Member Info for TrekMadone

“ I said that I would watch the Investor Meet presentation yesterday before adding any further comments to those I made after the results on Tuesday. There wasn’t anything of materiality in the presentation or the questions that wasn’t addressed in the RNS but some factors were given a bit more detail.

The fact that Touchstone is in a very strong position is in no doubt and is rapidly becoming the full cycle onshore E&P company in Trinidad that it has recently confirmed. Although there have been some delays in the last few months, in operational matters and via strategy this has been a phenomenal success story and the jigsaw pieces are falling into place.

As the production profile starts to gear up on the back of the start-up of Cascadura, operating cash flow is growing but clearly not at the cost of overloading short term production when early stage gas prices are lower while initiation takes place. I see no reason why the significant and highly robust domestic demand cannot be to a great deal covered by increasing production at the field.

Indeed it is not just Cascadura that is part of the portfolio as of course the existing properties as well as that from Coho will add to that production from the many development and indeed exploration locations in the portfolio. The answer from yesterday’s presentation indicated that Touchstone has the infrastructure and capacity to have those existing operations completed by the end of this year and then accelerate through 2024.

As TXP grows and with cautious responsibility it will boost revenue and in due course be in a significant position to be the market leader in the country and I wouldn’t bet against expansion of the asset base either organically or even via M&A activity in coming years. I have said before that Touchstone would be a serious candidate for share of the year, that has been moved to the right for good reasons and this company is going to look in very good condition as we go into 2024.”

Seems to agree!

https://www.malcysblog.com/2023/11/oil-price-dec-arrow-touchstone-and-finally/

Trek

Hi Tom,

TXP was my largest position but that’s now been replaced by PHNX, DEC then SEPL. I am getting old and need income!

It’s 4th now given the drop in SP. I also averaged up a while back!

I have every confidence in Cascadura because it’s an absolute world class well. On shore! Like I posted though the gains are going to come over the next year. They will come but some folk are selling possibly because they have hot money invested.

It doesn’t take many sells or buys for that matter to shift the mcap in this market and it’s completely disproportionate as there is no reward for the majority position of hold.

If you don’t need the cash then this is a solid hold and even a buy at this level for those that look at the income and production forecast.

Plus there’s always the chance of an RNS that can add 20% to the stock in a blink!

Anyways good luck.

Usual caveats

Trek

Malcy comments only…..

“ I have put the entire DEC announcement in below as it contains a great deal of technical listing data. But the key point is that readers know that the previous plan to list in the US was pulled after company brokers detected a worry that such a listing would inevitably come with a raise that would affect demand for the shares and thus it is crucial that this listing is going ahead with no raise attached to it. ”

https://www.malcysblog.com/2023/11/oil-price-dec-arrow-touchstone-and-finally/

Krusty, slick and carco…. Thanks for the info. I have had time to read it properly now! Twice!

Also re fees they lop off $270m of debt at 31st Dec 23.

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Trek

Hope you made a big or didn’t loose too much.

I may grab your shares later!

Atb

Trek

I thought 500p today given the positivity on Wall St. Kicked off pretty well. Now dipped below 490 but still time in the day.

Would like to see it hold above 490 but has been starting week well and tailing off at the end of late,

1.8bn in cash generated pa + acquisition benefits and a mcap of only 4.9bn! Could buy the skin 3 years albeit it doesn’t quite work like that.

Oh well I guess the market just gets used to seeing cheap!

Surely someone will buy us esp with the gov making regs more takeover/business ‘friendly’.

Getting paid near 11% to wait! Crazy market!

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Trek

Some NG contracts in T&T have been renegotiated one was to $4.25. That’s the precedent and the opportunity. It’s a negotiation.

I think PB is right to hold back production on that basis. It also helps ops wise but only if existing revs funds operations. It does and they have been reducing debt! Our outlook for Casca is 20 years not 6 months. We don’t want to give the gas away early in the curve at the lowest price whilst there is an avenue to renegotiate.

As I see it the problem is everything is taking longer on the back of what’s already taken longer! That leads to investor fatigue and people have investment time horizons.

The bureaucracy on the island and a run of bad luck hasn’t helped! That’s staying the obvious and I am as psd off as the next!

But I am now looking forward to a costed ops plan in December to show a path to 20k boepd. Show me another low cap producer explorer that can fund that growth.

Some prod will come on earlier than others but from now to the end of 24 that’s what’s looking like the transformational period for TXP and should be reflected in the SP.

It’s a pretty low risk route to growth and the story will continue with over 50 high quality targets. The growth will lead to more rapid growth. I wouldn’t be surprised to see in 2025 drilling several of the high impact prospects with more rigs fully funded!

This is really the beginning. The math will eventually win through!

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Trek

Great info graphic.

https://elements.visualcapitalist.com/all-the-metals-we-mined-in-one-visualization-2/?utm_source=VC+Elements&utm_campaign=71f93ae0bb-VCE_Email_November_15_2023&utm_medium=email&utm_term=0_f3fdb4328c-71f93ae0bb-46691849

Shows up cobalt and lithium as being quite low. I am in two minds though.

I would play cobalt via ECOR if wanted exposure. It’s a royalty company, pays a divi and yield is good atm as sp in lows.

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Tek

I am not really a fan for companies of this type to dual list as it just adds admin expenses. Its ok for big drug companies/financiers etc to run ADR’s. They have ample liquidity.

That said I hold two dual listed companies in the energy sector. SEPL 120p uk but trades at 198p in Nigeria! And TXP which tends to trade at a slight premium on TSX.

Both are established dual listed companies but they raise their base capital in the UK.

With DEC using a US listing for potential capital raising, which I get as that’s where they trade, I think they will eventually move to the US. Especially if an arbitrage in SP opens up which is likely.

They cannot use treasury shares, posted below, as these have been cancelled. It will involve a bank acquiring stock here and listing it in the US as an ADR.

Here is some info….

https://www.marketbeat.com/financial-terms/dual-listing-what-you-need-to-know/

We only know that there will be a 20:1 consolidation to enable this. So instead of holding 20 shares you will now hold 1. No idea what happens with rounding. It may be cash or rounding up.

The reason for the consolidation is to meet the US listing requirements (whatever they are). A portion of the stock will then be listed in the US.

The SP mechanical benefit will imo come twofold…

1. Less shares in UK which will help the SP IF institutions want to buy a US listed stock without fx exposure other than divi. That may help mitigate the decarbonisation rush as less stock. But more expensive so it nets out.

2. Obviously gives access to a bigger market so hopefully more niche buyers as they explained in the RNS which is the main driver. Here’s a thing, if there are more buyers they will deposit more stock in US. That in theory should make the stock price go up. However, that’s what should happen in the case of SEPL but London is so shty it hasn’t even though the liquidity in SEPL is now poor!

As I see it further on DEC will be another London casualty with a full US listing and I don’t blame them!

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Trek

I reckon 500p tomorrow. Signs are there from the street.

It’s part of how I have traded this one well.

Sticking now. Job done!

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Trek

I still got a big number in TXP Tro. It’ll come good. V good. The math will have its day eventually!

ONC.. there told ya I sold out the rest! Mind you I did ok as sold over half at 24p. Today it hit the risers board!

I sold as accounts are late and I didn’t want to risk a lock in. Not saying accounts will be bad or company is in trouble. Far from it they have cash following asset sale. Just sometimes it’s better to protect profit and live to fight another day!

Added a few back in to HE1 this morning around 5.6. Couldn’t believe it. In fact I so couldn’t believe it I think I convinced myself that the price after the RNS was reflecting a situation I couldn’t grasp!

I do have concerns about the well washing out at the bottom. Karoo heeby jeebies after last time. Perhaps that was it. I was pleased to see plenty of cash left.

Still I can slice a few back down on test results next. Was nice to buy below my average and net out slightly down over the two trades by pounds!

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Trek

Judge you can still average back in.

Some of my best returns have been paying more for something I sold for less!

It’s just counterintuitive but data changes and price changes so investors views should also recalibrate.

Market has spoken now with these numbers.

I have looked at vols and they were down but it’s now in the results. Next set will show benefit from maintenance and I reckon a divi increase! Lol!

Good luck whatever!

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Trek

Hi ID78,

Saw your note. I added at DEC as needed to grab more income. I do hold he1 but sold 60% with drill issues. May put some back in today.

PXC… 25.9 paid now. Vols been interesting lately with some pretty busy days.

Next news drill results from nav. Should show more low grade gold = open pit in line with geo.

When the ops paradigm and finance package land this could be v interesting. Permitting pathway is probably set so rest shouldn’t take long.

All one has to do here is wait. It will happen. US 10years down, Cu up as well which always help.

Shhh! Lol!

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Trek

I saw that cool beans, we haven’t been told anything. I looked at the ebit numbers which were in ballpark.

Gonna look back at last results.

Trek

Excellent numbers.

Debt remains at 2.4x ebitda. A little high but within guidance ceiling of 2.5 and unchanged from previous results.

Don’t underestimate the fitch rating. It’s what the institutions/banks use before committing finance not that they should need it with $135m of liquidity. A BBB rating held in this market is excellent. It actually stands out against many other cuts!

My indicator is always volumes whilst price is fixed vols are key to deliver that FCF, again DEC have delivered. With an 806 exit rate.

They have also reduced unit costs by 2%. Efficiencies are claimed esp around transport. With inflation coming down we should also see some tailwinds there later. That in effect bumps up the hedging margin as it’s based on same unit base.

All the bllx about well retirement costs and there you have it. It’s in the EBIT numbers. They only have 13 left to hit ytd!

The only blot is the Hokey Cokey BB. That’s what they need to do a better job of communicating.

As for the rest read the balance sheet!

DEC represents an excellent addition to a balanced income pf. These numbers again reiterate that!

With good inflation data in US and today in UK, US 10 year treasuries pulling back and future gas price hedging looking buoyant it should be a good day today.

I doubt we will notice the xd from this level. I am hopefully that my trading here is job done now and the sp can recover leaving a nice cushion with 70.1p average!

Let’s see…

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Trek

The Fed's next rate move will be to cut rates, former PIMCO chief economist Paul McCulley said.

McCulley pointed to the drop in shelter prices, which has kept inflation stubbornly high for the past year.

Some forecasters say the Fed will slash interest rates by nearly three percentage points next year.

https://markets.businessinsider.com/news/stocks/fed-rate-cuts-forecast-2024-october-inflation-drop-cpi-gamechanger-2023-11

Worth a skip read…..

IF IF geopolitics behave then next year could see a massive reversal in fortunes of markets. They tend to rise toward the end of a recession which could this time around be pretty short lived. Once the fed intimate they will start cutting it will be a green light for a bull run.

Lots of fat out of the system and productivity enhancements from AI just kicking in. I also expect to see more M&A.

My pick is PHNX, it’s a cash machine but when you have lots of people and lots of keyboards AI will revolutionise productivity. PHNX is digital now. You can lift and shift and rebrand it however you want. It’s cheap and yields +10%. As a ftse100 is an overlooked gem to hold!

A recent DLG survey showed that their AI bots got better customer service scores than their people! and it will get better!

Don’t get me wrong I am not advocating mass redundancy. There’s still loads of vacancies and a huge need for more practical skills etc

If you want an illustration of AI. My brothers business partner is a phd computer boff. Now with AI it’s like him having 10 extra staff, free!

Imaging how that can liberate a developing country. You get one person trained and they have AI capacity of 20!

AI will be a huge boost next year.

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Trek

Cavendish in their November research note had DEC at a 19% discount (from memory) to a selection of about 10 peers. It was all charted and data driven analysis not an off the cuff comment.

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Trek

Hasty decision. I tend to find it’s better to average in and average out of a position. Also if you don’t have a cushion trade the fringes to stay in touch with the SP.

Could have sold 20k and kept 20k in then decided on the 20k in after the results. Average up or average down thereafter or sell out.

In this game sometimes you can miss out by not being in!

I traded down my position at PHNX, posted some trades there and was fortunate enough to be all back in on Monday when news landed! I got my average down from 550 ish to 481 with same number of shares and pocketed some cash on the way down by buying the stock cheaper than what I sold it for.

Like here ones position is covered by some of the divi.

The market volatility makes it a trading market rather than hold and hug. Most of the ftse has been static at best on 5 & 10 year charts but up and down in the middle. It’s the divi’s that have made the difference. Hence I trade a few using my divi calendar.

But I do this for an income

Good luck.

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Trek

“ THE US 10 year yields DIPPING on that inflation data,so the BIG debt ridden fallers.....are rallying”

DEC included. Results out tomorrow.

I have just gone blue there in a blink! Mind you blink again and you’ll miss it!

I think they will deliver the numbers and have a debt amortisation waterfall in their investor presentation. The market still doesn’t believe it. They are set to pay down $110m. That will free up more cash.

It’s a nervous time though but I am sticking! 🤞🤞🤞

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Trek

Ps hope you are well.

I actually find his posts rather insightful. There. Someone has said it. Doesn’t affect my strategy though.

I am out 60% in 40% since the RNS average 5.8 this time around.

Couldn’t believe it only dropped 10% on the news.

Now I can either average down or average up with my trading money.

Will always work the fringes though slice and recycle. Not for everyone but works for me.

Also respect the longs here. It’s been a tough journey and I am pretty sure it will come good. Very good at some point! Hence keeping a little in so as to hopefully enjoy some fruits.

He1 has been good to me well the kids did very well the first time around!

Good luck all.

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Trek

Up 6% on US open. Dow up 500pts. Good inflation data. Or could be a leak for tomorrow.

No idea but I will happily take it.

Will be good to exit the week with my two biggest positions. PHNX and DEC blue. It’s been hard work!

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Trek