Linc Energy was once the darling of the speculators. When the company was still listed on the ASX, valuations of 20 Trillion were mentioned.
.... two independent consultants estimated there was an ‘‘unrisked prospective resource’’ of up to 223 billion barrels of oil equivalent in three shale formations within its 100 per cent-held Arckaringa exploration permits.
Media outlets including the Adelaide Advertiser appear to have multiplied the resource estimate by the prevailing oil price - above $US95 a barrel - to arrive at the $20 trillion figure.
Even for Linc Energy, that sounded a "bit" too rich, so they added:
‘‘It’s a multi-billion barrel opportunity, and that’s a good news story. OK it’s not $20 trillion. But 3, 4, 5 billion barrel resources are virtually unheard of these days, so even stressing this number down to the minimum number the experts stress it down to, it’s still a big story.’’
The company subsequently dumped the ASX for the SGX.
Quite a scoop for the latter, but if they are still happy with their "catch" remains doubtful, since Linc Energy went into voluntarily administration last week:
Linc, which once boasted a market value of $2 billion when listed in Australia, was worth $US15 million when its Singapore-listed shares last traded on March 24. Former Australian listed market darling Linc Energy has entered voluntary administration with the oil- and gas-focused company buckling under an ongoing debt restructure and recapitalisation.
The above story shows the danger of those "consultants", especially the kind who come up with rosy valuations, without putting in one cent of their own money. Even Genting apparently believed in the story, they owned 10% of the shares of Linc. It also shows how quickly the fortunes of highly indebted commodity companies can change.
Showing posts with label Oil&Gas. Show all posts
Showing posts with label Oil&Gas. Show all posts
Sunday, 17 April 2016
Tuesday, 3 November 2015
When will Hibiscus bloom? (2)
I wrote before about this subject, and in general about Hibiscus in a rather sceptical way.
I don't know if Hibiscus will ever bloom again, and if so when, but definitely not today.
Hibiscus' share price dropped steeply, way below its IPO price:
In an answer to an "UMA" (Unusual Market Activity) query by Bursa, the company replied:
".... the Company believes that there may be some shareholders who have been subject to margin calls on shares that have been collateralised and are being asked to regularise their margin positions."
Added to that, the short term outlook for Oil & Gas does not look good, the RM has depreciated against the USD and the company has never made an operational profit in its existence.
I don't know if Hibiscus will ever bloom again, and if so when, but definitely not today.
Hibiscus' share price dropped steeply, way below its IPO price:
In an answer to an "UMA" (Unusual Market Activity) query by Bursa, the company replied:
".... the Company believes that there may be some shareholders who have been subject to margin calls on shares that have been collateralised and are being asked to regularise their margin positions."
Added to that, the short term outlook for Oil & Gas does not look good, the RM has depreciated against the USD and the company has never made an operational profit in its existence.
Wednesday, 21 January 2015
Malaysia net oil importer, surprise?
Article in The Star: "Govt reveals M'sia net importer of crude oil, petroleum products since 2014", some snippets (emphasis mine):
"In a surprise turn of events, the Government has disclosed that Malaysia is a beneficiary of declining crude oil prices because the country is a net importer, and not exporter, of the commodity and petroleum products, if liquefied natural gas (LNG) was not in the equation."
Surprise turn of events?
Anyone who had the data from the past and extrapolated it within reason should have suspected this.
If this was properly communicated to the public is another matter.
I wrote in the past the posting "Malaysian oil statistics are puzzling" based on an article of Claire Barnes.
I wrote: "Luckily for Malaysia, it is still a net exporter in gas, although production seems to have slowed down a bit in recent years:"
The price of Natural Gas has however also come down a lot, in tandem with the price of oil and other commodities.
"In a surprise turn of events, the Government has disclosed that Malaysia is a beneficiary of declining crude oil prices because the country is a net importer, and not exporter, of the commodity and petroleum products, if liquefied natural gas (LNG) was not in the equation."
Surprise turn of events?
Anyone who had the data from the past and extrapolated it within reason should have suspected this.
If this was properly communicated to the public is another matter.
I wrote in the past the posting "Malaysian oil statistics are puzzling" based on an article of Claire Barnes.
I wrote: "Luckily for Malaysia, it is still a net exporter in gas, although production seems to have slowed down a bit in recent years:"
The price of Natural Gas has however also come down a lot, in tandem with the price of oil and other commodities.
Thursday, 25 December 2014
"all the IPOs this year were making money for investors", really? (2)
According to an article in The Edge (December 22, 2014) named "A dreary year for listings" 14 companies IPO-ed in 2014 on Bursa.
Excluding Only World Group (which just listed) the results are:
That is not exactly a good score. Bearish sentiment on Bursa and in particular in the Oil & Gas industry have played an important role.
Icon Offshore was the worst performer, I wrote some cautious words about the company before.
Last year I wrote about an article in The Star, where the following quote was made:
"RHB Investment Bank Bhd director and regional head of equity capital markets Gan Kim Khoon recently said that investors should ride on the wave of Malaysia’s IPO market, but only after doing their homework on the new entrants.
He noted that all the IPOs this year were making money for investors and said this trend was likely to continue next year, when speaking at a recent panel discussion on the prospects for next year’s equity market."
That all IPO's made money in 2013 was simply not true.
And some of those listed companies did rather bad in 2014, for instance China Automobile Parts, AirAsia X, Sona Petroleum, Caring Pharmacy Group and UMW Oil & Gas.
But the advice to "ride the wave of Malaysia's IPO market" in 2014 also seems dubious, with hindsight, as the above results show.
Five years of booming share market have led to too much financial engineering, too much hot air being injected in soon to be listed companies, too much focus on the Oil & Gas industry.
Not surprisingly, things have come down to more realistic levels.
Wishing all readers Happy Holidays.
Excluding Only World Group (which just listed) the results are:
- 3 are in positive area
- 2 have the same price as the IPO
- 8 have gone down, some considerably
That is not exactly a good score. Bearish sentiment on Bursa and in particular in the Oil & Gas industry have played an important role.
Icon Offshore was the worst performer, I wrote some cautious words about the company before.
Last year I wrote about an article in The Star, where the following quote was made:
"RHB Investment Bank Bhd director and regional head of equity capital markets Gan Kim Khoon recently said that investors should ride on the wave of Malaysia’s IPO market, but only after doing their homework on the new entrants.
He noted that all the IPOs this year were making money for investors and said this trend was likely to continue next year, when speaking at a recent panel discussion on the prospects for next year’s equity market."
That all IPO's made money in 2013 was simply not true.
And some of those listed companies did rather bad in 2014, for instance China Automobile Parts, AirAsia X, Sona Petroleum, Caring Pharmacy Group and UMW Oil & Gas.
But the advice to "ride the wave of Malaysia's IPO market" in 2014 also seems dubious, with hindsight, as the above results show.
Five years of booming share market have led to too much financial engineering, too much hot air being injected in soon to be listed companies, too much focus on the Oil & Gas industry.
Not surprisingly, things have come down to more realistic levels.
Wishing all readers Happy Holidays.
Tuesday, 2 December 2014
Good articles (2)
When a prospectus becomes a doorstop (KiniBiz)
Recently, an 800-page prospectus found its way to tiger as well. Yes, 800 pages! Let that sink in for a moment. Do you feel the weight of 800 pages on your investing shoulders yet? Yes? Moving on.
In the spirit that the prospectus is similar to a scientific report, Tiger proposes a form of abstract, something short that covers everything the prospectus would cover, but without going into too much detail.
Maybe the prospectus could include an executive summary, maybe about 10 pages, 15 at most? Why not add forecasts in the executive summary, like the old times? With forecasts alongside the plan the company has in place for the proceeds raised from the listing, prospective investors can get a clearer view of what the company is offering, and in turn may be a better sell for the company.
Transparency, a plan, and recommendations from a few trusted local banks? That sounds like a recipe for a successful fund-raising to Tiger.
At the same time, the shorter (and lighter!) document would definitely be more palatable and more easily digested than 800 pages. By simplifying the document, companies are given the opportunity to present themselves to a barely tapped market of investors, due to the ease of reading of the summary.
Tycoons see their O&G investment value cut by almost half
With the oil and gas (O&G) sector being the hardest hit in the current market rout, tycoons who own significant stakes in these companies have seen a huge loss in their net worth.
These tycoons had collectively had their shareholding in these companies valued at some RM15.89bil when O&G stocks were trading at their highest prices. The fall in global crude oil prices and the plunge in the value of O&G stocks on Bursa Malaysia saw the value of their shareholding cut by almost half to some RM7.86bil yesterday.
What the article doesn't mention is that most of these tycoons have bought the companies at a much cheaper price and are thus still sitting on a handsome profit.
Quite different from the minority investors who bought these stocks recently (or at overpriced IPO prices) and are feeling the losses.
Bumi Armada is especially painful since the stock is not only trading way below its IPO price, but also below the price of its recent rights issue. Also, there seems to be persistent insider selling, even recently at these lower prices.
Somewhere in the (may be not so distant) future there must be a moment where it makes sense to start dabbling in these stocks. For the time being, catching a falling knife is not always the best thing to do.
Recently, an 800-page prospectus found its way to tiger as well. Yes, 800 pages! Let that sink in for a moment. Do you feel the weight of 800 pages on your investing shoulders yet? Yes? Moving on.
In the spirit that the prospectus is similar to a scientific report, Tiger proposes a form of abstract, something short that covers everything the prospectus would cover, but without going into too much detail.
Maybe the prospectus could include an executive summary, maybe about 10 pages, 15 at most? Why not add forecasts in the executive summary, like the old times? With forecasts alongside the plan the company has in place for the proceeds raised from the listing, prospective investors can get a clearer view of what the company is offering, and in turn may be a better sell for the company.
Transparency, a plan, and recommendations from a few trusted local banks? That sounds like a recipe for a successful fund-raising to Tiger.
At the same time, the shorter (and lighter!) document would definitely be more palatable and more easily digested than 800 pages. By simplifying the document, companies are given the opportunity to present themselves to a barely tapped market of investors, due to the ease of reading of the summary.
Tycoons see their O&G investment value cut by almost half
With the oil and gas (O&G) sector being the hardest hit in the current market rout, tycoons who own significant stakes in these companies have seen a huge loss in their net worth.
These tycoons had collectively had their shareholding in these companies valued at some RM15.89bil when O&G stocks were trading at their highest prices. The fall in global crude oil prices and the plunge in the value of O&G stocks on Bursa Malaysia saw the value of their shareholding cut by almost half to some RM7.86bil yesterday.
What the article doesn't mention is that most of these tycoons have bought the companies at a much cheaper price and are thus still sitting on a handsome profit.
Quite different from the minority investors who bought these stocks recently (or at overpriced IPO prices) and are feeling the losses.
Bumi Armada is especially painful since the stock is not only trading way below its IPO price, but also below the price of its recent rights issue. Also, there seems to be persistent insider selling, even recently at these lower prices.
Somewhere in the (may be not so distant) future there must be a moment where it makes sense to start dabbling in these stocks. For the time being, catching a falling knife is not always the best thing to do.
Wednesday, 8 October 2014
The Edge: "O&G counters hit by a major selldown"
Article on the website of The Edge, of interest is the following part:
Those comments were very similar to the ones Tan made in his interview with The Star, which I mentioned in my previous blog posting.
If his influence is indeed so large, I don't know but it might very well be the case.
However, it has to be mentioned that warnings signals regarding the O&G industry have been there for quite some time. I mentioned them in postings, for instance here and here.
Reuters wrote in February "Oil firms seen cutting exploration spending". The share price of several O&G counters has been on a down trend for some while.
The larger macro picture is most likely that the price of oil has come down due to a slow down of China's economy and alternative sources for O&G through fracking.
Those comments were very similar to the ones Tan made in his interview with The Star, which I mentioned in my previous blog posting.
If his influence is indeed so large, I don't know but it might very well be the case.
However, it has to be mentioned that warnings signals regarding the O&G industry have been there for quite some time. I mentioned them in postings, for instance here and here.
Reuters wrote in February "Oil firms seen cutting exploration spending". The share price of several O&G counters has been on a down trend for some while.
The larger macro picture is most likely that the price of oil has come down due to a slow down of China's economy and alternative sources for O&G through fracking.
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