Faroe Petroleum Share Discussion Threads

[ed 123] 22/7/2016 00:12

Why vote against the private investors getting a few at 70p?

Unfortunately we weren't allowed a vote on the institutions getting loads at 70p.

I look forward to the day when Faroe becomes fully listed and these private placings are limited to 10% of the issued equity. Faroe's board had stated an intention to move to fully listed - but the date for that has been pushed out.

I still don't understand the low volume here. Surely the new shares can't have all gone straight into the hands of long-term insitutional holders?

[harry rags] 21/7/2016 21:35

I for one will be voting against this latest offering. ?

[corrientes] 21/7/2016 19:07

They do this because they can get away with it.If so and so can do it,so can we is the mantra.

The disgusting banking elite have managed to infect those below. Make no mistake,here will be a reckoning one day when the present financial debacle is seen for what it is.

[whackford] 21/7/2016 15:43

Yes unfair to loyal shareholders and they've done it before.

The 11,000 shares I bought nearly 4 years ago at £1.50 not looking so good now.

[ed 123] 21/7/2016 15:26

So, there we have it - details of the open offer. Only 1 new share for every 60 held and, looking at the figures, it seems the recent placee holders will be entitled to apply too.

As ever, unfair on the long term loyal shareholders.

Wondering, is there a lock-in period with the new shares? I had expected the share price to dip back to 70p. Also, the traded volume looks very low following such a big placing.

[wbodger] 21/7/2016 09:26

Yesterday's Holdings RNSs:
Henderson is new. SSE not taking up extra shares is unremarkable. JPM declare they had under 3% before, so that's a jump of at least 3.89% of the new total 354.5 million shares.

I just noticed that this Placing has been expressed as a percentage of the resulting shares-in-issue rather than the more normal shares-in-issue-prior-to-placement. (That's dodgy, imo.)

So the dilution is not 24.8% but nearly 32%.

Henderson and JPM additions don't account for 88.5 million shares, so other RNSs should follow.

[clunes100] 20/7/2016 16:43

I don't know about Dana but Tom Cross through Parkmead holds around 3% of FPM, or at least he did last time I looked.

[wbodger] 19/7/2016 18:33

I wonder if Dana took up their allocation this time? Do we know they didn't?

The new shares were admitted today, although FPM's Market Cap hasn't been corrected yet.

Holdings RNSs should be informative.

[ed 123] 19/7/2016 11:46

Ta, Rogerlin.

There was a time (2009?) when Dana/KNOK had about 29 percent of Faroe and I thought they might bid for the remainder. Those days are very definitely behind us now. After this raising, Dana drop to 13.6% of Faroe. Atm there is a market tested volume price (70p), so maybe this the point that an institutional buyer takes the Dana holding? I think Dana selling (if it happens) would be good for all parties.

Back to Brasse, this find has been very good for the technical staff at Faroe. They really thought they might have something big at Boomerang - so the result hurt. Confidence has been restored.

[rogerlin] 19/7/2016 08:45

"The company also took a £34.1million write down on its 18% shareholding in North Sea independent, Faroe Petroleum, which it said it was holding as an “available-for -sale” investment. It noted that it did not participate in a Faroe rights issue in 2014, which resulted in a dilution of its initial 22% stake".

Mention in recent statement by Dana.

[rogerlin] 19/7/2016 08:14

It's a great pity that the Butch appraisal wells didn't come up with anything. Faroe have 40% of PL810 Katie which is between Butch and Ula (a little to the south, the area right between Butch and Ula seems to be unlicensed) and 40% of PL811 Gullaxy which is to the north but not that far away. Anything that could be found in either of these licences would be close to the existing infrastructure.

[wbodger] 18/7/2016 22:35

Hadn't seen the Presentation, thanks Skaff.

No further mention of pre-empting, which is probably good - they would have had an indication by now I guess. Owning 20% of Ula will give them 20% of the tariff by the Butch consortium for using it, so that should be a net earner, since they only have 15% of Butch.

Butch FEED set for this quarter. Estimated 15% of $645 million, about $100 million to FPM, for 2P Reserves of 6.3 mmboe.

Njord A still in place, expected to be out of commission until 2020/21. (Seems long.)

[ed 123] 18/7/2016 10:45

Ta, Scaff55. :-)

Page 6 suggests that Pil comes on line before Brasse. Wonder why they didn't include Brasse on this page? It will be very material to Faroe, doubling that 25-35 mmboepd, I'd say.

Yes, rogerlin, don't want another NjordA situation. There is definitely some risk, but I'd like to think that the Butch partners (including Centrica and Suncor) checked out the Ula and Tambar facilities carefully before committing - so suggests that the c.1985 structures have several years more life in them.

Faroe's shares are being supported this morning but that was a big placing. When the new shares are issued won't some recipients just take the couple of pence on offer? Hmmm ... may eventually be able to buy in the market at 70p, methinks.

[scaff55] 18/7/2016 09:56

Presentation July 14 on there website. not sure if you have seen it.

[rogerlin] 18/7/2016 08:29

Yes it's complicated isn't it. Seems a very good fit with Faroe's operations, but the original structures are old, let's hope they don't break down too often!

[wbodger] 17/7/2016 01:28

BP no longer control BP Norge which will be part of Aker-BP (BP will control 40% of Aker-BP). Detnor, previously effectively controlled by Aker and now the brand-name of Aker-BP, were quoted this week as looking to add assets. But if BP were making the decision I would agree with Ed123 (#7654) that they would not want to preempt on Ula, and surely very unlikely on Tambar.

Oselvar is 55/45 between DONG/Cape Omega(Hitec Vision). Trym is 50/50 DONG/Bayerngas. I don't see Cape Omega or Bayerngas as likely to pre-empt.

DONG did not include Gyda in this transaction. It produces very little, is probably worth nothing and will cease to produce in 2018 according to NPD, but it does use Ula.

(That's a very informative page, rogerlin.)

[rogerlin] 16/7/2016 18:58

Some stuff about Ula here.

[hashertu] 16/7/2016 10:51

That Telegraph article contains information which appears to be in conflict with the placing RNS.
FPM are raising £60.8million, not $60.8million.
The break even price of $19/bbl (strictly /boe) was the estimated unit OPEX of the DONG assets only, in 2015. I suspect that "break even" and "unit OPEX" mean different things in accounting language.
Where $23/bbl comes from, I do not know. FPM stated:

"Operating costs

The DONG Assets have relatively low operating costs, (approximately US$19 per boe in 2015), and this lower cost production is expected to bring Faroe's average operating costs down to approximately US$26 per boe in 2016 from approximately US$30 per boe, if the Company did not complete the Acquisition."

Whatever, I think it is positive PR.

[seconduser] 16/7/2016 10:28

Thanks roger, key paragraph for me is breakeven costs:

"Faroe typically focuses on low-cost assets which are already producing oil and gas and Mr Stewart added that the new “high quality” assets will reduce the overall cost of its portfolio further. In 2015 Faroe’s costs meant it required an oil market price of $23 a barrel to break even, against an average price of $52 last year. But the new fields offer a break even price of $19 a barrel against a market which is expected to break the $60 a barrel mark by late 2017."

[ed 123] 15/7/2016 13:10

The deal itself looks good for Faroe. $70M cost for $20(?)M/annum operating profit. The $109M of tax lossses will give about 4 years of tax free cash. The deal pays for itself in about 3.5 years on an operating profit basis - but cash flow is of course what it's about. It looks like the cash flow (ie. excluding DDA) could be around $50M for 2016? Slight rise in oil price to offset the effect of natural decline in 2017 and 2018?

I doubt that BP would want to pre-empt this deal. The assets are tail end of fields and BP would more likely want to sell than buy, imo.

The decommissioning cost of £54.5M (or $70M) may arrive in an average 7(?) years time and is an admissible cost for reducing gross profit.

Cost of deal plus present value of decommisioning, say $110M. Post-tax cash flow approximately $50M/annum. So, bought on a cashflow multiple of about 2.2 times. From memory, this is about the same multiple as Faroe paid for Ketch and Schooner. Faroe hedged the Schooner/Ketch production, I wonder if they'll hedge the expected production from these Dong assets?

Overall, looks good and will give Faroe's staff plenty of work. This raising and purchase of assets may give Faroe the size it needs to hang onto the full 50% of Brasse and see it through to production.

If all goes to plan, Faroe's share price could grow by 20-25%/annum compounded over the next three years - target 135p by the end of 2019?

I can well understand those who are selling today if they are making a couple of pence per share on the placing but, for me, as a long term holder I intend to sit back and see how things unfold over the medium term. (No advice intended.)

[hashertu] 15/7/2016 12:00

On the plus side, the book building exercise took place on the day when the share price was at around the highest of the year. The dilution could have been worse.

If DONG have been producing 8000 boepd from these assets for 200 days, clearing $10/boe, will the purchase price be reduced by $16million? How does this adjustment work?

Do we know how much hardware comes with this deal? WB mentions the Ula platform and decommissioning costs. If owned, that platform has got to be worth a fair sum.

Abandonment/Decommissioning Liabilities

"The abandonment liabilities associated with the DONG Assets are to be transferred to Faroe which has agreed to establish a decommissioning provision fund to be owned and operated by Faroe and consisting of both cash and investment securities. The fund will maintain a minimum cash amount of US$10 million until the liabilities have been discharged or until the residual liabilities fall below that level."

I have not read of a record date for the open offer. As the issue of shares seems to need shareholder approval, I assume that the record date is yet to come.

"The Acquisition is subject to a number of conditions including certain pre-emption rights not being exercised. In the event that all or part of the Acquisition does not complete, the Company intends to use the unutilised Net Proceeds to fund similar acquisitions."

Does anyone know who owns these pre-emption rights?