By Tom Winnifrith | Saturday 23 April 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Monaco tax haven based promoter David Lenigas is today ramping Horse Hill shares at a minor trade show run by another offshore based share promoter. "tax minimization 'R us - screw the NHS." But, at the rampathon, what the fat Aussie wont be brandishing is a regulatory filing from late last week by Magellan Petroleum, the US listed owner of 35% of Horse Hill Developments. You see it wants out of Horse Shite big time.
Jabba The Hutt might tell tell you that Horse Shire contains a billion barrels and will transform the UK economy, Magellan - market cap $5.74 million (£3.5 million) is not so sure. It is involved in an all share disposal of another asset and following that, according to an SEC filing HERE (I underline the Horse Hill bits):
excluding the assets that are part of the Exchange, the Company’s principal assets consist of (i) its 100% interest in NT/P82, an offshore block in the Bonaparte Basin, Australia, (ii) approximately 8.2 million shares of the stock of Central Petroleum Limited (“Central Petroleum”), (iii) the right to bonus payments related to certain sales milestones of the Mereenie field in Australia, currently owned by Central Petroleum, Santos QNT Pty Ltd, and Santos Limited, which aggregated bonus payments could amount to A$17.5 million, (iv) a 35% interest in Horse Hill Development Limited, which owns the Horse Hill-1 well in the Weald Basin, onshore United Kingdom, and (v) 50% interests in Petroleum Exploration and Development Licenses 231, 234, and 243 in the Weald Basin, onshore United Kingdom.
With respect to NT/P82, the terms of the offshore license require the Company to conduct a 600 km2 3-D seismic survey over the license area before the expiration date of the permit, which is May 12, 2016. Although the Company has identified several prospects in the license and there may be a possibility of extending the terms of the license, the Company has been unable in this market environment to finalize a farmout agreement with potential partners. With respect to the Company’s interests in the licenses covering the Weald Basin, these licenses are due to expire on June 30, 2016, because the work commitment to drill a well, specifically at Broadford Bridge, has not been met. These licenses are also encumbered by pending litigation with the co-owner of these licenses, Celtique Energie Weald Limited (“Celtique Energie”). With respect to the Horse Hill-1 well, the recent publicly announced results of the flow tests are encouraging, but material risks remain before this well can be assessed as a producing well and reserves estimated.
Based on the preceding considerations, the Special Committee believes that while the monetization of some or all of these assets should allow Magellan to continue to operate on a limited basis and satisfy its remaining financial obligations for a substantial period of time following the completion of the Exchange, none is likely to provide ongoing revenue in the near term. The Special Committee recognizes that there are risks and uncertainties involved in attempting to monetize these assets. The Special Committee also believes that Magellan’s public platform is of potential additional value. Consequently, following the Exchange Agreement, the Company will investigate the possibility of a merger or similar business combination transaction with another company. The Special Committee believes that such a transaction could benefit the stockholders by (i) addressing the Company’s current liquidity constraints, (ii) bringing new assets, a new strategy, and a new management team, and (iii) leveraging the Company’s existing reporting infrastructure and simplified balance sheet. The Special Committee believes that this strategy can be executed in a timely manner and would permit Magellan’s existing shareholders to benefit from the appreciation potential of the new combined entity. Following the Exchange, Magellan will have no debt and limited liabilities, and will therefore, the Special Committee believes, be attractive to private companies and international entities interested in gaining access to the U.S. capital markets.
In addition, to maximize its chances of executing this strategy and identifying an attractive business combination candidate, Magellan is actively seeking to monetize the right to the Mereenie payments, its interests in the Weald Basin licenses, and its interests in the Horse Hill-1 well and any related assets. The Special Committee believes that converting these assets into cash will make Magellan more attractive to potential merger candidates as we de-risk and clarify the valuation of the Company’s remaining assets.
The potential sale of the Company’s interests in the Weald Basin and the related settlement of its litigation with Celtique Energie would further enhance the Company’s profile by reducing the uncertainties associated with those interests. The Company believes that the receipt of proceeds from the monetization of the above-listed assets could be accomplished in the relatively near future and could result in proceeds being received by the Company that are materially greater than the current equity market capitalization of the Company as of the date of this proxy statement, although the amount and timing of such proceeds, if any, are uncertain. The terms, timing, and availability of a possible post-Exchange merger or other business combination transaction are similarly uncertain and subject to numerous risks, including the risk that we will be unable to identify, negotiate, and complete a transaction with a suitable counterparty.
Oooh Er missus. Magellan is, post the current transaction, debt and (almost) liability free and reckons if it flogs ALL its assets it will have cash materialy greater than its market cap £3.5 million. Materialy greater means a hell of a lot more but unlikely to be mega multiples of. And that implies that the CASH value of 35% of Horse Hill Devs on an open and transparent market is not the vast amounts Lenigas wants you to believe as he ramps away.
Valuations of Horse Shite have, until today, been based on a series of transactions involving Lenigas associated companies. Let's see if an external party puts up a true metric of real value with a cash bid for the Magellan stake, or will UK Oil & Gas (UKOG) keep this out of the public domain with a cash bid once it gets the placing it is working on away - hence Jabba being on the ramp so aggressively.
And while Jabba uses Leni-maths to talk of reserves etc etc in an environment where regulation actually has teeth, Magellan which wants to put the best spin on assets it has for sale can only say of Horse Shite:
With respect to the Horse Hill-1 well, the recent publicly announced results of the flow tests are encouraging, but material risks remain before this well can be assessed as a producing well and reserves estimated.
Ouch, ouch, ouch and quadruple ouch. Jabba can ramp all he wants but the truth is out....
Next week at www.UKInvestorshow.com I shall reveal why David Lenigas should be drummed off AIM and why anyone associated with him should hang their head in shame. I suggest deluded Lenigas supporters read what Magellan has stated in a regulated document and what Jabba says in an unregulated forum and contrast.
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