Just rarely post here but its one that I just let rise and rise
The only thing that does not make this the perfect easy trend to follow is what I mentioned already a few weeks ago , the odd whipsaw .
I have set alerts to when am 75% of my trailing stop . I will never trade out at the height . just not my strategy but happily ride the trend and get stopped out one day when it stops or turns . I'll lose the daily average true range * ( my multiple )
Actually that EBITDA to EV is a lot lower for Premier Oil
I think EBITDAX was $589m last reported so current EBITDA/EV for PMO is now substantially lower and hence better
Meantime Faroe is just a beauty of a chart . I think the trend is pretty self explanatory
I picked these up purely as a technical play between 60s and 75p so looking forward to seeing all the positions double in price . Not quite yet . Some of the whipsaws did test my resolve as they went beyond my tolerance and should have sold .
Sure , the parallels are very similar to Ithaca as both Faroe and Ithaca were bought on the cheap by 2 corporations and both firms were bought at what I believe were values that were undervaluing the 2 companies. But especially the long journey of management and operational success that takes time to achieve . PIs are just impatient . I have been happy to stay quiet and enjoy the trend but don't want this to be taken over cheaply ! Both because it sets wrong 'comparables' for other stocks in the sector and because I think it undervalues the asset anyway.
In this case its DNO from Dalek and with Ithaca it was Dalek buying Ithaca to expand its portfolio of assets . Imagine how much Ithaca would be worth today in the open market .
Its smart corporations making money whilst the various private investors are caught napping in the entire sector more so here than in the US sector that I follow but both UK and US are lagging . The fact that institutional investors are doing these deals shows me that the market is pricing energy companies too low .
A Premier OIl has an EBITDA/EV ( EV = economic value ) I use this metric due to debt levels , of about 10 .
Faroe about 8.5
A comparison of Book value discount would imply that now PremierOil could be a target . Look at the 2 in those terms .
To me the sector will get a surge in such deals if Oil stays above $60-65 this year on average . ( current average is above $67 )
It triggers a takeover offer at a price no lower than [in this case, £1.25]. If DNO felt they could get control with an offer around £1.25 they could have offered that without a Tender, so I don't think they will.
Not going to be too hard for them to acquire another 2.32% and take it over the 29.9% level which triggers takeover code I believe.
I don't think the DNO 'no intention to bid' notice holds much water. They can change their minds in the future.
It's a poor market for fundamental pricing and FPM's share price of 125p is well short of the potential £1bln+ market cap which the company is more than capable of being worth.
DNO have ineffect gained almost 30% of FPM for 125p. If they gained the other 60% for circa 200p, it would end up nearer 175p in terms of full cost to them.
The danger in situations like these is that DNO then loan out the stock to shorters/hedge funds who drive the price lower to circa 100p level which then stagnates ... and eventually DNO offers a bid price just over 150p etc. DNO (or RAK) do not have a great history when it comes to taking stakes in companies. Normally it's aggressive stuff rather than share price emboldening.
For those that bought the dips at 45p to 75p ranges, 150p might be hard to resist. For some, it looks like 125p has already been a carrot too far.
DNO has announced that having bought the Delek stake of 15.37%, it then further acquired 10% through a reverse book building process and clearly found sellers over and today announces that it has bought another 2.32% all at 125p. This takes their stake to 27.68% and I assume that they are still supporters of the management.
Faroe has announced that they have had no discussions with either DNO or Delek regarding these moves and that 125p a share substantially undervalues the company.
It is perfectly possible that DNO will keep their word and not go hostile in this respect but it has made a canny move in getting the first lump (presumably 29.9% after other loose holders are removed) at this price. Now I have been criticised before for accusing shareholders for selling out early and on the cheap in these battles and I do understand markets and why holders sell out so early. I also believe that Faroe is one of the sectors finest explorers and has a track record second to none, ironically showed by yesterdays discoveries at Hades and Iris. The market is indeed the arbiter of such values but the short termism of some shareholders with regard to a business that has been built up over many years is bewildering, DNO have the first part of the deal at 125p, they will have to pay much more for the rest but have secured base camp very much on the cheap
Yes, well, td. Especially well with today's sudden activity in Faroe. Many times I was tempted to cut my losses but I stuck with it. Not much more than breaking even overall, but I am pleased that my obstinacy paid off. And I didn't sell into the tender.
I expect DNO to be true to their word for now, so Faroe will continue independent as long as they want. 25.37% is a substantial blocking stake. DNO could make a full bid with Board support, or sometime in the future.
DNO now have 25%+ which is a strategic stake. I'm wondering if anyone else like Statoil is interested in taking a similar stake. This Viking raid feels pre-emptive to me as if they are aware of other companies' interest in Faroe. There may not be a formal bid but I can see Faroe eventually falling under Norwegian control.
For anyone who hasn't been following the fast moving events today, check out the ADVFN board, or other sources.
Basically DNO announced a tender offer for another 10%, which would give them 25%, but also issued a "No Intention To Bid" notice. FPM responded by putting out another RNS noting the 'No Intention To Bid' and saying that the Delek bid "substantially undervalues" Faroe (well, they would say that). And now DNO have announced that the tender offer has closed, and they have 25.37% of Faroe.
It is as per DNO's Message to OsloBors this morning, where they said "DNO now has decided to build a long term strategic shareholding in Faroe Petroleum and to support Faroe Petroleum management's growth focused North Sea strategy." (But if they get the support of Faroe Board they can negate that 'No Intention To Bid'. )
Alls well thanks Wb and hope its the same for you ? read all the posts here and elswhere Faroe's been going sideways at best lately , but after todays news we can only make good money going forward. they will become a major if left alone or get taken over. so win win staying put till one or the other happens, progress is the right word. td.
"WTI $63.51 +50c, Brent $68.12 +48c, Diff-$4.61 -2c, NG $2.70 +2cA modest bounce yesterday with the Russian Oil Minister suggesting that they will discuss long term cooperation at the upcoming ministerial talks. Equities bounced which took ..."
I'm no expert on oil shares but I don't think anything stops a takeover of Faroe. In fact I'm anticipating one in due course from Statoil or a similar company with interests on the Norwegian continental shelf.
One person died, even if it was on the Mærsk rig and a Mærsk person who died - this is not good news for FP. Safty standard is high in Norway and all incident must be taken serious, even if nobody dies or get injuired
It will go to 130 pence when the oil price goes up further! All these "Mystic Megs" looking into charts are a complete waste of time (in my humble opinion); A chart measures past performance not the future.
"Faroe Petroleum (LSE:FPM)Sometimes price manipulation can be useful. We've had a bunch of emails regarding LSE:FPM:Faroe and it's not difficult to understand the interest.Basically, the share price is approaching a downtrend and it's not beyond ..."
" FAROE PETROLEUM (LSE:FPM) Sometimes price manipulation can be useful. We've had a bunch of emails regarding this share and it's not difficult to understand the interest. Basically, the share price is approaching a downtrend and it's not ..."
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