Nautical Petroleum Share Discussion Threads

[lanaken] 24/1/2012 15:49

It's an excellent result for both parties.

ENQ now have operatorship and 45% of the one of the biggest NS oilfields. They paid a decent fair price, added some sizeable heavy oil future production to offset against a low tax rate, added a big lump of expenditure to set against current production taxed at 62%, blew out a weak partner and acquired a strong sensible new partner. The combination of skills should lower the risk for both parties.

NPE can now retain a bit of Catcher and will be less of a one trick production pony and thus far less vulnerable to heavy oil being hit hard by falling oil prices. They will still fully utilise the heavy oil tax break.

As regards risks the oilfield size is borne mainly by NPE and ENQ get the tax break. Sweet for both parties;-)

If, and when, it comes to selling either some heavy oil Statoil has strong competition and PMO won't be able to screw NPE now on Catcher.

NPE have a strong technical partner to help with the rest of the block and the risks/rewards there have been divided up pretty well.

ENQ might well buy NPE at some stage, but they'll pay a lot more money and have a lot less risk than if they did it now and will have the cashflow to finance that purchase much more easily acouple of years down the track. In the meantime, NPE have some pretty tasty exploration targets, that now look a lot more doable.

Win : Win it is and the market will slowly start to recognise it for both parties , I believe. I love it;-)

repo

[steelwatch] 24/1/2012 14:00

"We see this as a positive for both EnQuest and Nautical with the Kraken field development now being pushed ahead by a well capitalised and resourced operator," said Numis Securities analyst Sanjeev Bahl.

The analyst reckons the Kraken development is a relatively low risk and with EnQuest at the helm first oil may be achieved in late 2015 or early 2016.

Fellow Numis analyst Mathew Lambourne looked at this 'win-win' deal from Nautical's perspective. He says a significant portion of the funding risk has now been removed and as a result the market will have more confidence in Kraken's commercial success.

"The size of the farmdown is in line with our expectations, and leaves Nautical with a material exposure to Kraken but without a capex liability that is prohibitively expensive," Lambourne said.

Given that Nautical share of the phase one capex costs is now estimated to be US$225 million, Lambourne believes the today's deal is likely to cover Nautical's entire liability – providing the oil reserves are sufficient to trigger the contingent part of the deal.

Should Nautical need any more cash to cover its liabilities then Lambourne says a reserve-backed debt deal or the sale of non-core assets could fund the development.

"In our view this is an excellent result for Nautical, removing the bulk of the funding risk of its cornerstone asset and providing good visibility as to Kraken's commerciality (first oil due late 2015)," Lambourne added.

"We are encouraged to see a fully funded, proven UKNS operator like EnQuest take a meaningful stake in Nautical's cornerstone asset."

[lanaken] 24/1/2012 12:37

Horndean Eagle,

Fair enough if that is the case. How about that sort of 60-70% move by Septemeber. Will that do?

Where do you see good value?

FWIW, this should rerate quite sharply now against other oilers, because the big doubt about this one was where the money was coming from to get Kraken through to production. That is now cleared and there is plenty of newsflow coming up to drive the price forward. So maybe you'll still get your chance to switch out at some stage soon.

repo

[horndean eagle] 24/1/2012 12:34

Id rather have had a 40-50% premium and moved on elsewhere. Plenty of value available. The alternative of having a share price higher by 60-70% in a couple of years isn't as attractive a prospect.

[lanaken] 24/1/2012 12:31

Horndeaneagle,

My neck of the woods down there as a Somers Town/Buckland/West Leigh boy.

Well there will be no early take out on the cheap now, so no PMO/Encore type deal. I can't see too much wrong with that as the oilies seem to be in recovery mode now.

The good news is that there are two big players in NS heavy oil now. NPE look like they are carried through to first oil on Kraken. They can now probably fund Mariner and do the explo programme through to Catcher. Sell off a bit, maybe half of that, once the appraisal is complete and get through to production there. PMO won't hang about with that one and now won't be able to buy NPE's share on the cheap.

Two years down the track a nice mix of heavy and light oil production, some further exploration success hopefully, material upside on Kraken proved up, at least in part, and cashflow coming in nicely.

If they can pick up some cheap bits of explo along the way, all the better.

I can't see a lot wrong with that and can see 6 quid later this year, which is better than the 4.50 or so, you might have got for a whole company sale now.

repo

[steelwatch] 24/1/2012 12:10

HE - with the medium term future looking assured here, would not what to be shortchanged!

[leedskier] 24/1/2012 12:06

No doubt at £10 a share ;)

[horndean eagle] 24/1/2012 11:59

Today's news is a bit mixed for me. Would have preferred for ENQ to actually come in and make a full blown offer rather than take what they have. Guess any corporate interest in NPE may be on the backburner for now.

[falklands] 24/1/2012 11:03

Steel

Over sleep can be costly in the Falkland oilies !

Employed the iPod services, saves time switching on computer etc to find everyone's dumped on a duster or panic on a oil find.

[lanaken] 24/1/2012 10:30

What a cracker Mr Jenkins has pulled out of the hat here.

They lost part of a weak partner in buying the 15% from Cammamens back in May last year for 12-15m quid we estimated. They then sell that 15% on for 2/3 of $150-240. I'll use the mid prices to estimate the profit 13.5m quid to $195m (125m quid)nearly ten times the money which ain't too bad really. Who said it wasn't a distressed sale?

So they have

90m quid cash;
15% of Catcher at 400mm bbl OIP and more to come, perhaps 50% more;
25% of Kraken with current reserve estimates of 160mm bbl valued, at $150-240m on today's deal;
A free carry of $150-240 on Kraken;
6.6% of Mariner valued at 25m quid on the previous deal they pulled out of the hat and stunned the market. That project is further down the track and there are two big players in the heavy oil scene now.

I make that 520m quid on the mid Kraken deal case, with more to come on further appraisal around the existing Kraken and Catcher discoveries and th eother exploration potential in for free. Fully diluted 90m shares at 3.50 a pop is 315m quid.

Funding issues are nowhere near so problematic now. I now think they'll most likely retain a piece of Catcher after the next appraisal round.

Anyone wanting to take them out and do a PMO type deal has just been thwarted. Statoil have some NS heavy oil competition too.

Rerating from here is on the cards and if WShak still doesn't rate the mmanagement I have to ask who he actually does rate.

DYOR,

repo

If the current estimate of reserves on Kraken doesn't go down and they add another 100mm bbl OIP on Catcher, which us old Encore hands know looks nailed ,then at 40% recovery and $10 a barrel we are currently trading at about half NAV.

Lots going on here too with not just Kraken, but also Mariner and Catcher aiming for FDP approval this year, and drilling on Catcher, Merrow, Spaniards and Ketos in the North Sea.

The upside of all that good news flow, if my figures are anywhere near correct (they are all backed up by recent transactions)is more than in for free. In fact you are being paid to take the upside potential.

repo

[steelwatch] 24/1/2012 10:11

Picked a good morning to oversleep!

Holding both NPE & ENQ :0)

[leedskier] 24/1/2012 09:10

So have all my oil shares.

[matt] 24/1/2012 09:08

The rumours of this deal didn't reach the BB but does seem coincidental that it's been rising for the last few days.

[leedskier] 24/1/2012 08:59

It is a good company.

[griffzinho] 24/1/2012 08:56

Yes had a look at financials.. Looks very strong indeed.

[leedskier] 24/1/2012 08:55

Add in today's minimum cash offer with the prospect of more depending on the oil in place.

[leedskier] 24/1/2012 08:54

17 October 2011


For immediate release 17 October 2011


Nautical Petroleum plc

("Nautical" or the "Company")

Final Results for the year ended 30 June 2011

Nautical Petroleum plc (AIM: NPE) is pleased to announce its final results for the year ended 30 June 2011.

Operational highlights for the year ended 30 June 2011

-- Share placing raised GBP30.3m (GBP28.9m net of expenses)

-- Kraken 9/02b-4 appraisal well extended the oil accumulation to the south of the field

-- Kraken 9/02b-4z west exploration sidetrack encountered 2 oil bearing reservoirs

-- Sale of 20.6667% of Mariner completed for GBP87.5m, retaining a 6% interest

-- Catcher area - Varadero and Burgman oil discoveries

-- Nautical equity interest in Block 9/2b Kraken increased from 35% to 50%

Financial results for the year ended 30 June 2011

-- Profit after taxation for the year of GBP50.6m (2010: GBP2.3m loss), inclusive of gain on partial sale of Mariner of GBP55.1m

-- 30 June 2011 net assets of GBP137.9m (2010: GBP57.7m)

-- Cash and deposits of GBP110.0m (2010: GBP11.7m)

Significant events post year end

-- Independent Resource Opinion confirms Kraken Heimdal III resources of 160 mmbo (gross), 83 mmbo net to Nautical.

-- Kraken 9/02b-5z horizontal appraisal well tested at 4,550 bopd

Steve Jenkins, Nautical's Chief Executive Officer, commented:

"The year ended 30 June 2011 and beyond has been an excellent period for Nautical. Against a challenging economic environment, Nautical has significantly strengthened its financial position and delivered outstanding operational results, the highlight of which has been the recent Kraken flow test. I would like to thank my fellow directors, employees and contractors for their continued dedication."

[griffzinho] 24/1/2012 08:51

New top this BB. How much cash does Nautical have now after this sale of interest? Any debt?

[philo124] 24/1/2012 08:47

Hard luck, did think of selling as well then. Have sold now though taking profit.

[cyclone x] 24/1/2012 08:29

In for a punt in auction


Can't believe it I sold at 267p 2 weeeks ago.

[hectorp] 24/1/2012 08:06

can only go up, it seems, strong hold ( /buy after this auction).

[bwanabanana] 24/1/2012 08:05

That's all NPE's major assests in the hands of established operators. Soon all their contingent reserves can be moved to proven +probably+possible

Wait for the takeover bids

BWANA

[bugsmoney] 24/1/2012 08:05

That looks like a pretty comprehensive deal. And lots of involvement for surrounding blocks

[hectorp] 24/1/2012 08:00

Not so fast, but somewhat derisked, yes.

[yellowdog] 24/1/2012 07:41

Great News.Now derisked.£5.00 today???