@rustys33I agree, profitability will be the driver for the SP....

@rustys33

I agree, profitability will be the driver for the SP. In both Company and Shareholder terms.

The market will assign little value, if any at all to Neon. Its like contingent resources are valueless unless converted to 2P reserves or until extracted.

Now we have acquired the GOM asset, it contributes to a 70% increase in 2P reserves and a 50% increase in actual production.

Accordingly, given the market's machinations, it values the GOM asset as if we paid twice its value.




US$100m is OUR 30% share. That works out to A$500m the JV is about to spend in defining 2P reserves in those blocks we've acquired. That would be a significant development. Will it lead to a doubling of productive capacity? The BOD has long said its ambition is to make KAR a 50kbpd Oiler.


Further, if Neon development is given approval next month, we will be looking for further development and reserve definition expenditure there.


Still, there's stacks of cash rolling in. The BOD has signaled they intend utilising the debt facility for at least 2 years and indeed maxing it out for that extra US$66m.

"Strong proforma cash flows are expected to enable repayment of drawn debt from our new facility within two years" - Dr J

https://www.offshore-energy.biz/australian-player-entering-gulf-of-mexico-with-new-oil-gas-acquisition/


It would seem GOM cashflows will be retained by the GOM JV to meet CY/FY24 CapEx.

The Brazil cashflow should lead to Cash at Bank sufficient to meet the US debt facility by May24, if necessary. While the debt facility has cash reserve and other requirements, there must be a plan for the surplus cash.

"Our long-term strategy remains to maintain low leverage and high liquidity to enable value-accretive organic growth, M&A and returns to shareholders"- Dr J

Those "returns to shareholders" have been promised a long time now. The BOD now has its multi asset balance sheet to achieve its 50kbpd ambition.

I'd love to see a Dividend announcement on 29Feb24. However, given Dr J's long term strategy, its likely they'll elect to maintain high liquidity and prudently wait to make a dividend announcement in Aug24.


A dividend payment would set the ball rolling to increase the Company SP. Finally incentive (and permission) for large investors (like Fundies) to invest.

The Neon Concept Select would enhance that SP momentum and GOM exploration determinations would add further.


There is a lot to like ... but you can't deny the risk.

While contingent resources exist in Who Dat and Neon, there is no guarantee they will be converted to 2P reserves, or to what extent. Until then, this is a gamble. I'm in.

Place ya bets.

Come in spinner.