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Came across this promising news article regarding the potential improvement in Egypt's LNG market, bodes well for Capricorns:

https://oilprice.com/Energy/Energy-General/Can-Egypt-Become-A-Global-LNG-Power.html

It was overbought last year, now its over sold - will end up somewhere inbetween. Gold is only going one way, and that is up..inflation adds to overheads but people don't factor in that gold will be on the rise big time very soon -the reason, paper money is literally overflowing out of the central banks and they can only tell so many porkies until everyone realises, just ask Boris- the asset is still here, no debt. Patience required, but a lot of short term views being spouted by guys spread betting this on margin. If you didn't buy on margin, just sit back and wait.

If it breaks down further why would it be a time to get out, you do realise you buy shares low and sell them high right?

I would say it is more likely bid or short defence. Seen it many times. Short £20m and it will be bought back and cancelled at whatever price you take it down to.

But with cash in hand and Indian settlement cash, the current market cap is below the probable cash holdings post settlement receipt? So why would the share price go down further on anything related to Egypt? They could literally hand back the license to the Egyptian government and walk off and would still have a company with more cash than the current market cap? Ludicrous theories from a 1 post newbie haha!

TBF, if you want to read my post history, you will see I was in this earlier in the year but saw the warning signs and got out without too much pain...and have since not rebought. I have set my position out transparently. If you chose not to listen or disagree I don't have any issues. If they breach covenant, what exactly do you think they would do? Either dilute you or flog assets for peanuts, that management presentation for the big turnaround was just blue sky thinking and mumbo jumbo at best. Net debt exceeds market cap, never a good situation.

What I cannot fathom is why this keeps tanking...how does Omnicron or covid impact a legal settlement to pay Cairn cash, which when added to current cash holdings is in excess of the current market cap of the entire company? Egypt production is fixed rate - no exposure!?

Who is selling this? I am starting to think someone is playing games here, ready for a lowball bid.

From my previous post:

''Underlying net borrowings at 30 June 2021 was £178.7m, showing a marginal increase of £3.7m compared to 31 December 2020 (£175.0m). On an IFRS16 basis, including the Group's operating lease liabilities, net debt has increased from £198.1m at 31 December 2020 to £211.0m at 30 June 2021.'

'At 30 June 2021, the Group had headroom against its committed revolving credit facilities of £117.0m (2020: £115.6m). The ratio of net debt (including bonds and guarantees) to Ebitda was 2.9 times (31 December 2020: 2.8 times; 30 June 2020: 2.5 times). The covenant requirement at 30 June 2021 was 3.75 times, which reduces to 3.5 times at 31 December 2021.'

I have looked at the 6 months results RNS from Sept now, they are in danger of breaching covenants here, hence why this will likely go a lot lower - the cash call is likely as others have said. They were on 2.9x Ebit at June, if things are getting worse, will they clear the 3.5 at year end? I believe they also need to refinance in next 12 months, so no way they will get financed at this debt ratio. Net debt at end of June was close to current market cap and margin is deteriorating further.'

You have been warned, this is in freefall because of the insolvency risk

No, the part when they breach covenant Cookie

Well I will throw my hat in the ring and controversially go for 5th Jan for confirmation of funds, as it seems missing deadlines and what not is par for the course...dividend by end of Jan. I dearly hope I am wrong and it's pre Xmas. Glad the mood has changed a little today..united we conquer, divided we fall. If someone comes on here with a short thesis from now until payment I will savage it (in an entirely constructive manner of course ;) ...onwards Capricorns, to the promised land and beyond!

There is a major problem here, just look at the share price graph since the pandemic started. Margin deterioration, unproven management team, significant debt levels, bad debts - can't see them turning this around. With the market cap this low, an equity raise is off the table, so how are they going to refinance it - when is the facility up for renewal?

The chat has gone quiet amongst us holders here lately. I also have many many shares here now. Its the easiest 10/20/30% return you will get in the current market - I just don't understand why the price is so supressed, have been over it again and again and just can't see the downside...Would be fantastic to get the cash in pre Xmas, then have to start thinking where to deploy the dividend return..odd markets these days GLA

Price rebounded nicely this morning...Maybe people realised there is virtually no exposure to oil prices anymore in Cairn, other than on contingent consideration receivable which is over 5 years and has been wholly discounted in the current market cap already.

https://oilprice.com/Geopolitics/International/The-Geopolitical-Game-That-Could-Transform-Gas-Markets.html

Lucky, I think this has some bearing on the decision to exit north sea production..will climate restrictions be more onerous in that region that somewhere like Egypt, that is still a developing economy?

The portfolio mix has been heavily shifted towards gas, which is cleaner than oil I think and more heavily involved in grid power production than car fuel, so I genuinely think the board know what they are doing in respect of climate - they said carbon neutral by 2040 in recent presentation. With the lack of funding for new fossil fuel production likely to worsen in the next few years, I expect hydrocarbon prices to remain elevated. This would make any new discoveries more valuable. it also means that if companies can't raise debt, a company such as Cairn that has significant cash reserves becomes more valuable. Someone suggested a while ago that perhaps Cairn might invest in a green energy project with the surplus cash, I must admit this is an interesting proposition.

The fact that the Egypt deal is fixed price does not bother me anymore, although I would like to know if there is an inflation mechanism built into the pricing, the fact that Cairn have a hedged cashflow to pay for the other exploration drilling etc suits me fine.

The current mcap is below cash post indian settlement, so really the elephant in the room for me remains the resolution of the case.

Topped up, I have the confidence in my conviction here.

If the Indian government pay up, this is trading below cash value - stupid market

The Indian Ruppee has strengthened recently against the pound, on current estimates the INR79b payment translates to £791m.

From the North Sea sale RNS 'The retained interim period cash to last balance sheet date of 30 June was US$272m as announced at the interim results, and retained interim period cash from 30 June to 1 Nov was a further US$90m.'
- That amount to $362m or £271m

Combined cash from those two items is circa £1.062b. Say Capex remaining this year is a £50m outflow . That is £960m cash at y/e if the Indian case settles and we have a MV of £919m.

There is then no value ascribed to the Egypt assets (which have a fixed price gas sale agreement), the contingent receipts on Uk North Sea and Senegal, Mexico and UK north Sea exploration to value.

This is a good place to be.

This is why I quite admired the board strategy, they have produced a company that is well hedged against covid risk.

Market is just irrational, expect if it really tanks we will get dragged down too, despite this currently being akin to a sovereign bond in its make up (granted no interest)...the buyback will be more value accretive should the price slide though, so some benefits to holders too...

Well if an offer is made, if is not going to be less than £1.30 in my humble opinion. So if you think they are serious this is a buying opportunity for a return within a month. Downside back to pre offer news is minimal - so its a good option at this level.