Hi all - Another great prezzo today from the company - it is clear they are doing everything they can now to get on the road and illustrate the underlying value of Dorado and the rest of the Bedout Basin's assets. I spoke with the company recently and I had all my queries clarified, they were fantastic to speak to. What pleased me is the prudence they are taking with every material decision, one being the ~40% reduction in ongoing corporate overheads - many of you are giving it to Rusty (I am unaware why that is) however the new team, which includes Rusty, are progressing the operations well. They will be generating net surplus cashflow of circa A$10m to our bottom line in the next 12-months, all else being equal, from the interest on our cash equivalent assets - we are holding a mix of Term Deposits, cash, and US currency.
What I also love is the optionality that CVN has from the broad range of assets we hold an interest in. What's not to say we sell some of our stake in the 20% held interest assets and pay a special dividend or capital return to Shareholders? These types of discussions are not out of the question and are being had alongside Dorado discussions, this is what excites me about our options. The JV is also looking to smaller FPSOs and a smaller WHP which would increase operational efficiency and reduce development/construction phase, I have had this confirmed, which I personally admire.
The new directors have pushed the mandate of value creation for shareholders via any means necessary. Rusty and Mr Barker have also been given performance rights, let's not forget, at 30c which incentivizes them to sell the entire business, get another entity to take >50% of CVN shares, or get the SP VWAP to 30c to name a couple. If they meet any of these milestones they are awarded 1 million shares each. Let it be known they will doing their utmost to sell this thing and it's been confirmed that JP Morgan has been employed to find corporate transactions that are in our interest as SHs, none that would undersell our assets will be accepted.
Perhaps STO should be marketing the value in the Bedout Basin harder, their SP has gone nowhere for the better part of a decade. They hold high quality world-class assets like Dorado, Pavo and the Bed. sub-basin assets as well as interest in Mahalo on the East Coast next to their GLNG plant and hardly market them to investors. Perhaps they'll start to when the reality kicks in that the renewable energy thematic is as good to our nation as tits on a bull. I have it confirmed from many fund managers who speak with companies like STO that ASX majors struggle to market traditional energy assets given the backlash they'll get from left-leaning ideological investor bases such as the Union-run Super Funds (these companies are as hypocritical as the Labor Govt itself) To STO: Just get on with the assets at hand, it is clearly in your interest to get Dorado to first oil ASAP.
How about the Labor govt today changing the coordinates of their moral compass and pushing the urgent notion fact that gas will be needed for decades!? This is the same Govt that put a price cap on gas pricing which disincentivizes investment into new energy production - Why the F would companies invest billions of dollars into projects full of uncertainty. There is evidently Sovereign Risk in Australian projects now which I would argue has never been the case in this Resource-rich country. These people make decisions with a heavy skew to emotion rather than rationality, trying to appease their buddies in the Greens party, the bona fide clowns of the world.
Guys, the way I view the CVN investment case is there is lowish risk given the robust cash balance and CPC Capital carry and there is extreme upside which can incrementally increase upon further discoveries in the Bedout Basin.
Tell me, in what other asset can you find upside of 30-40% ST upside and 90-100% MT-LT upside with f*&^& all risk when compared to other Australian projects. The timing to buy CVN today has never been better I would argue.
(20min delay)