Hub
04 Aug 2016
Re: Proposed Acquisition/Placement i've got 15kboepd pen'd in for 2017 assuming this deal goes throughWithout the deal taking place, I had production falling by as much as 50% (10500 to 5250).DONG deal requires $10million put into escrow which brings total exposure to $80million which ties in exactly with funds raised.The additional $7.5million being raised via open offer at 70p looks for G&A and perhaps some Brasse work.Cash burn is a concern (based on my numbers but sometimes tricky to work out full capex based on working interests).It's not a good time to get into debt but it has to be said... they have had that debt facility for sometime now and only appear to have drawn down around $33million of the $225million. Furthermore, they did have around $90million in cash. Where's that gone?Issuing shares is dilutive but one suspects they may need the debt facility for development commitments on Pil or Brasse.Norwegian tax credits usually come towards end of the year, so perhaps the cash balance will be replenished once that payment hits the balance sheet? Excluding this debt would be nearer $75million I think!HUB
Wordbodger
03 Aug 2016
Re: Proposed Acquisition/Placement Sorry Hub, I misread your question. You asked about present production excluding Ula, Tambar etc FPM present guidance without the DONG transaction has been for a drop in total boepd from 10500 (2015) to 8000 boepd (2016) because of the loss of Njord platform. I derive something similar as follows:From NPD figures, I project 1,576,500 barrels total net to Faroe for Brage, Ringhorne, Njord and Hyme for the full year 2016 (= 4,319 boepd), compared to 2,467,300 mmboe in 2015 (=.6,760 boepd) That is about a 36% drop in Norway production in 2016, concentrated in H2 because Njord and Hyme will produce nothing in H2. Brage has been producing well thanks to in-fill drilling but certainly not nearly enough to compensate. Ringhorne is in gradual decline.Norway accounts for roughly two thirds of Faroe production, but I don't have any precise data on UK production. Still, 36% of two-thirds of Total production leads to a rough expectation of losing about 24% of Total production this year. 76% of 10,500 boepd gives roughly the guidance figure, 8000 boepd.Njord/Hyme accounted for 45% of 2014 Norway Production. The reason the loss of them is slightly masked this year is that those two big contributors were (partially) operating until the end of May. In a full year, losing 45% of two-thirds of a full year's production would logically lead to a 30% decline in overall production, from 2017 until the platform returns. So without the DONG deal production would drop to 7500 boepd in 2017 and beyond.DONG's assets should fill the hole. GS guided towards an additional 8000 boepd for 2016 from the deal, raising production guidance to 15000-17000 boepd.
Wordbodger
03 Aug 2016
Re: Proposed Acquisition/Placement I think the net-to-DONG total for 2016 for Ula, Tambar, Oselvar and Trym might be around 3.8 mmboe, which is 10,500 boepd. This is my estimate from NPD figures to end of May.10,500 boepd is not corrected for tail-off as fields naturally deplete. (One way to estimate tail-off is to project it from the experience of the first five months versus a year earlier, but that produces an anomaly at Ula, which has increased production this year, for some technical reason.)FPM's announcement mentioned about 8000 boepd. Obviously that is the correct figure - aside from my caveats there are other reasons not to rely on my figures, including simply bad maths. DYOR.I don't know how the season affects day-to-day production - these fields are at the same latitude as Stavanger. It is also possible that caution about the future of Trym affects GS's estimate, also he may prefer to under-promise rather than under-deliver. Also excess production this year may not necessarily be good for Faroe, depending on the terms of the deal.Going forward, 2017 and beyond depend on the the futures of Trym (DONG 50%) and Ula (20%), but assuming Trym continues and Ula has had successful maintenance, 9-000-10-000 boepd in 2017 should be achievable. There is still considerable resource at Ula - NPD estimates 9.3 SM3 gross.I think the key here is that Ula is important to FPM as a hub for other interests in the area, also I think DONG were advised last year (Goldman Sachs) to exit the North Sea. Whether it was serendipity or needs-must, perhaps the opportunity matched Faroe's circumstances.
Hub
02 Aug 2016
Re: Proposed Acquisition/Placement Wordbodger,What's your expectation on production (without this current deal) for 2016 and heading into 2017. How much of the current production is expected to reduce/deplete?How far away are they from moving production higher?It's certainly cheaper these days to buy in reserves/production and tuck away the decom liabilities for a few years rather than pour a wedge of money into new facilities/development projects with pay off's some 2 years down the line.HUB
Wordbodger
29 Jul 2016
Re: Proposed Acquisition/Placement They are going to be able to avoid decommissioning on Ula by keeping the infrastructure operating. That's a bit beyond their control (Aker-BP has the other 80% of Ula) but I have to believe an agreement must be in place, because it will affect Tambar, Blane and Butch ('Oda' as Butch will be known as a producing field). Oselvar also uses Ula but the decision has been taken for Oda to reuse the Oselvar hook-up to Ula, which will take care of decom of Oselvar. The one where decommissioning could be a concern is the Trym gas field on the Danish border, which has subsidence issues. If it has to be shut down I can't believe FPM would pay anything for it, or be on the hook for decommissioning, since the issues are known about.I'm ambivalent about the deal, Hub. I can see why it is attractive to FPM because of Blane (UK production through the Ula (Norway) platform, a field they know well, going back to Paladin Resources. UK production is not taxed at 78%, so once the investment has been made in UK the owner gets better cash in hand. Also this is well understood geology where Faroe have other prospects.You have obviously dug deeper than I, so please challenge my facts. Afaics the deal works because decommissioning will not really come into it, hopefully for many more than 2 years, but that will depend on their partner, Detnor-Aker-BP.. I'm guessing they would like to get more UK production but UKNS is littered with corpses of junior oils which tried to make money from scavenging old fields, so perhaps the numbers have not added up. Also losing production from Njord A for three years will cause a hole in Norway production which I think they depended on. This will fix that.
Hub
29 Jul 2016
Re: Proposed Acquisition/Placement I think Faroe have been a bit naughty with their RNS on this acquisition as the headline boe cost is misleading. It looks a bargain but when you put your pot holing boots on and begin to dig down deeper you find that a great deal of the production / reserves are set to deplete to near zero by 2018.The said thing about this RNS (and something the FCA really should clamp down on) is the fact that you need to go deeper than an expert pot holer before you actually find the decommissioning liabilities. And even then, the company is very sketchy on what these might be. My guess is they equate to more than 30% of the acquisition cost at best scenario and even 50% at worst scenario.DONG have liabilities noted on account at over $54million!Yes, there are some upside opportunities within the folio but there are also some high risks.It's another scenario whereby a north sea player buys in assets/production/reserves today and back dates to book revenue from Jan 1st 2016 thereby negating the obvious issues of lower performance/margins in 2016.Furthermore, it kicks the decom liabilities down the road into 2018 and whilst Faroe enjoys the virtue of being debt free, the reality is they have decom costs piling up in the future which is just like any other DEBT. It needs paying and Faroe will have 2years + grace.It also brings into question the current production and forecast. Their fields / licences are ageing and require more and more shut downs/maintenance to keep the flowing.Recent discoveries are a shining light and should not be underestimated as is the low cost norwegian tax credits that they enjoy.But all in all, did Faroe really need to do a deal like this which looks closer to $12boe than $4boe when all is considered.There are infrastructure advantages and I see some logic in their approach but all I would say is that in a market that is on its knees, there are assets with reserves and same liabilities going for almost next to nothing.They over paid imho and I think DONG are chuffed to bits to be free of the future liabilities that await just 24 months down the road.Finally - what investor in their right mind is going to take the open offer at 70pence when they can buy the stock today at 67p?Faroe has been a solid company for a few years now and one of the best in the sector, but I can't be the only one that does not like this deal?HUB
Wordbodger
28 Jul 2016
Njord North Flank Songa Delta moved to Njord North Flank by the Operator Statoil.Faroe have 7.5%. Might spud tomorrow or the weekend.[link]
Ripley94
27 Jul 2016
Re: Proposed Acquisition/Placement two buys 69.75 & 69.5.
Ripley94
26 Jul 2016
Re: Proposed Acquisition/Placement August 1st ... W & S
tamdee
18 Jul 2016
GS, ceo. [link]
Wordbodger
15 Jul 2016
Re: Proposed Acquisition/Placement The Placing Price wasn't included in yesterday's RNS, but this morning there is a Placing RNS:[link] price 70 pence, 24.8% dilutionYesterday's RNS made reference to an Open Offer to raise up to $5 million, which would be 7.2 million shares. (Based on pre-dilution shares in issue, that's 2.7%. Say 1 for 40?. Or since it's directed at small shareholders perhaps one for ten?)
Xivan
14 Jul 2016
Re: Proposed Acquisition/Placement "The Company is raising approximately £60.8 million (US$80.0 million) for the purpose of funding the acquisition of the DONG Assets.o Five Norwegian North Sea producing oil and gas fields: the Ula field (20 per cent. working interest); two tie-back fields to Ula, namely: Tambar (45 per cent. working interest) and Tambar East Unit (37.8 per cent. working interest); Oselvar (55 per cent. working interest); and the Trym gas field (50 per cent. working interest)o LR Senergy estimates that the Acquisition will add 2P reserves of 19.8 mmboe o The Company estimates the acquisition will provide an additional 8,000 boepd of production in 2016 and to increase the Group's aggregate average production to between 15,000 and 17,000 boepd for the year to 31 December 2016 (approximately 60 per cent. liquids and 40 per cent. gas)o Estimated 2015 unit opex of $19/boe for the DONG AssetsAcquisition funded through equity to maintain balance sheet strength and flexibility"They mention the "placing price", but I can't seem to find at what price this actually will be. Anyone an idea? Or did I just miss a paragraph?
Wordbodger
14 Jul 2016
Re: Proposed Acquisition/Placement Sorry, I put up the wrong link. Link about the Placement is:[link] link about the NPD reporting of Brasse is relevant, but should be in the other thread. )
Wordbodger
14 Jul 2016
Proposed Acquisition/Placement [link] 14/07/16 16:50
Wordbodger
11 Jul 2016
Re: Brasse - Appraisal RNS [link] is quite a good discovery. The market isn't much impressed with exploration success so not much sp movement. However, to put it in context: FPM's existing resources (2015 AR): 2P Reserves 57.4 mmboe, 2C Resources 98.3 mmboe.The RNS adds Faroe's 50% share of 43-80 mmboe of resources, easily developable through existing infrastructure.
