Tue May 22, 2018 10:24 am
I see 1p as achievable to be honest based on the data we are currently seeing but probably towards mid late 2019.
I know at time of suspension we were at 0.35p and things are much improved – but the suspension, and especially ebbing in excess of 6 months, knocked confidence as much as during the Liardau era.
In my head I’m optimistic to seeing a 0.4p-0.5p by the end of the year if things keep on track.
Fag packet stuff – but we know form last quarterlies were are returning $12 profit per barrel which over the quarter generated $0.8m profit on 731 barrels or $3.2m full year.
Let’s say we hit 1000bpd by year end, and with oil another $10 avg higher than the $12 per barrel profit say instead $20 (realistic), then over a 12 month period that’s circa $7.3m profit.
There shouldn’t be any more write downs and let’s say Indonesia is neutral and the RIGS at this point in cost to profit.
Debt on $40m at 6% to Landocean = £2.4m per annum and the $20m convertible loan at 8% is $1.6m – total $4m. Serviceable. This is why the continued bopd improvement is key – serviceable with profit leaves this less of a worry for investing.
Current valuation on 7.5bn shares equates to £15m market cap.
In this situation I like to look at multiples of profit – so forward 10x of $3.3m profit gives $33m at X rate 1/1.35GBP v USD = £25m market cap taking us to a share price of 0.3p + with something for Indonesia and RIGS 0.35p-0.4p
By end of 2019 if they add 15% per quarter as they have been doing, could be more but could be less (waterflood should increase to make it more!) take us to 1750bopd Trinidad and in excess of 2000 with Indonesia.
If oil holds at $70 and we keep the $20 barrel profit then generate nearer $15m profit a year exc. RIGS. After debt loan of $4m its $11m profit. Multiple of 10 forward basis is $110m or 3 times current expectation for end of 2018 and this share price nearer 1p.
Could be much higher on a turnaround story and any additional stuff we may do – but I’m now invested on the basis there is a recovery story rather than my historic token amount.
My gamble is getting in too early as they need to keep showing the improvements. However I’m willing to now take that chance with 3 successive quarters of improvement and I find it hard not to be better again after the issues in storage in the last quarter.
People will get out on the way, but I see this as a laggard story on oil, and so with other oilers on the increase already this will pick up some of those profits to replace those who exit.