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My worry is what will happen if still no SS approval by Dec 15? Another suspension? What will be the reason? Will it even be granted?
Also does it look likely for another big deal announcement by year end? Personally I think it’s pretty slim when still nothing by now. I’m not saying there won’t be just unlikely to be by Dec 15.
Tier - I think it will all depend on whether Savannah Energy are comfortable in releasing the admission document without formal approval if all other workstreams are complete, for the various catch ups people have had with IR we have safely established that admission document being released is not contingent on formal approval and it would be nice to have alongside the admission document but not a condition precedent, the question will be and the onus on Savannah as to whether release an admission document without approval or come to the market without it
Not looking forward to relisting with no deal. We discussed and some of you think the share price will hold but I really don’t think so. Anyway a month/6 weeks makes all the difference if all parties truly want things to happen. Not long to find out.
Tier - having thought about it a bit more, I don’t think the market will like it if we come back without a completed (obviously we would still need shareholder ratification if we did come back with all work streams and Gov approval post ad doc and re-list) deal. I am also assuming that should we come back without a completed SS deal that we do not announce another M&A deal. My reasoning for this is:-
1 the market would be very nervous about SS completing, especially after the Chad fiasco, albeit on different terms
2 yes we are favourite for the 4 x ICC cases but these are too far off decisions and the market will price in zero for them
3 the Niger pipeline is delayed and so is our well testing program that should have been in Q4 2023
4 at the interims, debt has gone up since EOY 2022 and production was down
5 not sure where we are at with 450MW renewables in Niger but am assuming delayed with what’s going on in Country
6 no revenue coming to us from Cotco while revenues are frozen
If we did come back without a completed deal in SS I would dearly love to come back (as would everybody else on here) to come back at a minimum of 26.35p but somehow I think we would come back lower than that.
All that being said, I still think we have a good chance of SS completing and if it does, I hope the market do not discount for the ongoing war in Sudan and hence threat to the export pipeline.
I'm not the most knowledgeable investor here, but in my limited experience, the AIM market is a cruel mistress. She will punish no progress or bad news to the maximum and reward good news to the minimum. Someone please tell me I'm wrong :-)
Just about keeping the faith though......
JDC - that just about sums up the market :)
I said some weeks back that absent SS, we come back at 15 pence-ish. No reference was made in the interims to another hydrocarbon deal, so perhaps what was being worked on has fallen away. Maybe they're just staying silent though.
Agree that the market will price CC at zero, but perhaps that's a buy opportunity for the patient private investor. Niger clearly has no increment to share price until some oil flows to Benin.
Don't think the IIs will bail, but they'll be seriously pressuring the BoD.
All that said, SS is still live apparently. My guess remains that it's all about the licence extensions beyond 2027.
We need to put a GPS tracker in Knottie, like one of those Jason Bourne films. At least we'd get some visibility that way.
Reading everyone's posts here with interest. (Well, nearly everyone's, anyway.)
Cautionyourblast - Personally don't think we would be 15p, the business is far more resilient than that and at 26p neither Chad or South Sudan was priced in. Besides with the accugas CPF, debt restructure, potential Niger start up, chairman purchasing shares at suspended price of 26p, I see we are at fair value at present. The market could view the south sudan deal not completing as a positive to the contrary as well considering the jurisdiction of the asset and could think that long term we dodged a bullet.
But it all depends on how the company keeps the market appraised and I am not referring to just deals, I am referring to all operational things, such as Debt restructure and plans for Niger and anything else that they may or may not be working on...............................................
One thing I would say now is having our chairman on board who is fully focused on Savannah Energy post his EY role, would hopefully support AK quiet a lot so if AK is tied up in one country our chairman can be representing the company in other territories although it;s not within a typical chairman remit but considering our Chairman is african energy law expert I am sure he could be out there sounding out other acquisitions and building relationship at senior government and ministerial levels. I believe his value will be realised in time and can not be measure he has also helped a number of countries in african draft their petroleum laws so he would know many jurisdictions inside out
TIL Sorry but i don't agree with you re opening price with no deal. Negatives to share price since suspension
Chad deal in the courts and nationalized (we haven't traded since these were announed)
Coup in Niger (We won't be producing there anytime soon and we have tipped hundreds of millions into this)
As yet no debt restructure and we have seen interest rates change hugely since Dec 2022
Big hit on currency conversion
These are Big negatives and this is aim so sorry i greatly respect your input but these will be recived with negativity if no deal.
However these can be negated with, Debt re structure announced and deal concluded , and who knows a Chad settlement in the next 6 weeks.
The latter being my hopes.
SP is anybody guess really don't think there is a science to it. let's all hope that AK and the Board pull a few rabbits out the hat...................
CYB - I think 6 weeks for any potential Chad out of court settlement is a bit soon but I hope we have a chance to work on a deal like that. I believe AK is holding all the trump cards on that one and would be able to be VERY firm with any negotiation.
Conversely, SS know the massive importance to AK for the Petronas deal and he won’t be holding as many trump cards on that one. Whilst there not be any other ‘real’ acquirers, I think that if the SS Government say to AK ‘jump’ his reply would rapidly be’ how high’!
I’m with others here, let’s get this debt deal done to really underpin and stabilise the company but I am expecting something like 8% + LIBOR which will be pretty hard to stomach. But let’s not forget we still have nearly $4bn of Gas revenues in Nigeria over the next 15 years and that should significantly grow next year when the compression project is completed.
Like others I am massively hungry for some updates which to be honest, on the debt front could come at anytime.
Rockyride - Part of me thinks that the reason why we haven't had news on accugas debt re-structure even though they have said many times that the term sheet is in place is probably because there may be some linkage to the overall debt package we may procure for the South Sudan Deal. Otherwise it seems an awful long time from having a term sheet to formally close the financing for accugas..................
they may be certain co-dependency's
Hi Rocky
The Chad settlement timeframe suggestions were LST's, not mine; and I think he was just throwing an idea out there (not wishing to speak for him, of course).
For the record, I expect no settlement at all on Chad and I certainly wouldn't want us to take on operatorship again there. It is simply too risky, both financially and reputationally. Since we've allegedly had Nicholas de Blanpré at the pointy end of a gun from these punters, that's a hard pass from me.
Additionally, the Chadian's can't easily offer us operatorship again: it would be politically weak and they'd lose face. They might offer a financial settlement, but I doubt it would be particularly attractive: how do they fund it? And management surely says "see you in Paris (and New York)" if the Savannah case is as strong as we think it is.
The main share price movers that we know about from the suspension date are:
Debt restructure (we pay a significantly higher interest rate now);
FX losses (which may not have finished yet);
SS (of course).
Chad/Cameroon settlement is a long way off, maybe two or three years (in my opinion) though of course as LST posted, the expropriation isn't priced in: thus mark it to zero. Niger was valued at zero by the market before suspension and will remain at zero after.
As TIL rightly says, estimates of the SP are anyone's guess. My punt at 15 pence if SS aborts is based around my DCF model which I shared in the last week of August. But it's still a punt.
Best wishes
Guys, it doesnt matter if the interest rate on the new debt deal is high. Remember they are refinancing a USD term loan using a new Naira-denominated loan. Thus if you are selling gas to Nigerian govt entities at a USD referenced rate and then are paying your financing costs in Naira, even if the interest rate is 10%+, its not a huge deal.
Hi scotpak,
I agree, but my point was that if we don't get it refinanced and we aren't able to swing our Naira balance to USD and pay off a chunk of the existing debt, then we're going to find this world of debt and fx exposure pain continuing for some time.