Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
I guess the answer is now obvious....
Jan, i would agree with your broad fag packet expect one big item. You are shy on the increase in contingent consideration paid to BP for Magnus on higher oil prices. It is not small. Conservatively, i would take 75m-100m off your estimate at 60 oil to be prudent. It is still way too cheap
The US now respect their banks and their banks respect their shareholders and customers. Antonio's argument ''yes but we have created a safe bank''. Nooooooo, you have created an overcapitalised bank and therefore your return on equity would be laughed at by American banks Antontio. Lloyds need to start returning capital back to shareholders for this to catch a bid. They have messed around now for months with some cok and bull story about safety. What is this british institutional imperative about dividends? BUYBACKS WHEN THE COMPANY'S PRICE IS BELOW WHAT ITS WORTH AND YOU ARE SITTING ON TOO MUCH CASH IS GOOD FOR EVERYONE. Christ sake its painful to watch. The BoE have said buybacks are fine. NatWest have just done one
i would forget dividends. it was a forced question and AB felt he had to respond. its way further down the line. ideally i would like them to use excess cash to find small cheap end of life fields that dont suck up much in the way of capital. i think there will be real value in operating these enhanced / end of life plays. Regardless, forget dividends for the time being
Just to be clear, i dont think the catalyst for ENQ is reopening. Its completion of the refinancing and GE deal. That announcement (or announcement to say its pretty much done) could hit the tape any moment. When it does, ENQ rips within seconds and you have lost your entry. I ascribe a good chance of this refi getting done and GE getting done. If the POO holds, this is a slam dunk
Chilten how can you predict when that catalyst will happen? Levered cyclical small caps like ENQ can rip overnight. Your strategy doesnt make sense to me but i am not saying it doesnt make sense to anyone. I am happy to sit and wait for it. The world can not afford to stay in lockdown beyond late spring. The globe will start to reopen imo regardless
This could be calm the before the reopening bonanza. It certainly feels like it. Financials, energy, REIT's all taken a battering this past couple of weeks. It is probably impatience. Come May time, i would not underestimate the emotions of investors and therefore the market. The consensus will turn into....oh thats it for lockdowns....we need to get on with life....we need to fly, drive, go out, visit places, i need to get back into the office for my mental health etc etc etc. Europe is 2 months behind the UK and US not 6. Its amazing how quickly market sentiment will change. Do not let the market dictate when you sell. Just sit, smile and be happy :-)
based on the call AB indicated $35 cash breakeven at today's oil price (as 2020 +10/15%). His reference to oil price dependent cost was largely in reference to the contingent consideration for Magnus increasing as the POO increases, which is not immaterial but is of course a net benefit. That $35 also does not include PIK. But if interest due is cleared (hopefully 2022 and beyond), there should be no extra PIK.
Romaran...agree, mix of keeping a lid on disclosure while mandated investment bankers and lawyers write the prospectus + operational fixes in Jan / Feb hindering the pay down. I tend not to over-analyse management tone or 'slickness'. Skin in the game is more important than style for me.
hitman. Yes that FCF/equity yield was rather funny and a bit of a slap to the market but they should not complain and moan. They should put all their energy into doing what they can control. Getting good pricing and terms on the RCF, keeping operations humming at Kraken and Magnus, making sure the market is fully aware of their drilling plans at Bressay, GE, western flank, Malaysia so we can communicate a consistent message that ties back to our mission i.e. we do not lay out big chunky capex, we are nimble, we like short cycles, we extend lives of existing assets and enhance recovery and we are comfortable with conservative levels of leverage (from end of 2022 when we make a big dent).
Squid. I hear you and whilst it sounds unorganised and aloof, money talks and AB ultimately has his 'shoes' firmly under the ENQ table. In reality, the vague responses is due to one reason. They currently have their elbows out with the banking houses and they are conscious that they will shortly putting out detailed disclosure via the prospectus for GE and the refinancing. If they misquote on the call they will have to revise up or down in the prospectus.
The refi + GE transaction being completed and brent holding up is very very very critical for this company in terms of its ability to provide certainty to the market. Tullow provided more certainty and look at the reaction. I can not understand why an investor would sell at this juncture on a voluntary basis. With the new money at $50m, lets say the market cap is $500m at todays share price and call the net debt post-GE/refi on a fag-packet at $1500m. I calculate ENQ can do $400m of true FCF over time at $60 oil. Providing the 2P and 2C gives us +10 years, and we generate $400-450 on a current equity value of $500m, I see no reason why the equity/share price can't double each year from here.
...To add
Increase in decomm provision of $97m and the additional $10m cash to KUPEC also not helpful. Decomm cash expense of $41m in 2020 is no small number. It will matter going forward.
I will read the AR in detail later but first impressions in order of priority:
189mboe in 2P was 10% higher than I expected. 2C is also as a bonus
I see glimpses of a reversion to the ENQ mission of old and thats what i was looking for. Targeting end-of-life producing assets, laying out a low amount of capex for short-term operating cycles, not levering too much, avoiding development, enhancing recovery and passing free cash flow back to equity holders. Malaysia 211/12, Bressay, GE and Kraken Western Flank (although would have liked sooner than 2023) give me confidence that AB has a plan
Debt paydown is ok but I knew the Magnus vendor loan and Magnus contingent consideration payments totalling $60m is a dark sin, often missed by less astute investors, hampers the reduction the RCF and Bonds. With Brent in 2021, and the new RCF, hopefully we can start to see bigger lumps coming off
Operational problems in Feb 2021 not ideal but someone on this forum said 'things happen' and that is indeed what happened.
I want to see AB fight hard for the pricing on the new RCF. This matters in terms of ENQ ability to keep paying down principal.
Operational excellence is needed to avoid cok ups. Things can not go wrong operationally on a levered cap structure and thats why Feb dissapointed me.
I am often critical of ENQ and management but I am starting to see a rainbow forming. For the more numerically astute (L3, L7, PRDaynes......What did you think?
More to come,
Guitar.....I am sorry you had and expensive lesson. We all have them. But surely you now agree....the price at which you purchase a piece of a company (shares) kinda matters? It’s called margin of safety. Some people bought this at 35p when the EV of the entire company was c£200m. That’s very different to your 200p entry point. I don’t think people have to believe this is the next Apple at 35p