Ann: Loyz Deferred Consideration Settlement Update, page-15

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Cosmoterios

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07/09/17

05:15

Post #: 27047934
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Originally posted by IceyDoctor ↑

Anyone here follow much we got in total of the US$32M royalty promised? I was not expecting much but it was lucky we were not relying on the income to fund anything. It is a good education for those who kept adding the full amount of the royalty to their valuations of the company. Just 3 annual reports to get the total received, calculate the future cash value at the time of sale ...

It just reminded me of the discussions at the time on valuation, and similar discussions after the first Phoenix well. Lessons learned could apply the same risk and future cash discount approach to the current valuations based on the future production from our NW shelf assets. Risk is that although we may get the full return of the assets, we may also get significantly less per share by the time the 2C becomes 2P and the funding path revealed. All the 2C we have built up over the last 2 years has not pushed up the share price.

Don't get me wrong, I believe in CVN and am in as much of my portfolio as is prudent to invest in a risky asset rather than gamble. I think this is just a reminder of all the dream valuations. A valuation is calculated for a specific time frame considering what actual market will see as having changed in the assets over that time. Future earnings must be discounted even if they are known facts, future earnings contingent on anything such as future drilling success, oil price and funding must also be discounted with full risk.

Hopefully this time we keep the upward momentum a bit and oil breaks out of the down trend to add a bit of future earnings security.

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Icey,

Fair points you made. I must admit I was one of those who took for granted the money from Loyz would arrive without any problems.

Lessons learnt - nothing is a certainty in this market - best to be more conservative.

And you have to keep your eyes on things like a hawk.

On a positive note, Russia and Saudi Arabia are discussing the extension of production cuts, if the imbalance continues.

https://www.cnbc.com/2017/09/05/russia-hints-that-opecs-output-cut-could-be-extended-again.html

https://www.reuters.com/article/us-...f-oil-cut-deal-if-glut-persists-idUSKCN1BH0A5

CVN Price at posting: 8.5¢ Sentiment: Buy Disclosure: Held
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