Regarding the recent drop in BPH share price.
Let’s consider what has changed:
·The share price has dropped HARD (by about 40%)
·Scott Morrison made a comment that he was not supporting the PEP-11 permit renewal.
(see https://www.newcastleherald.com.au/story/7152540/scomo-says-no-to-hunter-offshore-gas-licence/)
·Anthony Albanese has expressed that he does not support the PEP-11 permit renewal.
(see https://www.nbnnews.com.au/2021/03/02/fresh-calls-to-block-the-extension-of-pep-11/)
What hasn’t changed:
·John Barilaro stands by his comments that PEP-11 should not be renewed.
(see disallowed/politics/federal/barilaro-urges-morrison-government-to-end-northern-beaches-gasfield-plan-20210217-p573e6.html)
·Keith Pitt remains publicly neutral, although he defends accusations against PEP-11 like that the rig will be visible by naked eye from shore.
(see https://www.abc.net.au/news/2021-02-12/minister-brushes-off-pep-11-gas-exploration-fears/13148198)
·The Joint Authority remains in control of Keith Pitt, who will take a recommendation from NOPTA and John Barilaro, who will also receive a recommendation from NOPTA. If Keith Pitt and John Barilaro disagree, Keith Pitt can override since he is the Minister for Resources, Water and Northern Australia and the PEP-11 permit resides in Commonwealth waters.
·The Morrison government’s initiative ‘Gas-fired recovery’ is still in effect and intends to increase gas production in Australia to stimulate the COVID and post-COVID economy.
(see https://www.pm.gov.au/media/gas-fired-recovery)
·BPH has increased their stakeholder position in Advent Energy (which holds 85% stake in PEP-11, ASX:BUY holds the other 15%) from 22% to 33%. This investment of approximately $5.75 million is indicative that BPH expects PEP-11 to be a profitable venture.
(see https://*********.com.au/bph-energy-raises-funds-ups-stake-advent-energy-baleen-drilling/)
·Advent Energy intends to use carbon capture and storage (CCS) to sequester carbon emissions into the earth. In this regard, this is poised to reduce Australia’s carbon emissions and approach Net Zero and the conditions of the Paris Agreement. Furthermore, BPH has taken the steps to prepare a carbon capture expert to assist in Advent Energy’s CCS goals and Advent Energy has commissioned an environmental review to be performed one PEP-11 is approved.
(see https://*********.com.au/bph-energy-carbon-capture-expert-appointment-sydney-basin-gas-project/ and the ASX announcement https://newswire.iguana2.com/af5f4d73c1a54a33/bph.asx/6A1022538/BPH_Advent_Commissions_Environmental_Review)
·No announcement has been made (as of yet) to the ASX about the sudden drop in share price. (As I post this a Pause in Trading has been released, not a Trading Halt)
Important Notes:
·I have specifically avoided using Coastal Community News as a source.
·Scott Morrison is currently in hot water with the rape allegations in Parliament House and the Liberal Government.
(see https://www.bbc.com/news/world-australia-56178290)
·The public is unaware of NOPTA’s opinion on PEP-11 and the recommendation could be positive or negative.
As you can see there are a lot of people who don’t want PEP-11 to go through.
I personally believe that many of these figures who are publicly opposing PEP-11 are doing so to gain easy support with the coastal and north shore communities. Since as far as I am aware, Keith Pitt still retains complete control of whether or not the PEP-11 permit will be renewed, these figures can preach as much as they want and not risk damaging the Australian economy. It is the best of both worlds.
We should also consider that just recently a media statement by John Barilaro caused a massive spike in the share price of BPH by about 78% on the 17th of February. The message (accessible here https://www.nsw.gov.au/media-releases/petroleum-exploration-permit-pep-11) contained no new information that was not already publicly accessible.
I have written to myfederal counterpart, Keith Pitt, in my role as a member of the Commonwealth-NewSouth Wales Offshore Petroleum Joint Authority, recommending that PEP-11 is notrenewed.
Mr Pittformally wrote to me last week seeking my recommendation, and I want toacknowledge the representations made to me by my parliamentary colleagues,including the Members for Pittwater, Terrigal and Manly.
I have listenedto their views, and those of the people they represent – it confirms my ownposition to recommend that PEP-11 is not renewed.
The Permit wasissued under Commonwealth legislation, it covers Commonwealth waters, and thefinal decision will be a matter for the Commonwealth government.
Indeed, the share price rocketed because it was ‘revealed’ that Keith Pitt is solely responsible for the decision regarding PEP-11. Despite this information being present in the Offshore Petroleum and Greenhouse Gas Storage Act 2006.
This behaviour indicates several important factors:
·Either a large number of new shareholders were attracted by an obscure media release OR a large number of previous shareholders or people watching the stock did research with due diligence and were unaware that Keith Pitt had this authority.
·The market believed that BPH stocks were worth at least $0.20 if PEP-11 was renewed (likely more, since this was just a speculative approval). <- Keep in mind this is a biased opinion.
·BPH is very volatile.
Today’s behaviour indicates that the market believes BPH stocks are worth around $0.10 without PEP-11 (another biased opinion, it is hard to tell in such a small time period).
Remember that BPH holds investments in other companies, the most notable of which being Cortical Dynamics whose product the Brain Anaesthesia Response Monitor (BARM) was recently approved for use in South Korea. PEP-11 is not the ultimatum of whether BPH goes ballistic or out of business.
So what can we conclude from this?
The way I see it, PEP-11 has still got a green-light, and BPH is filled with new investors who are riding on the back of the GME drama. People who invested more money than they are willing to lose, and people who are not willing to do any in depth research.
Unfortunately, I am unfamiliar with other companies in the same sector with a similar market cap and business structure to BPH so I cannot make any comparisons in share price. But I definitely believe that BPH is at least worth $0.20 with PEP-11 approved. If you bought in above $0.20, you are gambling. Otherwise, you have a good shot at making a bit of money.
On a final note, please consider this an additional SOURCE for your own research. This is not financial advice. Build your own opinion sheeple.
(20min delay)
