3. Economics become clearer - easier to price - higher valuation

- Once CAPEX, GSA, carry terms, and timeline are public, the valuation tends to go up, not down. The Conrad RNS messed this up

4. Strategic value - percentage value

EME’s 8.5% could be: the final piece required for full control, or a stake Nations buys to simplify financing, or a stake that stops governance complications.

The last 5–10% often sells at the highest implied valuation.

What this means for EME?

If EME ultimately negotiates a settlement or buyout, the real-world analogues show:

An 8.5% minority can easily get:

- 15–40% premium over initial farmdown valuation, a settlement cash payment, or a carried interest to production (even more valuable long term).

This is why the “last man standing” can sometimes be the 'KINGMAKER'

GLA.

Stephen11.

The same could be said of Conrad - they won’t want a protracted legal dispute either and Nations will not pay them until they have clean title.

Two sides to this story, and it’s not over yet.

Dispute the legalistic RNS language you can be assured all 3 sides will be talking behind the scenes.

To much at stake for this to drag on to arbitration.

As many have alluded to, neither EME nor Conrad can afford this, and Nations will not be able to proceed without clean title.

That's it in a nutshell - 3 parts need to align (EME, Conrad, Nations), not 1 or 2 in isolation.

Pride and corporate greed need to take a back seat to enable progress.

2 weeks and this will be sorted - i hope!

Out of interest - how many percentage points down 👇 was Conrad at last close?

They have caused this issue and they should fix it. Nations won’t like the possibility of a protracted legal dispute over title.

Whilst in dispute publicly you can be assured Conrad and EME are still negotiating privately.

Nations will want this deal to go through with clean title and no possibility of protracted legal ramifications.

There is more to come as this story evolves.

Thankyou Junior1616

Jimi Hendrix et al. when will GDR receive the next tax credit and isn't it normally about £800,000.

Just thinking about cash runway Verses cashburn.

£500,000 as the first trench in January (or earlier) wont last that long on current burn rate.

That said, i don't know what future revenue is anticipated.

Thoughts welcome?

Ps... super pleased to get the loan.

Thanks in advance,

Stephen11.

Indeed Lionel1 - fantastic news. Thankyou for all your info sharing, and positivity, even through worrying times.

The survival crisis is now under control, pending final paperwork. Nugent is now effectively the company’s backer. Shareholders no longer need to fear an immediate insolvency event. A rerating over the coming weeks is coming.

This is the most shareholder-friendly rescue structure GDR could realistically have hoped for - well done DN and the board.

Onwards and upwards,

Stephen11.

I'm not the fastest at typing MrH_m, so have missed your post between thinking, making tea, and watching I'm a Celebrity.

Why the “wobble down first” theory is completely wrong.

The idea that EME would drop after the Conrad/Coro farm-down completes is simply not how JV asset valuation works.

The ONLY reason EME is trading at distressed levels today is because the market doesn’t know the farm-down price.

Once that number is published, uncertainty disappears instantly and the market finally has a hard valuation for Mako.

When a large stake is sold, the remaining minority stake rerates UP, not down — because:

1/ A transparent market price is finally established

- EME’s 8.5% is valued directly off the sale price.

2/ EME becomes the last piece of the puzzle

- A buyer consolidating Mako needs the final 8.5%

- The smallest stake historically gets the HIGHEST premium.

3/ Scarcity value kicks in

- Only one stake left to buy

- Leverage shifts to EME, not the buyer.

4/ There is ZERO precedent for a minority stake falling after a major JV transaction

- In every relevant deal (Cove Energy, Tullow Uganda, Ophir, Oil Search), the smallest stake increased in value post-transaction.

The “wobble down” idea is emotional speculation, not supported by any industry examples.

Once the farm-down is priced, EME’s valuation goes UP — because the asset finally has a visible market price and EME becomes the essential remaining stake.

I'm happy for further debate or correction.

Stephen11.

They'll be saying something like “we cannot complete any deal until this dispute is resolved.”

Then think what the highly paid corporate lawyers advising the buyer will say. They'll want:

- clean interests

-no legal action

- no ownership ambiguity

So the buyer is thinking:

“Fix your JV issues. Then call us back"

This will put pressure on Conrad as they will fear losing the deal.

I'd say we'll get a resolution between Conrad and EME within 2 days.

Money£££££talks.

GLA.

Stephen11.

Bids on 0.995 and SP +25%.

Getting the loan deal over the line and announced would sure help short-term stability.

When i think of the way Conrad have behaved.

Good on EME for standing up to them and being proactive in their communication strategy.

GLA.

Stephen11.

A long, protracted legal dispute will not do either company any good.

Best to get both boards on a conference call and find a win-win solution.

Or both companies SP and credibility will suffer in the short term.

I hear what your saying Pied_piper, although Conrad will also be worried that this will throw a spanner in the works of the farmdown. Conrad have more to lose than EME.

I bet both companies are in a state of turmoil at the moment.

Lot's of business psychology at play.

Exactly my thought HawaiifiveO - i hope common sense prevails and a mutual agreement can be sought.

Reading between the lines, the EME issue has delayed the farmdown. The potential suitor will want this sorted before they sign.

Conrad have more to lose. EME are sticking up for themselves - they are the Kingmakers and hold the balance of power, id anything.

The key lines from the RNS:

“At the time the Notice was received, the formal dispute-resolution process… was ongoing.”

- Under most JOAs, you cannot enforce a forced withdrawal while a resolution process is active.

“An ‘in-principle’, verbal understanding… had been reached.”

- Shows EME was negotiating in good faith.

“Empyrean has received legal advice… rejects that the Notice was issued validly.”

- This is a clear legal challenge.

“The Notice purports to frustrate the tag-along provisions.”

- EME is signalling Conrad breached obligations

- This is a serious legal risk for Conrad, especially with a farm-down pending.

“EME will take all necessary action to protect its interest.”

- They are preparing arbitration or injunctive action if necessary.

GLA.

Stephen11.

####Read between the lines####

This is not a loss of asset.

It is a commercial dispute designed to pressure EME before a major farm-down.

Ironically, this confirms:

- A farm-down is coming

- Conrad wouldn’t do this unless a deal was imminent.

- EME’s 8.5% is valuable

- Otherwise, Conrad wouldn’t bother trying to force it away.

- EME now has leverage

- Farm-down cannot complete cleanly with a disputed title.

- Worst-case: EME gets bought out at fair value via arbitration (arbitrators strongly resist wiping out minority assets on unsettled cash calls)

- Best-case: EME gets a proper tag-along premium due to the buyer’s entry

Join the dots - the RNS reads:

“Execution of all Transaction documents”

This is extremely important wording.

It means the deal is:

- Not being negotiated

- Not being reconsidered

- Not falling apart

…it is being signed.

Execution = final signatures → not early-stage.

Happy Days £££££££££££££

GLA.

Stephen11.