Member Info for Sturm

Agree on those points +

4) Dividend instead of share buyback = not as good for compounding and LTH

5) It's Peru. Even with rule-of-law you need some country discount.

Will be interesting to see if Canada also went for a x-mas sleepover. A "zero" day doesn't seem likely :)

Somebody should place an order for 1 share @ 30 p :D

I doubt Shell or any other major is interested. They allocate Capex like TXP will. And T&T just has a terrible tax-regime, so they certainly have more interesting targets globally with better returns after tax.

We'll get 2025 guidance in mid/end January - until then, anyone can have their own more or less qualified guess.

At the present brent price and 2024 Capex in 2025, they'll have 40 mio. USD for dividend from cashflow (not set in stone, depends on tax and the precise amount requires details only known to the company).

And yes, that's based on 20K BOPD.

With 915 million shares, 40 mm = 0.0437 /share or 0.0109 /share per quarter. So yes, they have to reduce Capex overall (despite promises on 107 and 131). Or borrow to pay dividend (again assuming 20K bopd and brent @ 72.5).

Had they reduced the share count to 800 million, 40 mm in cashflow = 0.05$/year or 14.4% more dividend per share vs 0.0437. Buybacks at low prices is a strong thing. Having investors buy back shares after they've paid taxes on dividend = less compounding. Those 115 million shares could have been bought back for less than 1 year of dividend.

And ofc. we get what the major shareholders wants. Top 3 own > 50%. They decide. We abide.

Nice to see PB is taking the doubt seriously enough to reiterate that they'll fund it by debt. Also ppl in doubt of the strategic fit might get an epiphany. True synergi is when you're getting a stronger market position and/or can get more for the existing production. That's the case now. (Whereas Trin was a clusterf. of complexity and new, risky (offshore) production and "cost" synergies - those are paper synergies and often fail to materialize).

Block 131 is nice and hold nice true synergies (meaning existing production increase in value due to dilution and Iquitos distribution), but it's not as transformational as block 107. They've kicked the can on block 107 since the IPO, so that's very disappointing IMO. I'd rather have less dividend and more exploration when it comes to 107.

Also, at 2024 Capex in 2025, they don't have the free cashflow to pay dividend at the present brent price and production. They'll have to borrow or reduce Capex. So investors who knows the case are probably worried about 2025.

IMHO they should have used more of the cashflow to buy back shares and keep the dividend at a sustainable rate. So far they've paid 0.125 UDS per share or more than 100 million in dividend. That's enough to buy > 25% of the shares back at the present market cap, meaning each share would be worth 37% more. Certainly more interesting for future dividend (once the pricing is more fair) to own 1 million shares in a company with 600 million shares vs. a company with 915 million shares. Had they used buybacks to reduce the number of shares to e.g. 800 million by now, keeping a dividend at e.g. 1 cent per share would be less challenging.

But the major shareholder wants dividend.... question is how certain he is to get that in 2025 and 2026? I wouldn't be surprised if we get a message soon of II's reducing for said reasons.

@CRL - no way it's that expensive to stay listed on AIM.

"For example, a company with a market capitalization of up to £250 million (approximately US$318.30 million) would pay an annual fee of £10,650 (approximately US$13,560)."

What's your source on that - or perhaps there's a note in the ER.

@ Gord_1 the central block has produced for years. Consider it steady income, like a rental property. The loan will be easy to obtain "but" secured by the facility. Loan to speed up "drill to fill" is another matter. Even without a loan they'll be able to drill, just a bit later.

IMO they're not going to dilute shareholders further. We saw the reaction last year at the GA, and I'm quite sure the BoD would rather fold on the Central Block acquistion if it takes issuing 50% new shares. Not even sure that's legal, and it probably requires a prospectus if so. Though IDK the regulation re. investor protection in Canada & UK.

I think people confuse borrowing for a producing asset vs. exploration...

"Current gross production from the Central block is approximately 18.0 MMcf/d of natural gas and 200 bbls/d of natural gas liquids (approximately 3,200 boe/d)." At just 5 USD /MMCF and 50% to tax, opex and G/A, the loan & payback could have a duration of 2 years. In other words very solid. We don't know the details (especially the liabilities re. decomissioning); but the pipeline and facility will still be used for years and years. And we know there's synergi and scale advantages.

I bet anyone here would love to make that kind of acquisition.

I can’t see them raising anything at this SP when it should be possible to cover the aquisition through debt and cashflow. Let’s see what happens the next month when drilling commence and tax sellers return.

I hope they manage this with debt. Cheap or not. Dilution (especially without retail invester repair) would be a nuisance. If that means drilling a bit later, so be it.

We don't know the details of the deal yet, especially liabilities & decomissioning. But on the asset side, this makes a lot of sense. There's synergi in infrastructure and (especially) pricing and it's not dilutive.

While the Trin deal was dilutive at a low SP, had no asset synergi (some possible cost savings), added more complexity etc. Real asset was a taxloss... that will still be there when LOL throws in the towel in some years.

I'm keeping my fingers crossed - hopefully there's real clarity when the Q1 ER is ready. But probably a lot of noise in the meantime.

Wilbur, you should move shares if possible. Vote with your feet :)

Now you have to apply for a tax refund. Always a nuisance.

Just a PS:

I was very vocal about why the Trinity deal was bad.

Must say I love this one :D

Excellent acquisition. 0 dilution (at present SP) is what matters most to me. Perfect fit - I expected this to happen at some point, but this is much sooner than I imagined. Ofc. not a done deal yet, but it's highly likely it will be. And should also help on the "capitulation" sentiment - IMHO this marks the point of slow return.

I'm also holding PTAL and VLE - my 2 favourite 20K BOPD Co's and they each have a joker, like Kraken. I'll be holding on in all three companies until those cards are flipped (generational wealth chance at each IMHO). Easier to do so when sentiment isn't hostile :D

Even Dunder might give PB a slight nod today, I think :)

I hope someone asks when they'll be able to drill the next well if they're not able to increase their debt immediately. They should have been able to grow organically from this point. I can't believe that choked wells decline so fast that they're basically just refilling the decline with new wells. It doesn't really sound right.

I wonder if the market will believe there’s a white rabbit. He might say there is. Yesterday he Said Cascadura is not world class, but a cash burning mediocre field. Atm it’s a lottery ticket with a bloated board. Can a single presentstion change that perception?

@WAAA the new strategy is drill to refill. Drill to fill was 2024.

I somehow think they focked up their excel sheet. Either that, or Cascadura is not a world class asset, but a cash eating c class dilemma. I think (and surely hope) they took their sandbagging a bit too far. At this point in time they shouldn't really rely on more debt to bring more wells alive.

They're sandbagging the 2025 guidance for sure. Which makes no sense. So we're getting 4 new wells, but none of them will be above average from what we've seen so far and/or the production will decline so fast that there's only little growth in 2025? And on borrowed bucks?

It honestly makes little sense to me. I think PB will be able to tell the story better tomorrow and hopefully we'll have some rerating. Also - what about cutting the BoD if 2025 is just meh? 5 should surely be enough for the next year of nothing / *drill to refill*??

I don't think removing PB will make any difference (revenge and money don't mix well), but a stronger local presence is def. needed. Also at a board level. I'm not going to QQ much about the BoD buying (they own a fair share), but now is the time... dig in or sign out.

If they'd used their buy back mandate, we'd have 20% less shares and all-else-equal a 25% higher share price (and better dividend per share). And more likely be above 1 CAD. However, major shareholder wants dividend, so that's what retail investors also get.

Don't fight the windmill. Just buy something else. Like #VLE Valeura, with 10% share buybacks.