Ann: Trading Halt, page-93

Before everyone shts the bed when trading resumes and panic sells, have a think about the price you're selling at and how that correlates to the company's value as a function of its undiluted market cap (for those who aren't familiar, undiluted means options, performance rights not exercised etc). I'm looking at market cap to creep behind the dilutive effects of capital raisings and to understand how the company's value is actually moving over the long term (share price is a poor index for value). I'm not looking at dilutive market cap at this point because TEGO only comes into money at 2.6c and that goes beyond well beyond this sub-2.0c pre-drill analysis.


On the right hand side, the table illustrates in orange that the company has been consistently trading above a $30m market cap from last year (with a dip in February from the cap raise). The middle table illustrates in green the projected market cap at 1.3c, 1.4c and 1.5c after $2m of shares are issued for this raise at 1.5c (assumed figures as there's no Appendix 3B or 2A lodged yet).

This number salad simply illustrates that if shares trade at 1.5c or lower, the company is the lowest value by undiluted market cap it has been since last year (February excluded).

That is with:

-More cash (lots of it; I'm betting on the company having what it needs now for a first pass on L7 - that's all we need for now)
-Balance of GAS shares (less than 9%? Starting to sell these but a little too late some may say)
-L7 (gas production, 50% owned, TEG's share is 268 Bcf and 18 MMbbl)
-EP 437 (oil exploration, 50% owned, TEG's share is 3.5 MMbbl)
-P2628 [UK] (gas exploration, 50% owned, TEG's share is 263.5 Bcf (46.57 MMboe))
-P2650 [UK] (gas exploration, 50% owned, TEG's share is 134.5 Bcf (23.77 MMBoe))
-Entitlement to $4.5 million cash in staged payments between mid-October and 31 December 2024 from PGY
-Entitlement to $4.0 million cash when NOPTA issues a Greenhouse Gas Injection License
-Entitlement to Up to $7.5 million in royalty payments from the Carbon Storage project

That is without:

-A touch under $30m in Cliff Head rehabilitation liability, which is now as good as gone.

These are just the highlights. There's plenty more value to extract and this summary shouldn't be taken to be everything.

TLDR: At 1.5c post-raise, TEG is worth less than it was 7 months ago plus now with the new goodies itemised above (obviously not including GAS shares, L7 and EP 437).

Takeaway points:

1. DYOR. This is not advice nor ramping, it's a prompt to think harder about being upset and smarter about investment decisions (holders have a right to be upset and that we are for varying reasons). It's also acceptable for one to allow themself to feel and express that, but be smart and rise above it rather than dwelling.
2. Find me a company that didn't blow the bank on drilling for gas. TEG got stuck with a faulty broken asset (Cliff Head) and it's paid a lot for that; it needs more money to kiss it goodbye and start a new chapter in what is a deteriorated economic climate and market that TEG has so far held up profoundly in.
3. Bring the fing spud on. My simple bet is on the added reliability of 3D seismic to identify the pockets and the competency of the company to put the drill in the right bit to bring it up. We know it's there, it's an expensive and complex matter of getting to it.