given that STO probably won't sell down any equity until after pavo/apus drills, i hope CVN doesn't move too early on any divestment.
to what level would CVN divest... 20%?... 15%?? and what would that equate to in dollars? and would it be more beneficial to divest rather than to dilute just a little further?
if both pavo/apus prove the goods, i'd be happy for them to normalise their equity at 25% over all 4 permits and do a CR to raise some capital, obviously at a higher price, if both drills deliver as expected, let's say 150m shares at 70c (i had to pick a number for illustrative purposes) leaves us with 1.7b SOI and another $100m in the bank... and the senior and mezzanine lenders feel happy that CVN has some skin in the game... and a shorter payback period to boot!!
STO continues with their equity sell down, maybe something like...
STO 50% and operator CVN 25% XYZ 25%
maybe i'm wrong, but wouldn't the cashflow from the higher equity offset the negative impact of any dilution from a CR?? especially as it's highly probable that POO is probably going to hit some serious highs in the next few years, we'd be leaving more profit on the table as we try to avoid 10-15% dilution.
no one knows how long this russia/ukraine conflict will last, or if it escalates, or how POO of oil will normalise after it, but as a low cost producer, dorado is looking like a proper cash cow at the right time...
and if a bid came in post CR, well fk, yeah that would absolutely suck.
of course, this all relies on pavo/apus delivering!
i could be well off, so happy to field feedback and counter views.
CVN Price at posting:
28.0¢ Sentiment: Buy Disclosure: Held
(20min delay)