Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Morning Ducati2, pleased to hear GL is happy to negotiate with reducing our share of the licence - in fairness it's the only bargaining chip we have (huge thanks to Schlum for the £1 sale of their interest). The 5 well programme (plus the extensive 3D seismic) is a huge undertaking which will no doubt require a partner with vast resources and know-how to execute properly. As tragic as the Russia/Ukraine situation has been, it has also focused attention on the fragile energy security situation facing us/Europe and has highlighted just how urgently the energy supply landscape may need to change/adapt.
I was scratching my head over the 'renewables' section in the recent RNS, but it wouldn't surprise me if it's being undertaken purely to attract a partner with deeper pockets who have 'corporate responsibility' towards their own shareholders/institutional investors to shift towards 'greener' tech. If so, this part of the announcement might all be more of a lip service to satisfy a tick box list of requirements before a large company/major player signs any agreement.
Sure, Sound might erect a wind turbine over here, a solar panel or two over there - but the real focus will no doubt be on the long overdue development of Anoual. I remember posting the other week how frustrating the whole process has been since 2016 and that it really shouldn't be too difficult to get things moving if all vested interests are cooperating in good faith towards the common goal of getting the gas out of the ground and out to market. Assuming this 5 well programme is rubber stamped then rapid progress may finally be on the near horizon after all. GLA - goodness knows we long suffering LTHs are due a change in fortune! Welcome on board to any new investors (especially those who enjoy roller coasters) - substantial and sustained value might just be for real this time!
Five wells over the next couple years is a remarkable turnaround from the days where it looked like Sound was going to fold entirely without so much as a whimper. I don't think there's any reason to doubt the veracity of the report Ducati posted (great find BTW), and assuming it all gets confirmed shortly, we could *finally* be looking at a dramatic increase in share price.
Sound will likely need to give up a large chunk of the 75% ownership of the Anoual licence, but if GL can pull this off on fairly favourable terms, he'll deserve an enormous amount of credit. Too many variables to start speculating on share price at this point, but if all this is confirmed then we might actually see the 'many, many multiples' (albeit from 2p rather than £1) that JP promised! GLA
The phantom buyers bidding for Tendrara offered 23p per share last time around if memory serves correct. I'm sure any current Sound holder (long term or new) would bite any hand offering that kind of money today. Unfortunately those unnamed buyers from parts unknown didn't actually have any money, which was a real shame. Hopefully a named bidder from somewhere on Planet Earth will offer actual genuine currency next time!
In all seriousness, the Russia situation could be something of a game changer. Sound simply don't have the finances to fund any exploration. The LNG income will just about cover running costs. The sooner phase II can be sorted the better because that 10 year tax holiday begins the moment the first hydrocarbons come to surface (assuming the other tax issue also gets sorted). Might be a long shot but with BP and other big players exiting Russia they could be looking for 'plug and play' assets, and Tendrara (not to mention...err....Sidi) could fit that description. If we manage to get a partner on board they'll likely want as least as much percentage as recently vacated by Schlumberger, maybe more. Here's hoping the positive news flow/sentiment continues!
I can't explain the drop, but I can say it's no surprise. No surprise whatsoever. I've lost count of the number of RNSs, conference calls, press coverage etc which any logic would predict should spark a positive reaction from the market. But around 90+% of news is either welcomed by a sharp decline in price or a fleeting increase, followed swiftly by the price reaching lows at depths even more depressing than the pre-news price. It's all so frustrating.
Nothing but a very positive result at the drill bit, exceeding expectations, generates anything close to a sustained rise in share price. Thankfully our assets mean that our share price is underpinned at an absolute minimum of err...45p....or was that 23p? Oh right, Parsons was talking total nonsense and now our share price will never recover substantially because all trust has been broken, I fear regardless of GL's best efforts.
The most depressing part is that there is no real reason why the share price should be so low, other than reasons created by vested interest bureaucrats and those who must be intentionally creating unnecessary barriers. Despite the previous mismanagement, we are sitting on a huge gas find. The demand for gas is high, the gas prices are high, if there were good-faith actors on all sides it would be very easy to get that gas to market.
Hope you're right Sundance - but I'm out of here the moment this share gets to my break even point at a little over 11p. Maybe even sooner and accepting a loss such is my desire to exit with something at least close to my initial investment.
I agree that GL appears to be far more trustworthy than JP, but even with the best intentions and good faith sensible management decisions, if this company has proven anything time and time again over the years it's that we're never far away from a sickening depression in the share price to previously unthinkable lows.
Despite my doom and gloom (sorry) - at least I'm confident that I won't be eventually exiting with 0p. GL saved the company from going under and for that he has my respect, thanks, and best wishes!
Hope you're right Tincan. Ever since about Summer 2016 this company's fortunes have followed the path of most pain. We're long overdue a sustained turn around heading in the right direction for a change. GL and the team saved the company from insolvency, but adding genuine value (without funds for investment/drilling) is a much more difficult task especially given the amount of dilution over the years. Unless we can effectively farm out Schlumberger's relinquished interest with some favourable terms, I don't see where that value will come from. The position of this company is quite astounding considering we were valued close to a billion quid a one point only 6 years ago.
I'd be very surprised if we got a substantially positive RNS (defined as having a big and lasting increase in price) tomorrow ahead of the Q&A session. I've lost count of the number of Q&A sessions or conference calls etc where they caveat before every response that they "can't divulge market sensitive information". Chances are nothing exciting will be revealed. Hope I'm wrong.
I'm considering sacking this share off once and for all. There is a decent chance I could sell out at a better price in future, but whatever potential multiple we can gain from this position would likely be dwarfed by the multiple x gains which are almost a certainty if I reinvest those funds in crypto. Waiting for a development to heppen here (which might never materialise) is probably a bigger risk. I appreciate crypto is generally far more volatile, but I'd say the long term future of Bitcoin, Ethereum, or Cardano is far brighter than the future of Sound. Even Doge will likely go through another multiple x gain cycle while Sound stagnates with no news of the pipeline or further exploration on the horizon.
ST123 - Nothing personal, but much of your optimism may be misplaced. I have no interest in any personal slanging match between you and PS2, but surely you can appreciate why there are plenty of LTHs who find your 'ramping' of the share a bit tiresome? The truth is that us LTHs have seen this all before - new management, ducks lining up, 'exciting news' just around the corner etc etc. Yet each time, even though it's always 'going to be different this time', the same thing happens. Namely, the market reacts poorly/fleetingly to some 'positive' news, there are endless delays, more dilution...it's been happening for years and years on end.
The TE6 and TE7 drills led us all to believe that our luck and perseverance had finally paid off, but even then after being promised the world, the unthinkable kept happening over and over again. Unthinkable lows surpassed only by a share price sinking to new depths thought to be impossible. To be fair, GL has at least prevented Sound from going under completely. In may ways what he has achieved could be seen as quite impressive given the situation he inherited. But as PS2 has correctly assessed in my opinion that all the hard work is still ahead of us.
In the unlikely scenario that Sound manages to optimise the LNG production, gain revenue (for the first time ever), over a very short period - that still amounts to only covering costs (just about). The only way this share is going to see significant gains is if we get the pipeline sorted (at huge cost for which there are no positive indicators that it will materialise) with further exploration also funded. There is a chance the 'plug and play' Sidi Moktar could finally start producing, but if it was that easy it would have been done years ago and/or instead of the LNG plans.
I truly hope your optimism is justified but I fear you will eventually just join the long list of Sound investors who end up bitterly disappointed. I'll take no joy from this happening to you and hope you end up calling me out for my 'lack of faith' sometime in the near future if we get some pleasant surprises!
Would be most strange to have one arm of the Moroccan Government chasing us for a huge tax bill while another arm offers to fund a pipeline - it's unlikely in my opinion but I've been wrong about just about everything, so that could be a good omen!
ST - I've considered selling at various times and cutting my losses, but as it stands I may as well hold for the time being. If the share price increased to 6p+ then I'd be very tempted to sell and get over 50% of my money back. Only need 11p to break even again - I'd be selling for sure at that point, unlikely as it is that we'll ever get there in my opinion.
Just giving some more thought to the pipeline - as we're talking about Morocco's energy independence and security, is there any chance the Moroccan government would be willing to fund (or at least provide a heafty contribution towards) the $180m cost?
ps2 - Do you think there is ANY chance the situation can be salvaged from this point? That $180m cost for the pipeline might just prove to be insurmountable. Even if Sound were to bring a partner on board who'd be willing to fund that endeavor, we're talking about a partner who need to be willing to stump up a huge sum of money, presumably for a share of the licence which would need to be a majority, more than Schlum recently surrendered, but where would that leave us?
What would need to happen for you to consider reinvesting? I think your 'worst case scenario' will be pretty similar to my own, but I'd be interested to hear your 'best case scenario' (if you have one!)
Is the only likely solution to get a partner on board to stump up a considerable portion of the $180m, but secure another sizable loan which would be serviced by the gas sales? You'd think deep-pocketed Schlum would have been the ideal partners for that, but clearly they intend to focus elsewhere. I'd like to hear GL's opinions on the next conference call regarding our options for monetising Sound beyond a break-even operation.
ST123 - without doing any name calling or throwaway insults, please explain as succinctly as possible why ps2's (and indeed Sound's own target) valuation is wrong and your optimism is justified.
From what I understand the LNG route to market will be sufficient to keep the company from folding (as was a distinct possibility before the Afriquia Gaz deal was announced) but will not be sufficient to produce profits which would either fund the pipeline or further exploration. There is also a huge tax bill hanging over us which hopefully we can avoid paying/the payment demand will be dropped.
How do you propose Sound will be able to generate millions of pounds in order to ramp up production/revenue over the long term when the company has inadequate funds at the moment and the total shares in circulation have already been hugely diluted over the years? Genuinely interested to hear your opinion how Sound will add substantial value from this position and over what expected timescale?
Please do not just accuse me of being 'negative' or having a username you do not like. Not interested in trading insults, just looking for reasons to be more optimistic.
Latino - it all depends on your definition of "very strange". Unfortunately a big drop in share price has become something of a banality over the years. All too common and to be completely expected, regardless of whether some seemingly good news drops or a perceived corner being turned. Generally the only thing which causes a big and sustained rise in share price is a huge gas discovery following exploration. In the case of Sound TE6 and TE7 should have provided that sustained rise and eventual plateau (more or less) to a value far higher than today's share price. We all know who is to blame for our fortunes but at least GL appears to be more trustworthy. His task is still enormous nonetheless.
Sharetrader123 I'll settle for GL getting us back to my entry price (need about a x7 from here) which would allow me to make some much needed home improvements and maybe even a vehicle upgrade. I think it's certainly possible, but even if we get an RNS confirming the tax issue has been resolved, there is still a long way to go. Anyone think there is a possibility of bringing a farm in partner on board for further exploration? Effectively replacing the ownership percentage of Tendrara that Schlumberger recently vacated?
KTF - 'wish all these LTHs would stop moaning about losing huge value on their investment, after being promised the world by a charlitan. Jeez, get over it and be positive!'
Also KTF - oh no, someone has a depressing sounding username which they didn't chose, but I also find their original choice of username offensive. Better have a moan about it!
KTF I didn't actually choose that name for myself. It was moderated by the website. Originally it was AxeWoundLicker, which has a different meaning than one of self pity, but I won't go into too much detail otherwise I might get moderated again!
Tincan what would be your definition of 'glory'? Unfortunately we'll never see the 'glory' days back as I remember them, when we were pushing and briefly exceeding the magic £1 mark. I'm thinking 'bust' has about an 85% chance of happening. If we can get back to Sound's own target valuation of 6.5p then I'll be able to recoup just over half of my current unrealised loss. I guess compared to going bust, 6.5p would represent 'glory' for me. Albeit 'glory' in the loosest possible interpretation of the word!
Sharetrader123 - You mentioned that long term holders may be blinded by bitterness. You also mention that new investors should look at Sound with a fresh pair of eyes and not be blighted by the failings of the previous board.
Some genuine questions -
Would you expect any LTHs to be anything other than bitter?
Would you expect any LTHs to be confidently adding more money, even at these prices, seeing as most have already lost 95%+?
Do you accept that the vast majority of LTHs will never see their money back because there is about a 0% chance that Sound will ever reach anything close what was previously considered a 'good' entry point?
Do you appreciate that James Parsons 'said all the right things' throughout his time as CEO in terms of talking up the company's prospects and there is every chance that GL is now saying 'all the right things' to convince people a recovery is only a matter of time?
Do you realise that before Parsons, Gerry Orbell had overseen a calamitous period where Sound Oil (as it was known then) was burning cash like it was going out of fashion with zero reward?
What makes you think GL can rescue Sound from this position without any money and with a huge debt looming which is impossible to repay?
What exactly is it about GL that you think should inspire new investors to part with their cash?
Not trying to be provocative or anything, just interested to understand your optimism. You may not enjoy reading ps2's analysis of the figures, but can you clearly explain exactly where he is wrong on those fundamentals about the bottom line valuation of the company?
For what it's worth I do actually think GL seems more competent and genuine than his predecessors, maybe Sound would have been a success with him in charge from the beginning. But the damage has been done in my opinion and any chance of substantial growth from this position is unlikely to materialise. Hope I'm wrong (again).