Portland Gas Share Discussion Threads

[eacn] 17/5/2009 00:55

Chrismez, I like to be conservative - it avoids unnecessary dissapointment.

That said I won 'first prize' in the EEN 'guess the year end SP' competition last year with a forecast of 350p, way below the estimates of others, so maybe I am not as conservative as some might think.

My year end target for PTG of 200p doesn't mean to say that I expect the price to stay below this level throughout the year. In fact I think it is quite likely that we will exceed 200p at some point, potentially by some margin. However by the year end I expect the share price to have fallen back to the 200p level as investors come to terms with the fact that, even with funding, cashflow is some years away.

[bones30] 17/5/2009 00:42

AOTN: Interesting about OHM... must look into those.

[chrismez] 16/5/2009 10:25

Dont think this is a false dawn eacn - it is massively undervalued - as explained by the broker. Your 200p target is realistic and conservative and in fact should come sooner than you anticipate. Think we're on our way there now. Hope that prediction is not a curse! Good luck to all holders and newcomers.

[angel of the north] 15/5/2009 18:48

Happy with close today - UNIQ holding well, happy with MXP, PRL still in rising channel but slow...!,Still caught in a (My own fault) P&D trap with OHM, but still think they may come good. My little prize strawberry though is my 'Jam tomorrow' PTG which is proving to be a resilient and constant riser against the markets.
Have a good weekend all.
Pray Blunderland get a point from Pompey.....don't deserve to go down.

[junior21] 15/5/2009 12:49

eacn, unfortunately I didn't read your posts until after the recent rise (typical me)but I plan to add gradually to smoooth out purchases after spikes in the share price.

Have already looked through some earlier posts and I imagine I will do some more reading over the weekend.

Thanks
J21

[eacn] 15/5/2009 12:44

junior21, welcome on board. When I posted on the JTC thread the share price was 61p. By some fluke of timing the share price started to rise within an hour of my post.

It is quite possible that the recent rise is a false dawn, since I would not expect any result from the recent financing round so soon after the data room was opened. It does, however, demonstrate the capacity for upward movement in the share price on the slightest rumour or evidence of buying.

You may find it useful to trawl through earlier posts on this thread if you are looking for further information on the company and the share price history.

[junior21] 15/5/2009 12:31

Cheers eacn,

Decided to dip my toe in after reading your very informative posts on JTC thread.

J21

[eacn] 15/5/2009 10:50

The rumour is that Siemens are the mystery contractor offering to fund the pipeline.

[eacn] 15/5/2009 01:03

kooba,

The note says very little about the way in which the company is proposing to raise funding in this round. The CEO and FD, however, were more forthcoming in their recent presentation, the slides for which are on the PTG web site.

Seymour Pierce haven't really changed their base view on PTG for well over a year, although their top end estimates of value have fallen. Seymour Pierce take their lead from management who clearly remain convinced of the value of both Portland and Larne. Management are usually too optimistic, so my targets are set well below Seymour Pierce's.

It should be added that all of these valuations (both my own and Seymour Pierce's) are based upon NPV models of future cashflows, which only tend to have any relevance to the share price when a takeover or asset disposal is on the cards. If PTG only sell a minority stake in Portland, then NPV models may only have limited relevance, since the projected cashflows are many years hence. While I expect the share price to be strongly influenced by the potential value of Portland, as predicted by these models, if finance is forthcoming, the share price could drop back quite quickly when and if a deal is announced.

One factor working to sustain the share price following a successful financing would be the 25% Credit Suisse stake. I do not expect CS to be in this for the long term and I would not be surprised if they decided to flip their stake at some point either following a financing of Portland or after Larne gets planning (assuming that comes after Portland finance). It is not inconceivable, indeed given the Star experience some would say probable, that the sale of the CS stake could lead to or precipitate a takeover of PTG or a sale of its principal assets.

[kooba] 14/5/2009 23:44

it doesn't make bad reading...but they are the shop!!! bit of a prospectus for those interested in the funding process??

"In terms of valuation, at this stage we have not included Larne Lough in
our core asset value – although it could add 100 pence per share. Our DCF
model of the Portland Project generates an NPV (using a 10% discount rate)
of £340 million – equivalent to 483 pence per share."

putting down some guidelines?

[bones30] 14/5/2009 23:27

Thanks for posting that Kooba.

[kooba] 14/5/2009 23:16

bit more on that seymour note.

[bones30] 14/5/2009 22:04

If we can bust through 80p - that'd be bullish indeed.

[bones30] 14/5/2009 14:22

Yes, I got straight out of Encore when the Esmond drilling result was out and back in at the bottom. (taking about 25p off my average, which was lucky). Have topped up since (at something like 8p) and my average is now 14p. I'm now just waiting for Breagh to be sold.

I agree about CS... EO. isnt the only share I've seen them sell out of.

[eacn] 14/5/2009 14:03

bones30,

I have kept a close eye on Encore and the developments with Esmond & Gordon. The economics of E&G were always much tighter than those for onshore depleted field or salt cavern development, but in the E&G case there was the counter balance that there was potentially easier access to finance as a result of the takeover of Star by Petronas.

E&G turned out to be more of a gamble than shareholders had been led to believe and following the poor drilling result I concluded that it was a dead duck. While the economics have improved as a result of HMG's decision to allow operators to obtain capital allowances for cushion gas, the prescence of an active acquifer significantly increases the development risk and makes it a non-starter imo.

I have posted rarely on the EO. thread, since few posters on that thread seem to understand the economics of gas storage.

I bought some EO. shortly before the E&G result at around 30p on the basis that if the result was positive there was probably 20p of further upside and if it was negative there was still sufficient core NAV to justufy a share price of 20p or so, once the dust settled. I remain of that view and have therefore resisted the temptation to sell out below 20p despite the recent rally. In Encore's case Breagh looks certain to be sold, and Booth can be expected to honour his promise to return a significant part of the monetised value to shareholders.

The fact that the Encore share price cratered to 10p was entirely predictable since Credit Suisse were only ever buyers of Encore on the back of the gas storage potential. They are aggressive players and were the catalyst in the sale of Star to Petronas. It is noteworthy that they haven't sold down their holding in PTG and have installed a director on the board: imo they believe PTG is worth over £4 and are damned if they aren't going to see that realised, even if they have to force a sale.

[bones30] 14/5/2009 13:19

Thanks for the info, again. Seems you know this share backwards. (e.g. Olympics implications).

I have some Encore Oil, and my knowledge of GS is based on what I know about Esmond.
This one's been on my radar quite some time, and yesterday seemed like the day to jump onboard.

[eacn] 14/5/2009 12:54

PTG has sufficient cash to cover current committments through to end Q1 2010 (the CEO's way of pointing this out was to say that there was no going concern issues raised in the recent accounts).

After that if they don't raise finance for Portland they will have to issue equity or sell a stake in either Larne or Portland. The CEO says that the board is committed to no further dilution at the PTG level (but made no such committment at the Portland or Larne holding company level - these are both wholly owned subsidiaries of PTG).

Their annual operating cost in a quiescent state is probably no more than £1.5M and could probably be pared further if absolutely necessary. That said mothballing will have an opportunity cost: the Portland Harbour pipeline work needs to happen in 2010 if it is not to be delayed by preparations for the Olymic sailing, and any delay in creating the caverns will push back cashflow and may lead to the diversion of potential funding to other projects (a lower risk since there aren't many with planning or that have as attractive economics as Portland).

[whiterussians] 14/5/2009 11:27

Is this got enuf dough? or does it need more money

[eacn] 14/5/2009 10:42

bones30, the price action confirms that stock is relatively tightly held and that positive news on finance is very likely to see this above 200p.

I mentioned PTG on the JTC thread yesterday when the share price was still 61p, but somehow I think it was Seymour Pierce's note rather than my 'tip' which has triggered the price rise! That said everytime I have 'tipped' stocks on ADVFN (I have only done so four times in two years) the stock in question has risen significantly. When I tipped PTG in December 2007 (when it was still EDR) the price rose from 220p pre-demerger to 460p at the intraday peak in May 2008 so perhaps the current rise is a continuation of my lucky streak.

All imo, DYOR, etc.

[bones30] 14/5/2009 09:49

Thanks for the info eacn. FT article seems quite positive. Up on a down day too, can't be bad.

[eacn] 14/5/2009 07:56

The official opening of the data room was targetted for May 2009, but according to the company a number of interested parties have already been given a preview (these probably included organisations who participated in the failed fund raising last year). Given that the data room has over 3000 documents in it, due diligence can be expected to take at least 6 weeks, taking us to mid June. Offers and negotiations could then take some time, since this is a multi-party process but I would expect PTG to want to reach a preliminary conclusion before August because of the need to place the pipeline order.

[bones30] 14/5/2009 07:53

Bright outlook for Portland

By Ed Hammond and Neil Hume

Published: May 14 2009 03:00 | Last updated: May 14 2009 03:00

Portland Gas , which is trying to build one of the UK's largest gas storage facilities in south Dorset, jumped 19.5 per cent to 73½p after a push from Seymour Pierce.

Urging clients to buy, analyst Alan Sinclair said the proposed Portland project was a "very attractive asset" given the shortage of underground gas storage in the UK.

"Whilst the first round of funding fell foul of the credit crunch, we think that the outlook is improving," he added.

[bones30] 13/5/2009 21:54

Up on good volume, quiet BB, tends to bode well.

To add to that, if thats not a "double bottom".

[scruff1] 13/5/2009 20:03

I've been in this for years. It's share price has always jumped about with sudden big rises and then sudden big falls. The last couple of years has been squeaky bum time for lots of my stocks but not this one. It's product is good. We need gas storage - fact. The banking crisis was an obviously needed correction. The brokers target of 400+ is another correction. It's current price is ridiculous.
There aren't many at the moment but this has to be as good as a banker.MO only but I bet we see more of these rises in the near future.