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The concerns here lie in the fact that by Q3 DISH will have to raise funds to keep going. I’ve heard one or two on here talk about significant dilution at that time. But why wouldn’t DISH be able to raise through debt rather than dilution? The cash burn has reduced with the new marketing approach, so the cash to keep this going beyond Q3 wouldn’t be significant. Thoughts?
The biggest concern right now is how long the sale might take. How much of it will be a negotiation and how much will be a major offering a take it or leave it price will depend on competition I suppose, but if we are able to negotiate we know the GSA has taken over a year so far... how long for an asset sale?
I might regret getting involved in this discussion, but I noted earlier that someone (fell?) said that the advice changed when JJ came in... what changed at that time was that JP used to use £1 per TCF GOIP, JJ started using £1.50 recoverable. However, both were net to Sounds equity share.
I’ve a feeling a tirade of abuse is coming my way.
Just answering my own question here, but JP says the start of TE-9 ground works are linked to TE-10 location, but Brian says we only just received the new seismic around TE-10 this week:
"We expect the Te-10 location in the near future following the receipt of the new seismic this week"
..... for the delay?
JP: "Yes actually the ground works for TE9 and TE10 will be completed at the same time so TE10 pad will be ready quickly. This delivers some cost synergies on the ground works and is the reason we don't start ground works at TE9 today (ie we want to finalise the exact TE10 location before starting ground works)"
Hi Egg - It's right there in the Q2\Q3 presentation on the Sound website - "GSA heads for existing discovery".
It was only ever going to cover our existing discovery (the 1%). That will still be enough to more than underpin the current share price with nothing priced in for exploration potential, so lots of money to be made here (if we hit gas on one of our next three drills).
Egg - all sounds reasonable to me.. the point I was making was that the GSA covers the immediate area around our discovery (1% of the acerage), so if the buyer wanted to renegotiate the price they could fill their boots on the other 99% of the acerage. All we have done if give the buyer price certainty on the 1% (which is great for the buyer). Not sure how that is a deramp, if indeed you aimed that at me.
Hi Medi - I see your point. I would have thought that price certainty on gas sales would be to the advantage of the buyer as well as Sound? And the GAS only covers the immediate area around TE5-7, so the buyer can renegotiate a different price for the remainder of the license (assuming we hit gas, of course!)
It is important to note that the 9-17-31 are GOIP volumes, whereas the �1.50 per TCF was based on recoverable volumes, not what is "in place". Either way, you still arrive at pretty big numbers if even one of the wells comes off!