looks like someone agrees with the administrator (and their advisors) that the company is still seriously undervalued - £2m buy must be II
OK, so what's going on - anyone? Big volume, single trade?
my point precisely - dont know what the orderly market agreement says about off market deals - probably silent. I'm sure investment bankers are looking at this situation. With 30% owned at a 200% discount to NAV, any bidder would have plenty of room to complete takeout at a discount to 60p NAV
lobs, - this is a big step to closing fully diluted NAV (north of 60p from Finncap I recall). There will definitely be further conversions and warrant subscriptions for short term players to get anxious about , but at the end of the day, the raw economics will prevail now that the company is funded through development. Harvey is a secondary issue - hopefully it will be accretive, but its less important.
Butd - i thought the underlying beneficiary or concert party would have to disclose in aggregate with directly held positions
Ali, im not sure its necessarily correct to say the reservoir is thicker/ higher than initial calculations. Certainly this appraisal well has found a thicker reservoir section than the Arco discovery well, but that would have been expected, as it was probably drilled on the mapped crest of the structure. This new data will allow a refinement of mapping and reservoir characteristics which will narrow the range of reserves in place and recoverable. As a hub tie in, its going to be commercial, we just dont yet know its value. But in my book its good news .
Before the Farm out and LOG refinancing , the actual project plans were still subject to significant counterparty risk. With the completion of farmout and reorganisation of IOG balance sheet, the situation is stable and I see this RNS as evidence that management has turned its attention to optimising asset exploitation to maximise shareholder value. The CFO clearly knows what he is doing. There will still be ups and downs as in any large project, but I remain a confident LTH.
edgar - Finncap NAV includes net debt and 10% discount rate , so is NPV in effect? Unless I've missed something
Agree with all of that - there is still significant value left in the SNS for a committed player - there are no easy pickings, but plenty of incremental assets to build on a hub strategy through exploration, appraisal of old discoveries and clever asset management . The IOG team have done this before, and are now in control of their own destiny.
Aligator - you are correct that the UNRISKED NPV is north of £500m. Finncap apply geological and commercial risk factors which reduce the RISKED NPV to $436m - circa 60p/ fully diluted share. So there is upside from the 60p, but also downside ( as BUTD would point out) ...
Clarification on Finncap NAV. Their fully diluted risked NAV/share is 60.3p/share and is based on 580 million shares fully diluted (so similar to the 583 million in todays RNS). The 536m I quoted is 'weighted average fully diluted shares'). So the their NAV expectation is confirmed by this announcement.
mole - that's spot on. Management deserve credit for putting this all together. Its been horrendously complicated. Enough residual shareholder value remains for this still to be a decent long term investment . Not as good as it might have been, but a lot better than feared a few months ago. I'm looking forward to seeing the project develop. I'd expect further asset value to be added to the portfolio as IOG consolidate their position in this part of the SNS.
Sure - as IOG joint broker and nomad you'd expect them to be part of a placing, and take commission.
Finncap research last week was 60p NAV risked fully diluted based on 536m shares , so this announcement reduces risked Fully diluted NAV by 10% to 54p by my calcs. SP still at a significant discount. DYOR.
GG - any idea how we can get a copy of the Finncap research ? - I trained as a petroleum economist, so Im keen to see the details
Butd - you may be right on reflection, but surely they would have to have laid off the equity risk if they did convert, or they could be accused of just taking a punt with LCF bondholders funds, moving from a secured creditor to an unsecured shareholder. Not long to wait.
BUTD
I wouldn't expect administrators to decide sooner than they have to . Its all about option value. They’ll decide tomorrow , and id still expect them to elect to be repaid. Conversion exposes them to equity downside risk as well as upside , and leaves them with a need to sell into a thin market..
They can still play the upside through warrants. We’ll know soon enough, and IOG will announce im sure.
Does anyone have access to any recent broker research notes - post farm down ?
RRE havnt bought any shares. The 21p price you refer to is dealing by Cantor - a party connected to them.
Exercise of options that were issued to pay for services crystallises income tax liability (and NI). Any gain thereafter subject to capital gains tax , not income tax. So this looks like tax planning in anticipation of further gains. If the option holder felt the shares more likely to fall rather than rise, he would not exercise. Equally he would not have been able to exercise if in possession of inside information. So this looks like a judgement call on the pros and cons of gains from here. I believe Richard Jameson was a colleague of Mark Routh and an experienced north sea engineer.