Member Info for WhichWayNow

Read the RNS, that not how SXX convertibles will work.

I’d expect first reporting on this next week. Looks very cheap given the targeted 50% production growth, low risk Workovers/appraisals and regular news flow expectations.

Summary Work Programme

2019

· From now through mid-year an aggregate of at least 10 workovers in Puesto Flores (oil), Estancia Vieja (oil/gas), Puesto Prado (oil) and Las Bases (gas) will be carried out. The rig is currently being mobilised to the first well location
· By end of May, the renovation and commissioning of the oil treatment plant in Puesto Prado. The commencement of deliveries of oil from the field direct to local refineries will give enhanced margins (current production 150 bopd from this area)
· From end of May through to November the first phase repair, upgrading and commissioning of the multi-million dollar value gas plant in Las Bases in order for it to have the capacity to handle initially up to 250,000 m3 of gas of President's own gas per day by end of October. The pipeline is already transporting approximately 20,000 m3 per day of third party gas for which a tariff is payable to President
· In any event by mid-year gas flow will commence to the market from the Las Bases and Estancia Vieja fields through temporary facilities
· From July through end of the year a target of seven new production/appraisal wells
· By end September, the erection and completion of 14 km of new overhead electric lines between Estancia Vieja and Puesto Flores fields and the commissioning of an electricity generation plant to power the latter field from the former's gas and to sell surplus electricity generated to the grid
· By end October, the commencement of increased volumes of gas flowing through the building, completion and commissioning of a brand new 16 km section of 4" steel pipeline to be laid between Puesto Prado and Las Bases replacing the limited capacity 3" flexible pipeline between those points
· The commencement of a further workover programme from October, details to be advised once the results of the present campaign are reviewed
· The continuation of infrastructure works throughout the year

Sunday Times tip. Buy.

https://www.thetimes.co.uk/article/hurricane-to-whip-up-a-storm-in-shetland-gwhpkx2gd

Good news!

Do you not think she’s referring to the BoD rather than the CEOs. There are another 4 or 5 Directors!

https://itportal.ogauthority.co.uk/web_files/relinqs/p1022.pdf

The greater area alluded to in the RNS and interview may be quite extensive.

Given the original target was 23mmboe then a preliminary result of 15mmboe, plus potential structural upside, does not feel like a negative to me. More work to be done, but it still seems possible to achieve the original estimate of £132m NPV at $55 per barrel. My main concern is how much additional capital and time Corallion now require to further appraise.

Centrica's difficulties are also highlighted in the Times this morning.

https://www.thetimes.co.uk/edition/business/pressure-grows-on-centrica-boss-c733f952f

For those unable to access a key line is:

Centrica would seek to shore up its balance sheet by selling £500 million of non-core assets, including a £230 million disposal of a US business announced yesterday, and said it would also target further cost savings.

Bango set-up next to China Telecom! An opportunity?


Merchants, app store and payment providers cross the threshold into the Bango ecosystem to converge, grow and thrive.

By bringing businesses together and powering e-commerce with unique data-driven insights, Bango delivers new business opportunities and new dimensions of growth for customers around the world. Being inside the Bango circle means global merchants including Amazon, Google and Microsoft can work together with payment partners from Africa to the Americas, accelerating the performance of everyone on the inside.

Bango. Think inside the circle.

Good to hear him talk about ‘very, very large chunks’of EUS transferring to BGO.

I think the standard city way is just the simple calculation that assumes the new MCAP reflects old MCAP plus the raise.

You’re right that HUR has no debt, so that a difference and the comparison is never exact.

Do you have a good example of debt plus equity raises where the SP has reacted as you suggest? That would help validate the model.

There are a number of parallels here with other companies. Many on here will know a little about Hurricane Energy which is chasing a somewhat similar large, high risk resource play, although in oil not fertiliser.

HUR chose to fund development through a $500m+ placing of equity and convertibles. In doing so it saw a SP drop in around a month or so from circa 60p to a placing at 32p followed by a drift lower to 24p. Almost 2 years later it is hopefully within weeks of production and the SP is sitting in the high 40s. Not everything is the same, but I would argue their are parallels.

So what? If the market knows you need the cash they will drive a low placing price. Most investors know that most placing are at a discount so will hold off buying until after the placing. So a post debt signing rebound is possible, but is unlikely to see significant extra cash invested. We should be asking what rate of return will IIs want to invest significant sums over say a 5 year period from 2019-24? I suspect they'll be looking for 30%+ per annum, especially as the downside is being wiped out as the lowest tier holders. So a buyer in 2019 at 20p, will be looking for 80p+ in 2024. That looks a tough ask against some of the numbers published here.

As ever, there are other routes to dilution and it would be perhaps better to focus on a strategic partner and/or more royalties to reduce the placement amount.

I do realise that this post may be seen by LTH as negative, it's not meant to be. I'm a former holder and am tracking SXX, but not a current holder. I'm also a Boro boy at heart and want to see the company succeed. GLA.

Raising $600m plus costs via a placing is surely a very big ask. What type of price do you think is realistic?

Snaggle It amazes me that you are confident enough to post 44p to all on a BB, but don’t plan to trade. Why would you not take that money making opportunity that you are so confident about that you predict it to (potentially)100s of people? Regarding RTs optimism, I agree, he has on numerous occasions in interviews been too optimistic. The RNSd dates have been good, but the spin surrounding it less so.

Snuggle, Jiffy

It looks like you’re both confident that you’ve identified a trading opportunity on Monday. I assume you’ll be taking it up? Good lick.

Regarding weather forecasts. They’re generally excellent out to 3 days and pretty good out to 5 days. Beyond that, my experience is that they are pretty worthless, particularly so beyond 7 days. Just worthwhile noting to help with expectations for the hook-up

NigWit

I just want to pick up on your point regarding dilution. Dilution can occur in many ways but to most people it is probably synonymous with an equity raise. I don’t see that. The GWA deal is based on projected cash flow from the EPS.

Assuming that an outright buyer for GLA can’t be found on good terms, I would expect a GLA JV to be dilutive in the sense it gives away a large % of the projected field production, but I would expect HUR to be funded for a large proportion of the capital needed given the buyout that will be required for drilling and EPS. I would expect any remainder, if required, to be debt. To that end a dilutive equity raise seems unlikely to me unless the POO collapses.

IJWT

I agree it seems a long wait on published plans until Halifax is re-drilled. But to be honest, I think it is just the company recognising that on current projected cash-flow they can’t afford it and GWA development together. The plan has always been, and remains, to do a deal on good terms once the FB model is proven. As others have said, sometime late this year I would expect us to bring on a JV partner in order to accelerate the GLA timeline. The EV article specifically mentions this type of activity.

Can I ask which of the decisions you didn’t like? I remain critical of the warrants fiasco, but see the Spirit deal as realistic and the current published GLA plans as simply the ‘backstop’plan. I do suspect RT has been too optimistic in his interviews regarding timelines and I guess we’ll see whether ‘6 hours’ and ‘20-22 days’ prove accurate. However, I don’t have the knowledge to disprove either. Aside from that, the BoD seem broadly on the right track. The new NED is a positive step, hopefully one more to follow, and my experience with SXX is that main board listing (this year I hope) will be significant for the SP.

So I’m definitely long with my main worry being POO rather than reservoir performance. I will add on weakness, but otherwise am looking forward to an interesting year.

I’m more optimistic. The JV with Spirit is the template. They have invested in GWA which if I’m not mistaken has never flowed oil and Warwick itself has never been drilled. So they got in cheap but at relatively high risk. A JV for GLA with a successful EPS up and running and the fractured basement model proven will be worth far more to HUR. Far lower risk to the investor. I don’t agree with the ‘too big’ argument, there are always ways to divide up the spoils and get multiple partners on board if required. Moreover, moderate levels of debt, once you are generating revenue, is the norm and often the most financially efficient way of proceeding. Given the GWA drills may only be 2 months away, we should expect to see further news flow and a variety of bookings/licensing appear soon. All in all an exciting time ahead for 2019. Let’s hope the POO stays supportive!

Great article. Looks like we’ll have at least 2 and possibly more FPSOs in place over the coming years. Shame that the poster who had the insight to first suggested this was banned.

So you hate long distance interference and criticism from those with little knowledge or experience of drilling. Yet you don’t see the hypocrisy of criticising a ships captain based on an AIS track on a computer screen.

Unbelievable!!

Goodnight.