tes123
22 Nov 2019
Unable to sell Zama Cheers beatley. $400 mn should be doable given that their own lower end estimate of Z stake based off of Sierras sale was around 300mn. Reading the upstream text posted on lse by geo seems to suggest they already have some indications of the offers. Plus Talos is keen on two more low risk exploration wells in Zama block 7 in 2021 which might add more monetisable value to our stake sale in the block. And TD seems to be suggesting net debt could be $1.5bn end of next 12 months. Given that pmo usually shares conservative targets, chances are at $65/bbl fcf could be at least 300mn, same as this year and a 400mn sale should take net debt between $1.3-1.4bn end of next year, right before refinancing at end of May '21. This doesn’t include any value attributed to the massive Alaskan appraisal well coming up in Feb. By the share price movement of 88E and possible £100mn market cap before spud would suggest pmos stake should have an equity value of close to £150mn just on this appraisal well vs a current market cap of £720mn. Massive discounting being applied to pmos equity in these high impact low risk wells.simply because of the lack of marginal buyer of the shares.i.e. The company itself who is usually the marginal buyer of the equity. Once pmo has the power to buy back shares, equity can’t stay so undervalued. Same as genl when they were stuck under £1 per share but when the share buyback and balance strength was clear, the share price rallied to £3 without any exploration wells. Shows the power of strengthing the balance sheet and having the option available to the company to buy back it’s own shares, on its shares market value
Beatley
18 Nov 2019
Unable to sell Zama Speedy response from IR… Deadline extension is to 6th December Not anticipating a two stage process so would immediately move into SPA, with final announcement due to holiday timings likely in January. Noted the Sierra deal took 4 months, so working to those timelines I guess end of H1 2020 is realistic for the funds to be received. I did ask about the timeline for the export financing for Sea-Lion but they were unable to provide any new information. Judging by Rockhopper’s share price the market doesn’t seem to pricing in a successful outcome. Can’t help but think it’d be a good idea for Premier to take them out, get rid of the development carry and look to farmout 66% to two different partners, $600m CAPEX would be doable even without the export financing.
tes123
17 Nov 2019
Just seen Catcher Q3 Production via MOL results I think if debt goes down to say $1.5bn, there will be an undrawn borrowing capacity of c.$1bn (esp. if that amount is drawn post refinancing at a lower interest rate via an RBL or similar). That borrowing capacity on a lower interest rates post refinancing could be used for a sizable acquisition without any equity. Although, equity itself would be in high demand as equity might only be needed for a sizable acquisition, which in turn will be material enough to start buying back shares via the cash flow from that acquisition. Premier should try buying smaller fields from Ithaca or the other PEs who have been succesful on their bids for entire packages, especailly the fields they might not be keen on but could be sig. for Pmo. Pmo should start targetting individual fields instead of full packages, as for most packages Pmo might not be successful until debt metrics are extremely healthy for the seller in NS.
tes123
17 Nov 2019
Unable to sell Zama Cheers Beatley. Look forward to your post
Beatley
17 Nov 2019
Unable to sell Zama Will fire off an email to IR and report back once they’ve replied.
Beatley
17 Nov 2019
Just seen Catcher Q3 Production via MOL results I would always opt for an UK acquisition over a buyback, I know Premier probably don’t want to be scrapping around with smaller pre development or late life fields, but there’s a lot of them out there in the hands of much smaller companies that could be bought out with cash once debt is at sustainable levels. Or they could go for a grand gesture and look for singeing transformational. The most recent investor presentations show us keeping production flat’ish until the growth projects come along, although I’m not sure what the these projects are with only sea-lion nearing sanction, but you are right, EBITDA will drop significantly when replacing oil barrels with gas. Thankfully, I do think we’re getting to a place where do have options. Get the debt down first, refinance to a better rate whist maintaining some headroom for an acquisition, obviously the bigger the acquisition the more chance that would come with an equity raise to maintain balance sheet strength.
tes123
16 Nov 2019
Just seen Catcher Q3 Production via MOL results Agree, its either that or an acquisition. No other oil project is coming online for pmo to replace natural declines post 2020 - actually its the same situation for most E&Ps around the world with very few new developments coming online in 2020s. Kind of works in favor of the producers who have spare capacity into 2020s. For pmo, Tolmount gas is barely one-third of Catchers FCF - and Alaska or sea lion wont be online till 2024. We definitely need more oil producing fields with a lot of tie backs/near field dev. potential to sustain production and offset declines. Solan barely has the reserves… maybe Hurricanes near fields in WoS? Chevron deal would have been great with immense near term potential especially in the hands of an efficient operator like pmo.
tes123
16 Nov 2019
Unable to sell Zama Sorry Beatley, i dont. Maybe the IR can guide on a rough timeline from deal signing to money in the account, based on their knowledge of Sierras deal completion?
Beatley
16 Nov 2019
Unable to sell Zama tes123, do you have details of the length of time fr regulator approval etc for the Sierra deal? Would be good to try and understand when Premier will be able to get rid of some of the hugely expensive Senior notes.
Beatley
16 Nov 2019
Just seen Catcher Q3 Production via MOL results I’ve been thinking the same about a buyback, get rid of the restrictions then if the equity valuation hasn’t significantly improved, announce a buyback during the year-end 2020 results of maybe $100m. With debt sub $1.5bln by the end of next year and hopefully significantly reduced finance costs, it should be very much doable.
tes123
15 Nov 2019
Unable to sell Zama An interesting development with Zama is that Pemex will be finally drilling the appraisal well on their block in Feb2020. So that could increase the size of the field or the split of the field which could add a contingent payment on the deal assuming once a deal is agreed. Its better to accept the highest bid and the best structured deal sooner, rather than later, as deal completion itself could take time via signoffs from the Mex. regulators,etc. and until money landing in the account. Sierra’s deal completion (end-to-end) might give a good idea…
tes123
15 Nov 2019
Just seen Catcher Q3 Production via MOL results If $30m/month FCF is a good estimate then YE net debt should be $1.97bn. Next year Solan should add an additional 7kbpd on the existing oil production, boosting FCF. The main event is refinancing -which should hopefully remove the restriction on share buybacks and dividends. Once that buyback restriction is removed, the market will have to price the shares above £2 in order to avoid the company swooping in with a paltry £50-100 million buyback which could remove a sizable chunk of the free float over time. There will also need to be an unwinding of the debt holder hedging that takes place on shares once net debt is closer to $1.3bn.
Beatley
15 Nov 2019
Just seen Catcher Q3 Production via MOL results We certainly got the positive update lots_of_sense, which was nice to see in this market when others have been very mixed. The share print is stable for now, I guess not going down is the new going up these days. I’ve had my gripes with Premier over the last couple of years, but hats off to them for pulling the company out of the hole that it was in. Debt is reducing at pace but most importantly this is being done whilst still investing for the future. BIGP & Tolmount are due to come on-stream, Alaska & Brazil appraisals next year, not bad for a company that was on the brink just a couple of years ago. Lots of positives but still a couple of key things to sort, mainly the sanctioning of sea-lion and the refinancing of the debt. After that, and with a reasonable oil price, long-term holders should finally get the equity valuation that they’ve been holding out for. ATB.
Beatley
15 Nov 2019
Unable to sell Zama It’d be hugely embarrassing for the team at Premier to mention the interest as ‘significant’ and then turn round in December and say there’s been no bids. I’m not saying you’re wrong but given the wording I have no reason to doubt the outcome of the process. $300m net to Premier will be a huge help in getting debt down to a reasonable level.
The_Marin
14 Nov 2019
Unable to sell Zama Looks like they struggling to get any offers for Zama. How many times have you heard that before, data room open with lots of interest but no takers. I would imagine any offer, if any, will be low because there’s a lack of interest.
