Lekoil Share Discussion Threads

[oil man] 08/12/2014 21:32

Grabbed some more bargain shares today. As soon as oil bounces so will the
these companies.

[ngms27] 05/12/2014 09:12

foxx999, quite the opposite in fact.
The $22m was a pre agreed amount upon first oil which was agreed ages ago and was actually extended in February 2014

They need another $75m and to date haven't managed to fund this and have engaged Standard Chartered to try and arrange this.

[foxx999] 05/12/2014 07:29

So it's still doable in this market then..........Eland Oil & Gas PLC("Eland" or the "Company") Access to US$22 million Loan Facility Eland (AIM: ELA), an oil & gas production, development and exploration company operating in West Africa with a principal focus on Nigeria, is pleased to announce that it has satisfied all the conditions precedent to access its US$22 million loan facility (the "Facility") with Standard Chartered Bank. Drawdown of the Facility is now available to the Company to allow Elcrest Exploration and Production Nigeria Ltd ("Elcrest"), Eland's joint venture company, to continue to develop OML 40. The Company has mandated Standard Chartered Bank to coordinate its $75 million reserve based lending facility and is targeting signing the facility by year end. George Maxwell, CEO of Eland Oil & Gas commented: "Entering the debt phase of financing is a key milestone for both Eland and its shareholders. It allows Eland and its stakeholders to push on with the further development of our assets without the requirement for equity funding. Furthermore, in a current economic environment of falling oil price, where financing and capital expenditure plans are being cut or deferred, the commitment from Standard Chartered to coordinate the raise of such a material debt facility by the end of the year further validates the significant value of the OML 40 license."

[fraserdean] 04/12/2014 09:46

Sadly Nigeria is always hurting and probably always will do although, how much that change hurts normal people is pretty open to debate. It's not as if there's a cut in the NHS or child benefit.

I guess you could argue the budget level has some effect on the oil companies in JVs with NNPC etc but as the cash call is always in arrears even that is a pretty tenous link.

[ngms27] 04/12/2014 08:53

According to Deutsche Bank and the IMF Nigeria needs an oil price of $123 to enable it to balance it's books

The article is primarily about what the oil price is doing to Russia which only needs $103 oil so Nigeria must really be hurting

[ghhghh] 04/12/2014 07:53

LEK stunningly cheap and great lockaway

My only concern is country risk.

What are the consequences if opposition party wins Feb election?

I'm told Jonathan deeply unpopular and likely to be replaced as President but that his party likely to reelected. All down to tribes?

And risk of civil uprising thanks to the split in wealth?

[fangorn2] 03/12/2014 17:40

@Kaos3,

Having a parent who spent 5 years in lagos the scale of theft is shocking.On par with the laziness actually.

[fangorn2] 03/12/2014 17:33

@Ghh,

I wasnt aware they needed $100/bbl odd plus to cover social costs tbh. Gioven their breakeven is $20-40,are they really unable to pay for those social costs out of the difference?

Perhaps the locals could just steal more?
Which might be a problem with new pipelines coming in - eg Mart news earlier today.

[kaos3] 03/12/2014 17:24

It is easy. Where there is no more cash people stop being civilised.Families, nations ( USSR, Yugoslavia-to name 2, EU next?). How to deal with it? Comprehend and be the same or you get burned by everybody else. Sad. Been there.

[ngms27] 03/12/2014 17:16

$130 in the article I read...
Lets face it though, oil is stolen, revenues get trousered by officials and the population are left to rot.

Not exactly a nice place with any real social values so hardly surprising the level of terrorism they get

[ghhghh] 03/12/2014 16:53

Fangorn

I was refering to oil price Nigeria needs to pay social costs etc, well over $100?

[foxx999] 03/12/2014 16:11

I understand the point and its a reasonable one. I agree dilution wouldn't be great. They said it would be debt funded - if they cant get it then maybe their hands will be forced. But, lets be clear - an oil sell off to $70 isnt really an extreme event in the life of an oil company. It was a highly profitable deal when signed. Its still profitable. Funding is the issue but like I said, they don't have to fund it all at once tomorrow do they?If you invest in oil shares long term you expect these times. Do you wanna invest during these times or be selling at these times like so many do?

[ngms27] 03/12/2014 14:53

foxx999 I think you are missing the point.

Given the current market how would LEK fund this work? Dilution now would be horrific to shareholders.

Probably better all round to walk away and concentrate on OGO

[foxx999] 03/12/2014 13:23

The profitabilitty of ota depends on the tax status they get granted. I dont know the exact $bbls in either case off the top of my head but its nothing to worry about if they get the tax status they think they will. I think Lekoil mgt are pretty shrewd. I'd be amazed if they walked away on the first crude sell off - anyone that's been in oil for more than a few months knows its a cyclical business. Also, we should get cashflow from just re-entering the two wells already there - which I assume is pretty cheap. The further field development might just take bit longer. So, early cash flow from ota still likely and all our share of the ogo drill when it happens. I'm going to add when finances allow.

[fangorn2] 03/12/2014 13:06

@NGMS,

Nigeria would be fine if they sorted out the exceptional theft problem they have.
Eg Mart loses 21% of its production to theft.

Perhaps some hand chopping of thieves might provide a quick solution.

[ngms27] 03/12/2014 12:59

I actually thought I saw something that suggested the opposite but that may have been referring to the price the Government needs to continue with it's spending plans rather than profits / cost of operations.

[fangorn2] 03/12/2014 11:59

"This risk is Nigeria imploding if medium term low oil price but my view is OPEC cuts Q1 2015"

I was under the impresion Nigeria had one of the loweest breakeven prices after Saudi..$20-40/bbl apparently.

[ghhghh] 03/12/2014 09:04

Answering my own question, no problem?

In addition, Lekoil Oil and Gas is required to fund an initial work programme agreed with the Farmor for re-entry of the existing wells and all costs until commencement of production, with a base case estimate of approximately US$67 million. Lekoil Oil and Gas' expenditure on the initial work programme ("IWP") shall be recovered preferentially from 88 per cent. of production cash flow from Otakikpo. The Farmor will be entitled to terminate the transaction if Lekoil Oil and Gas fails to pay the Consideration when due or fund the IWP. After funding the initial work programme, Lekoil Oil and Gas will be liable for all obligations in respect of its 40 per cent. participating and/or economic interest in Otakikpo. Lekoil will also be the Technical Partner on Otakikpo. The Company guarantees the obligations of Lekoil Oil and Gas under the farm-in agreement.

The had $60m cash after paying the $7m. I assume they can now walk away by not paying the $4m. So in very strong position

This risk is Nigeria imploding if medium term low oil price but my view is OPEC cuts Q1 2015

[coxsmn] 02/12/2014 19:50

Date Ticker Broker Name New Old Price target New Price target Broker change
21-Nov-14 LEK Westhouse Securities Buy 0.86 0.83 Reiteration
03-Nov-14 LEK Westhouse Securities Buy 0.00 0.85 Reiteration
16-Oct-14 LEK Investec Securities Buy 0.00 0.90 New Coverage
02-Oct-14 LEK Morgan Stanley Overweight 0.95 1.05 Reiteration
30-Sep-14 LEK Oriel Securities Buy 1.05 1.05 Reiteration

[ghhghh] 02/12/2014 16:23

Remember Afren has eye watering debt whereas LEK had c. $60m net cash.

My concern is Ota. Is this a liability if LEK can't fund? Can they just sit on it and worst case is that counter party cries default and takes it back. LEK lose deposit. Not a bad result in this market at 32p valuation?

Anyone know if they have a back stop date to begin development by?

Investec have Core and Development NAV at 55p $75 oil 12.5% NPV or 79p at 10% NPV

That drops to 33p and 52p at $65 oil

More realistically, $85 oil is 78p and 106p. A bidder could value NPV 10

[stefield] 02/12/2014 10:59

they said no need to raise monwy at moment, but if that changes, it wont be good. there was a mention of borrowing against production, but wont be so easy with current oil price ?

[theprovosts] 02/12/2014 10:24

Afren up 14%, whilst not a single buy on LEK. When's the market going to wake up to this? :)

[ngms27] 01/12/2014 15:06

foxx999,

No I looked at the chart which only showed Afren's NAV only being green at $80 oil i.e. that's what they need and I agree I should have shown Brent rather than US light crude.

[stefield] 01/12/2014 11:34

afren have around 200mmbls p2, so currently valued at about $4 a barrel.
as there is not much chance of getting it all out of the ground this month, it would seem more sensible to value it on an average oil price over a slightly longer period.