sentiment vs fundamentals, page-5

I doubt that BPT has excess cash for a share buy back (sbb), when there are all these activities happening in Cooper, Egypt and Tanzania.

Furthermore, a sbb is only good if the objective of raising the sp is achieved. If the bot traders continue their relentless play at the expense of the sp, then BPT would have "wasted" the money.

Let's assume that BPT does carry out a sbb and spends $150M to purchase either (a) 214M shares at an average price of 70c; or (b) 187M at avg sp 80c.

a) The balance of 1,092M-214M = 878M shares would have lost value by $150M/878M = 17c ps. So, BPT sp would need to increase by 17c to compensate. (The calc. ignores the interest charge for bank borrowings to pay expl & dev costs in the near future.) Can BPT sp reach 66c+17c = 83c as a minimum? That's a 13c premium to the sbb sp.

b) The bal of 1092M-187M = 905M would lose $150M/905M = 16.5c ps. Minimum target sp in this scenario is 82.5c. This is only a 2.5c premium to the sbb sp.

But it's interesting to note that a 14% incr. (80c/70c) in the sbb price has only changed the target sp by 3%.

Furthermore, let's assume that the market does respond very favourably to the sbb news and the sp goes up to $1.00 before BPT can act.

c) The bal of 1092M-150M = 942M would lose 16c ps. Min. target price is now 82c. The sbb would then have created value of $1.00-82c = 18c. But the premium to the company is gone. Instead, the shareholders have obtained the premium.

It all still depends on the vagaries of the share market, doesn't it?

Lastly, the matter of BPT having too many shares is still unaddressed. In scenario (c), there ware still 942M shares floating around. How long will it be before the bot traders put us back to square one?

Personally, I prefer the use of share consolidation to reduce the amount of shares in circulation by at least 50%.