Faroe Petroleum Share Discussion Threads

[thegreatgeraldo] 03/5/2018 20:03

Re-finance or redeem, guess we'll hear pretty soon...

[jasper2712] 03/5/2018 19:59

Surely if DNO were mulling over the idea of taking over FPM with a cash payment/share they would have done some forward planning with their finances. To start buying shares at £1.25p and then telling the market that they are looking for a finance deal - just doesn't make sense. So I personally think the market has read something into this that is just not there.

[ed 123] 03/5/2018 18:57

Thanks for the updated figures, Vikingbhoy. :-)

Do you have any thoughts on how this might play out? (If you're too close, then it's no problem if you don't answer.)

[vikingbhoy] 03/5/2018 18:47

Ed, You got the cash figure for DNO wrong. $520 million was at the end of q1. Since then they have received about 50 million in payments, but also spent 200 million or so on Faroe shares. With operational costs and capex they probably have less than 350 now.

[ed 123] 03/5/2018 18:38

Yes, depends how it is viewed. Atm, DNO have $400million bond borrowing which (if they don't want to buy anything big) they don't need, since they have $520 million (and rising) cash. So, if they do go for a refinance, it means they want cash for some new reason. That's presumably why Faroe shares put on several pence today?

My own speculation and I may be wrong, but I'd guess that DNO have spoken to the other big shareholders to ask how much they'd want to sell. If DNO think they can get enough support (say another 22%, to take them over 50%) at an acceptable price, then they'll go to Faroe's management and ask for a recommendation at that figure. Faroe's management would want to know that DNO could raise the funds to complete and that may be where we are now? DNO may be going to the bond market so they can show Faroe's management they have sufficient funds?

I should emphasise that the above is just my own speculation. I could easily be wrong.

IF there is to be a takeover, do you have a price in mind that big shareholders and DNO might agree on? I'd be very happy with 150p and it may be as low as 140p. The share price didn't stay above 140p for long and the big money often 'guesses' prices fairly accurately.

[thegreatgeraldo] 03/5/2018 18:10

Just a thought.....AIUI, DNO currently have $400mill bonds, with an 8.75% coupon, due 2020. They may be looking to refinance that, with a lower coupon & kick the maturity date down the road?

[ed 123] 03/5/2018 17:16

Why do you say undervalued at £1.50/share?

[jasper2712] 03/5/2018 17:01

Still way undervalued at £1.50p/share Shareholders need to look at the bigger picture here which will only be realised after 2020.

[ed 123] 03/5/2018 13:47

(DNO has $20 million in RAK shares.)

DNO has net cash about $110 million .......... starting with $520 million cash and equivalents, after taking off $410 million in borrowings (bond plus exploration facility).

If they agree (just my own thought) say £1.50 per share, they need about £400 million for the 71%, or $560 million. So, net, they need to raise about $450 million.

Cashflow for DNO approx. $200 million per annum, so if they agree a bond at say 10%pa, they could repay with about 3 years production.

For safety, they may go for $500 million for 5 years?

(Edit:- DNO might have the sale of some Faroe assets in mind? Also, for DNO, Faroe's $100 million bond cash would become available to them. So DNO might be looking for only $400 million or less from the bond market?)

FPM LSE order book is getting support at 138p, so it appears that someone with money believes a bid is coming.

My guess is there's c.80% chance of DNO bidding soon. We'll see.

(Above is just my own thinking. No advice intended.)

[wbodger] 03/5/2018 13:21

I would have thought an all-paper bid would be unlikely to succeed because the main holders (BlackRock and Aviva) would have issues if their holding of shares could only be traded on Oslo. Perhaps they have sounded out the big shareholders, and know what cash they would need. As whackford posted (#868) they need more cash than they can lay hands on.

It isn't as if they need to raise all the 71%, they do have $636/1.4 ~ £450 million including 'marketable securities' (whatever those are). However much they do need to raise will take into account their ongoing business needs, and the Nordic Bond providers will run the slide-rule with them. Faroe already has a Nordic Bond, unused but it would be affected, so that possibly explains the need for the meeting.

[bountyhunter] 03/5/2018 12:35

cheers vb, not sure if that rules out a share option to any possible bid approach but I wouldn't fancy owning shares listed in Oslo, that would leave around 1/2 billion as a ballpark figure for the potential cash required imho

[bigdazzler] 03/5/2018 12:34

Next TA price point for me is around the 150p.

I can see that being hit soon enough.

[vikingbhoy] 03/5/2018 12:26

DNO is listed in Oslo. DNO has fantastic cash flow so should be able to service half a billion without any issues. The main problem for DNO is political risk in Iraqi Kurdistan where almost all their production is today. Expansion into the North Sea is a derisking for DNO in that respect

[bountyhunter] 03/5/2018 11:41

market cap 505m, so would need 505m * ~72/100 + premium = ~£364m + premium for bid
...so say around half a billion ball park figure, don't fancy DNO shares! (are they listed, if so where?)

...if this rise continues there may need to be a "don't know any reason for this" type rns from FPM

[bountyhunter] 03/5/2018 11:38

interesting, can't see any other reason for today's unexpected rise

[corrientes] 03/5/2018 11:00

Thanks vikingboy and jasper2712.

With all these big boys having major interests in the politically stable North Sea and the junior FPM being no longer insignificant following their successes, I just don't see how this 'little' company will remain as an independent for much longer.

[vikingbhoy] 03/5/2018 10:47

Corrientes, it's means that DNO is raising funds. Now, it could just be a refinancing of their existing bonds, but it could also mean they are raising funds to acquire Faroe.

[jasper2712] 03/5/2018 10:44

Faroe did this a few years ago

[corrientes] 03/5/2018 10:41

Sorry if I'm being daft or I didn't read into it enough enough, but what,please, is the significance of this announcement ?

[ed 123] 03/5/2018 10:30

A good find. Thanks, Vikingbhoy. :-)

[vikingbhoy] 03/5/2018 10:26

If you're wondering this probably explains why Faroe is up today: hxxps://newsweb.oslobors.no/message/450295

[cwa1] 03/5/2018 10:00

Perky, for sure.

[thedudie] 03/5/2018 09:56

Bid?
Acquisition?

What else ?
td

[corrientes] 03/5/2018 09:54

Are FPM's days numbered ?