There will no doubt be a game out in due course called Ukraine, the Russian Quest. It’s my view the Russian sales of "We've only just begun" by the Carpenters are rocketing. So for those so old they can barely consider shorting a stock, some music from your era.
Sticking with the oldies that like to moan about the weather its my view that Putin (NT Times) has realised that Europe gets darker and colder from now (Read as September) until March. So if one was hotting up the Ukrainian situation I'd be turn off the gas around December. Just to see how positive those reliant on the Russian commodity become to Russian Ukraine and European Ukraine.
Food for thought, and with reports via the News (I don't think I know any Ukrainian traders) that Russia is army is helping the separatist rebels (it’s not quite like that but its very hard adding drama to finance) will come as no surprise. Before one starts to cringe at where today's mumble could have gone, I'll stop before I show a remake of Luke I am your Father, with Putin as the Father and Merkel as Luke! For those with humour and German (Fi et al), you may want to see Angela Merkel vs. Star Wars Imperial March.
We are all well aware of the outlook for coal, Bogdanka SA, Poland’s 2nd Largest reiterated the theme (28/08/2014) globally. One just has to look at New World Resources (NWR) (RNS's) to see the very predictable calamity and financing issues. Nuclear is the way forward save for anything revolutionary. The interest in the sale of certain Uranium trading units is evidence of this and yellow cake will be the plat du jour soon enough. If one looks at Japan and China, the demand is growing, despite certain murmurs of coal led generation.
Considering the obvious, would one be backing Continental Coal Ltd (COOL)? In fact, would one be backing any type of enterprise in South Africa where the alleged stability is far from low risk? COOL have one benefit in that 75% of their sales are domestic. Albeit new power generation in South Africa is limited and even the forecasts won't keep up with demand. The line-up of directors will assist people in making a decision.
The Afren Plc half yearly results were as expected. It's a brave company that publicly suspends directors, and it was on this basis that I elected to trade Afren yesterday on the basis of the company's statements. Further reiterated in the half yearly (bold item to be noted);
“At this stage no misstatements have been identified. Furthermore, the Board's assessment is that based on facts to date the existing carrying values of the relevant assets in the balance sheet are unimpaired. Further details are given in Note 10.”
What should not be ignored is (see bold) “Principal risks to 2014 performance - The principal risks and uncertainties faced by the Group were documented in the Annual Report and Accounts for the year ended 31 December 2013. The Directors consider the risks the Group faces to remain the same for the remainder of 2014. Following the suspension of two principal executives and two associate directors, the Directors consider there is a heightened risk of disruption including due to possible loss of staff, potential difficulties in relationships with partners, providers of finance and other stakeholders.”
So Afren are investigating, with the amounts included in the balance sheet at 30 June 2014 which are expected to be covered by this independent review include:
- US$39.9 million of advances to Partners in 2012 included in Prepayments and advances to Partners (31 December 2013: US$99.3 million);
- US$93.3 million of amounts paid to Partners to secure agreement to field extensions included in Property, plant and equipment relating to the Okoro field (31 December 2013: US$98.5 million); and
- § US$1.9 million included in Property, plant and equipment relating to the Ebok field (31 December 2013: US$2.0 million), together with an associated amount of US$298.0 million attributed to deferred tax assets, reducing the deferred tax gain in the 2013 income statement.
The positives are there with the highlights:
- · 1H 2014 net production of 33,488 bopd; Full year production guidance revised to 32,000 to 36,000 bopd, removing Barda Rash, due to temporary suspension of activities.
- · Two rigs on location and drilling ahead offshore Nigeria on the Ebok and Okoro fields; Central Fault Block Extension platform to be installed in Q3 2014.
- · Approval received from the Department of Petroleum Resources for the initial five well development of the Ogini Field. Rig on location and development drilling well underway.
- · 3D seismic acquisition on OPL 310 complete and interpretation ongoing; further drilling to commence in Q4 2014.
- · Profit after tax of US$160 million (1H 2013: US$62 million) reflects tax exemption at Ebok offsetting reduction in pre-tax profit and revenue.
- · The balance sheet remained strong with net assets of US$1,972 million (1H 2013: US$1,498 million).
Save for the investigation Afren look on track with news soon on Ebok & Okoro. Having trading on yesterday’s suspension news, I am looking to acquire equity in Afren again 96.45 currently.
Chariot Oil & Gas (CHAR) finally have their cash with admission of placing shares and likely to be a cap on the stock until farm out.
Sirius Minerals Plc (SXX) appear to have yet more warrants converted, one would be wise to watch the volumes. Has it capped out the SP?!
No time to coverage Entertainment One’s (ETO) completion of the acquisition for Force Four Productions. 6 months ago this was my wife’s largest holdings, it was purchased purely on the back of the Twilight Series she liked, I believe around 65 pence. It now deserves a better look in light of the substantial changes and potential growth.
Atb Fraser
Fraser- Hi- I hope you have fought off the peanut butter attack this morning- Inspector Clouseau had his little friend Kato attack him on an ad hoc basis to keep him on his toes so I can see the logic of employing a toddler in a similar manner.
ReplyDeleteRe AFR- the statement today didn't justify the further drop to 91p so I added at this level. They have repeated said these payments weren't made by the company, so the accounts are more than likely showing overstated payments to suppliers in past periods, which then were possibly shared with certain employees of Afren. The issue going forward is that if that was the price of doing business and it wont be repeated by AFR, then the rate of moving forward with their assets may slow and even stall in some cases. Still I feel this is more than in the current price, the accounts probably wont need major restatements and so they look cheap today.
Re Indonesian- Im not sure if you have seen this but Newmont have suspended their arb case and seem v close to withdrawing it. They have agreed to develop an Indonesian smelter in conjunction with Freeport and Newmont is expected to restart its operations shortly. This is positive for CHL, as the new gov seem to be much more conciliatory and business friendly and and they know that the CHL case will be pivotal to get overseas companies to start investing in new projects in the country.
Re COOL- a massive NWR type rescue issue, with the bulk of the A$35m going to pay off debts and rolled up interest. I tend to support issues that are for expansion and business opportunities, this is clearly a case of paying for past mistakes and keeping the business afloat but for whose benefit- the board no doubt wont be waiving their salaries and the underlying business isn't attractive or they would have sold off some of the undeveloped assets. The current shareholders will see their existing holdings become fairly worthless in this 9 for 1 exercise unless they take up the issue. Bargepole case for me.
Have fun with FTML later- Im off to sort out a cricket ground for the final full weekend.
Cheers. The Leggie