IMO, this decision further highlights the regulatory uncertainties and procedural deficiencies within Italy's energy sector and provides strong support for our case. It's clear evidence of flawed regulatory processes, which could significantly strengthen our position and increase our chances of receiving the compensation. With this annulment shedding light on regulatory instability, I'm feeling even more optimistic about our prospects for a positive outcome in the arbitration.
Good News:
Increased Certified Resources: 11% increase in certified gross 2C resources irising from 712 MMbbls to 791.
Optimized Field Development Plan: a 16% increase in gross 2C resources specifically for the Sea Lion field, from 269 MMbbls to 312 MMbbls.
Reduced Capital Expenditure: been reduced from US$1.3 billion to US$1.2 billion.
Decreased Operating Expenses: reduced to under US$17
Stable Net Present Value (NPV10): Despite a lower initial plateau production rate, the NPV10 remains within 5% of previously published numbers, indicating that the project's long-term value remains robust.
Strong Cash Position
Bad News:
Continued Dependence on External Financing:
Delays in Monetizing the Ombrina Mare Arbitration Award
some rough calcs:
At $50 per Barrel:
Original Asset Value: US$13.45 billion
Revised Asset Value: US$15.60 billion
Net Increase: US$2.15 billion
At $60 per Barrel:
Original Asset Value: US$16.14 billion
Revised Asset Value: US$18.72 billion
Net Increase: US$2.58 billion
At $70 per Barrel:
Original Asset Value: US$18.83 billion
Revised Asset Value: US$21.84 billion
Net Increase: US$3.01 billion
At $80 per Barrel:
Original Asset Value: US$21.52 billion
Revised Asset Value: US$24.96 billion
Net Increase: US$3.44 billion
Am i reading this right...
Tranche 1:
Initial Payment: €45 million.
Rockhopper's Retention: €15 million (after paying €26 million to the Original Arbitration Funder and other fees).
Tranche 2:
Contingent Payment: €65 million (assuming no annulment or reduction of the Award).
In Case of Partial Annulment: If the Award is reduced, then Tranche 1 and Tranche 2 payments will be adjusted downward on a pro-rata basis, but not below a total of €45 million.
Tranche 3:
Calculation Basis: 20% of recovery amounts exceeding 200% of the Specialist Fund's total investment.
Specialist Fund's Total Investment: €30 million.
200% of Investment: 200% of €30 million = €60 million.
Recovery Exceeding 200% of Investment: €190 million (Award) - €60 million = €130 million.
Rockhopper's Receipt: 20% of €130 million = €26 million.
Total Receipt by Rockhopper:
From Tranche 1: €15 million.
From Tranche 2: €65 million (assuming no reduction due to annulment).
From Tranche 3: €26 million.
This lot discusses the challenges faced in transporting waxy crude oil through pipelines, emphasizing the impact of temperature and rheological properties on pipeline operation and shutdown. Here are the key points:
1. Introduction: Flow assurance in oil and gas production faces challenges due to various issues, including wax deposition in pipelines. Waxy crude oils, which contain paraffin wax, can lead to blockages in pipelines due to wax crystallization during transportation.
2. Wax Formation and Properties: Waxy crude oil contains long-chain paraffin wax components, which cause it to exhibit non-Newtonian rheological behavior, especially at low temperatures. This behavior is characterized by temperature-dependent viscosity and shear rate dependency.
3. Factors Affecting Wax Deposition: Several factors affect wax deposition in pipelines, including temperature, pressure, wax molecular weight, and the presence of other crude oil components. The wax deposition process is influenced by molecular diffusion, shear dispersion, Brownian diffusion, and gravity settling mechanisms.
4. Waxy Crude Rheology: As waxes precipitate, the rheology of the crude oil changes, leading to non-Newtonian flow behavior. Viscosity becomes dependent on shear rate, and viscosity increases as temperature decreases, eventually leading to gel-like behavior.
5. Transportation Challenges: Transporting waxy crude oil through pipelines presents challenges due to the temperature variation along the pipeline's length. As temperature decreases, viscosity increases, leading to higher frictional pressure losses. Pump stations are used to maintain flow, and heating or chemical flow modifiers can enhance crude rheology.
6. Shutdown and Restart: During a pipeline shutdown, the absence of continuous flow and heat generation makes it difficult to restart the flow, especially if the temperature drops below the wax appearance temperature. Measures like heating, chemical additives, and shorter shutdown periods are used to ensure smooth pipeline restart.
In summary, this chapter highlights the complexities and challenges of transporting waxy crude oil through pipelines, emphasizing the importance of managing temperature and rheological properties to ensure smooth operation and restartability.
Consider selling in Nov ahead of any Dec rush to sell existing stock to raise funds to buy warrants. Then consider buying back early in the new year to take advantage of people banking the profit from the warrant sale?
What are the likelihoods of Italy opting to pay into Escrow? IMO, It appears to be relatively low, and potentially only serves as an initial step to exert pressure and prompt their active engagement in the process.
IMO, ROI may be more inclined to consider acquiring the company rather than ring-fencing the award in escrow.
Based on the current share price, there is a possibility that the company could be acquired at a cost significantly below the award's value.
Do we know exactly when the RoI have to set aside and ring fence the funds for the award? I had been expecting it to be yesterday? if, once that date passes, and assuming RoI has not complied, is that the date we are able to 'enforce'?
I'm afraid I'm not at all familiar with DCUs, as I think are most on this board!; however, can anyone confirm the following (numbers simplified for ease):
If I held say 10,000 shares in an ISA that were purchased at 10p, i would expect the initial dividend to be tax free (due to the tax efficient ISA wrapper), giving me cash of £625ish.
if, after this dividend, the shares are converted to DCUs and over the next few years Prax deliver on the deal, returning deferred credits of another £625 (making the 12.5p offered), would i not have made a theoretical loss of £375 on my shares purchased for £1000 (as the initial dividend was tax free)?
I
You have to call Barclays Smart Investor to vote too (no corporate actions were displayed for me in app or on line). Make sure you have the date and time of both meets to hand.... but be quick as they normally want 7 working days notice to do this on your behalf and we are already in 'best endeavours' territory.
I concur. Additionally, it is important to remember that the ROI challenge pertains to the adequacy of the Arbitration panel's conduct, rather than the merits of the case. Whether Italy had violated its obligations under the Energy Charter Treaty is not up for debate and has been decided. If the ROI wishes to have the decision overturned, it is incumbent on them to PROVE that the panel did not conduct their proceedings appropriately.
Why would ROI deposit approximately £180 million into escrow for an appeal with low prospects of success? Would it not be better for them (or an entity or corporation acting on their behalf) to pursue a takeover bid for the company? If they offered 25-28p today ,i think they'd get it through and acquire the company.... which has to be better than pursuing a futile appeal with limited chance of success and nothing to show for it at the end?
Thoughts?