Valiant Petroleum Share Discussion Threads

[frazboy] 28/2/2013 17:17

yes Ed, agreed

[ed 123] 28/2/2013 17:14

Thanks, frazboy.

Yes, the figure will be helpful.

We've got an idea that production from Causeway and the Dons is to expections, from Antrim and Enquest.

First DECC figures for any (?) field might be a bit misleading, if commissioning/testing involved? More reliable figure for Causeway next month?

[frazboy] 28/2/2013 16:52

my average is 380p but would probably add if it went lower.

causeway should appear in the DECC production feed which is due tomorrow. guesstimate is 2500bopd for the month (5000bopd in reality but a start date of mid month)

interesting times

[ed 123] 28/2/2013 16:44

More shares were availble in the auction at 346.5p, but buyers held off.

Same pattern as has been going on for some time.

There was more buying interest today. Thinking it may not go any/much lower, although I'd love to get some at 300p. Bought a few more today.

[ed 123] 28/2/2013 16:27

43,813 shares offered at 350p. That should cap it.

Is someone trying to keep the price down into the close?

Auction could be interesting.

[utrecht_00] 28/2/2013 08:52

its a bargain at these levels however you cut it.

[bomfin] 28/2/2013 05:40

There are a few problems which put a 3 to 4 year block on growth of companies who were committed to investment in production/exploration in the UK North Sea. 1 is that successive chancellors have seen North Sea as cash cow. Very foolish but that is what they have done for a temporary attempted quick fix to their balance sheet. Much of the same big investment money (institutions) were invested in the service sector in the North Sea as were invested in North Sea producers. Service sector was still taxed at UK corporation tax level! So no pressure to keep development costs down! Big institutions can cream off the profits in the North Sea from the Service companies! taking their money out of the production companies. Costs of development have now reached ridiculous levels. Steel has also gone up a lot in price over the last decade according to presentations I have watched from some companies who have currently got big development projects offshore Norway. Money has also been going out of North Sea UK to Norwegian Offshore Industry.
This shift out of UK producers though is overdone and the Government have redressed the balance a bit with tax breaks which effectively mean that small finds will once again be profitable. So there has been a lot of downward pressure on the share prices of UK North Sea oil producers/explorers which can't last for ever. When the pendulum swings back there will be big gains to be made in well run companies with the right asset base. Those with big accrued tax pools like Valiant will see the fundamental value in their business realised. imho dyor

[sirookietrader] 28/2/2013 04:46

Yes chaps.

Pumping 11,500 bopd?

Brent Oil $112 per barrel

Operating costs as per last presentation circa $22 per barrel

11,500 * ($112-$22) = Over $1,000,000 per day

Tax? Don't think so.

Last presentation states tax losses $472 million as at 1 July 2012! (Also states value of losses alone at that date as $271 million - i.e. well in excess of market cap)

..In fact, if losses are worth $271 million+, a profitable North Sea player could bid a 25% premium to today's price, which if successful, would allow them to recoup their outlay via tax saving and effectively pick up the company for free..

This can't be right..?

Please, somebody shoot me down.

[hpcg] 27/2/2013 23:31

I didn't feel entitled to complain about the lousy PR, firstly I bought after the SR announced so not expecting any till that announcement, and secondly because it is in part enabling me to buy at these prices. Mind, as Falklands says it is no foregone conclusion that they go back up.

[ohisay] 27/2/2013 22:23

hpcg - thanks .Actually I'm sure its the cash issue thats driving the current weakness.
I remember reading CHAR's RNS just after 7am laat week and thinking it read like a suicide note.
Here was company with 60m$ cash which said it was going to spend 45m$ on seismic etc this year and not drill .So the market worked out that 15m$ was worth 10p cf 7am price of 30p so at 8am we were at 26p and now its 20p - how come it took so long to get to 20p ?
So as Falklands alluded to - where are we with our cash cf Causeway etc - we don't know - as Ed said they haven't bothered to update us on running rates/outlook and they absolutely should have done that 2 months into 2013.
Its a big black cloud over VPP.
I see extrapolating from that recent AEY broker note ,that Causeway alone should be worth 100m£ to us .

If I was running VPP I would have instituted the review .They are plainly not quite big enough to do everything they want and because of that the market is marking them down.They can chug along but I'd have thought too they could do better with their assets preferably from my point of as part of a larger group..
Its the classic M/A sitution where the medium sized companies get taken out.
My average now 395p .And my largest position.
And my second largest Trap equally undervalued on cash flow.

[hpcg] 27/2/2013 20:49

ohisay - I wouldn't want anyone to get the idea I am anything other than a small investor. If I had half a million quid to throw around I would be doing all sorts of things which can't be described on a family bulletin board such as this.

I've had Valiant on my watch list since the crash and its always looked cheap but never the best opportunity. It still isn't but I like a bit of diversity. I never really thoroughly researched before but I began to when this started bumping against 400. A read through the annual reports shows on the one hand solid development and growth but on the flip side they've had their share of disappointments and delays. Unsuccessful exploration wells are a given for any company but they're on a bit of a fallow run. So P2 looks a little light and there is no big kicker in some exotic local.

The upside should come from the power of cash flow. That means a strong negotiating position with asset rich cash poor companies and the ability to farm in to more exciting opportunities. I think they made exactly the right move into Norway.
They should have stopped the hand wringing about the share price (though there may have been large investor pressure to which I am not privy) and got on with running the business. Finally, they really ought to move to the main market as AIM is not trusted by so many investors, private or institutional.

All in my opinion - the management run an oil company, not something I have on my CV.

[ohisay] 27/2/2013 19:13

hpcg - were you the idiot that bought 153,800 shares at 346p today - if so that was me just afterwards for my 500 top up.!
But - bit unfair I'd say to criticise them for lack of direction .
In yorkshire we'd say that in the current market, companies like VPP are neither owt nor summat and they've recognised that I think .
The time for N.Sea small cap oil co's to really flourish disappeared with Osborne's bonkers tax raid 2 years ago.He's made some amends since but the damage was done to lots of companies (thats when VPP started getting into Norway after all) .I think Ed agrees - small cap oilers seem about as popular as Nick Clegg at the moment..
Whatever happens here will be quite instructional for understanding the way the market views the opportunities attached to the remaining assets in the N.Sea.If we've got it wrong so be it.

Incidentally I noticed the other day that the oil and gas sector generally has underperformed even more badly than I'd though over the past year.

Clearly I should have been in forestry and paper....

[hpcg] 27/2/2013 15:42

Falklands, I don't know, and to some extent I don't care because I have been buying in the recent drop and I didn't have a position before. The volume is modest so I put most of it down to boredom. 400 down to 340, or 15% is nothing compared to a lot of junior oilers, and even if you count the drop from 600 this time last year that still isn't much.

I also happen to think the strategic review has had the opposite effect to what they thought might happen. It signalled direction-less management who doesn't know where to take the company even though the company itself is chugging along quite nicely. They need to get over that nonsense IMO.

In terms of margin of safety I look at the option pricing, the big raise at 530p, the NAV and the cash flow and I think these are a comfortable buy at 400 or below.

[frazboy] 27/2/2013 14:52

From Valiant's Interim Financial Report September 2012

"The Fionn development (previously Central Causeway), which benefits from synergies with the main Causeway development, has also seen progress during the period. DECC consent to the Field Development Plan was received in August, and work is now proceeding to bring the field on stream in mid 2013. Valiant entered into an arrangement during 2011 to bridge finance partner Antrim Resources (NI) Ltd's 35.5% share of the Fionn pre-investment costs; Antrim can choose either to pay these costs with interest, or to opt out allowing Valiant to own 100% of the Fionn field and produce across joint facilities without further charge."

Falklands, you'll notice that in Valiant's announcements they never stated what the interest rate chargable was. They also never stated whether, on the first day of production from Fionn, they had to pay back the full loan to Valiant. In other words the precise commercial arrangement is not known. Furthermore cost overruns perhaps aren't as great as being touted (same report as above)

"The combined Causeway and Fionn project is now anticipated to be completed at a net cost to Valiant of $190-200 million, compared to the $175 million previously projected. The cost growth has come from higher rig rates in 2013 and unusually poor weather impacting across all offshore activities in 2012"

Antrim need all the cashflow they can get their hands on to pay for other commitments. If the costs have overrun and the loan was payable immediately then I can see why they let Fionn slip, particular given the poorish performance from Causeway. I still expect/hope that Fion/Causeway turn up trumps for Valiant.

OT: Would be interested to hear your news if you attend that conference

[falklands] 27/2/2013 14:26

Hpcg if that's the case why the fall from £4 ?

However I am going to a city event and asking why the market devalues small north sea oilies in production on low pe to their Market cap

[frazboy] 27/2/2013 13:44

hpcg, good post, thank you

[utrecht_00] 27/2/2013 12:48

they won't need to borrow anything for overruns as they are producing 11,500 barrels of oil a day. Thats a lot of cash being thrown off.

[falklands] 27/2/2013 12:02

Well it's cheap but nav not at a 50% discount yet ! As for pe etc forecasts one does not know how much they need to borrow on bank facility for fion and causeway overrun, comments by aey caused the fall.

Other aspects expect exploration duds on Timmis however hand cross has a flat spot so it's a coin flip.

I guess you only know if it's cheap after the event and a falling knife before

Best of luck to you all

[ohisay] 23/2/2013 12:20

Re squeaky bottom time - I notice the RSI here (using weekly data points) is the lowest since the end of 2008.

I've often made money on screening stocks like this - if I weren't already invested here I'd be taking a position because theres nothing much wrong with the company - and sterling going pear shaped just helps the bottom line.

[hpcg] 22/2/2013 16:25

Not me. In the end I did have another nibble at 342, but I'm prepared for it to go lower. Neck deep in bargain territory here IMO, but that won't stop the buy high sell low brigade from unloading because of the share price performance.

[frazboy] 22/2/2013 15:27

anyone brave enough to call the bottom?

[hpcg] 22/2/2013 12:45

Thanks very much.

[ed 123] 22/2/2013 12:14

hpcg.

Top of the order book, 998 shares bid for at 342.5 and 4081 shares offered at 346.