You raise a number of valid/interesting points including that about splitting the company and possibly offloading our near term production opportunities.
Whilst like many here – I did extremely well out of my investment in Sunshine Gas/Queensland Gas/BG Group – the markets were hugely different back then with the appetite for risk being far more bullish than at this time.
Whilst it is without doubt true that our current Market Cap of approx. $66m does nowhere near reflect the value that us shareholders and I’m sure our management places on our 40% share of Mahalo and our 100% share of Mahalo North – we have to be objective and look at what a potential PLC suitor would want to pay in this marketplace to buy us out of those positions whilst bearing in mind that ultimately any offer will have to be deemed as being acceptable by the majority of shareholders whom they represent.
Experience has taught me that as both positions are likely to be so far apart from each other that the likelihood of meeting somewhere in the middle is remote.
I may be wrong but to further complicate matters we are entering a ‘perfect storm’ whereby the Covid-19 virus is emerging quickly and rearing it’s ugly head which will do nothing positive for the markets in general over certainly the short term with much economic growth and usual trade stagnating at best.
So where does that leave us?
There are many ways to cut a deal should we decide not to go all the way to production at Mahalo/Mahalo North and an acceptable total exit price isn’t forthcoming such as splitting the company with Mahalo/Mahalo North ring-fenced in 'Company A' with Galilee and the rest in 'Company B'.
Few others beyond ourselves and Vintage Energy at this early stage are going to place any of our Market Cap valuation being attributable to Galilee - so possibly a deal could be structured whereby we exit 'Company A' for $?million plus a future share of free carry production – leaving us with a cash injection to fast-track what we believe we have sitting undiscovered in Galilee – whilst still benefiting from Mahalo/Mahalo North future production.
Alternatively we could exit 'Company A' for no upfront payment but a greater share of future free carry production whilst we concentrate on the likes of Galilee in Company B.
A deal such as this may be easier to strike at this time - however crucial that minimum production targets/income flow within a specified timeline are 'set in stone' and form part of the contractural obligations.
I’m not for one-second suggesting that such a deal is or would be considered – I’m just thinking laterally as to the way that I would look at things should the time ever come when the difficulties of near term production as a stand-alone at Mahalo North or as a JV at Mahalo were being hampered either because of cash-flow or funding difficulties.
That being said – all’s good with regard to where we sit as a company other than our Market Cap and Covid-19 – neither of which are within our control.
Purely posted to expand the thought process regarding potential options.
COI Price at posting:
8.4¢ Sentiment: Hold Disclosure: Held
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