LON:AEX | Aminex - Where To From Here?

13th Feb '11 by dbfromgb

261 comments 97296 reads

As a long term buy and hold, Aminex (LON:AEX) has been a major disappointment for me , and it is time to consider whether I continue to hold on the basis that 2011 will be AEX’s year of triumph, sell out on the basis of too much dilution, lack of confidence in management, and the binary nature of some of its exploration, or somewhere in between. The love affair is over, it's time for a cold clinical appraisal.

USA Assets

The Shoats assets were valued, pre dilution, at circa 4mmboe and the USA assets collectively at an independent valuation of circa 11p per share. Management clearly indicated unverified but best guess reserves estimate of 18mmboe at Shoats (I was in the front row in February 2010 when Brian reiterated this guidance), which even discounted by 50% translated to 20p per share. Gas prices have fallen since then and show no signs of recovering for reasons we are all familiar with, but oil has for some time been trading above the $70 assumption of the original valuation. It was on this basis that we hoped for a sale of USA assets, or reserves based lending facility, to avoid dilution and provide the platform for further Tanzanian exploration.

So what has happened? Whispers are of management regretting the 18mmboe quoted, and having difficulty agreeing a fresh reserves/valuation report. The two wells drilled so far have not flowed as we had perhaps hoped, with one requiring fraccing, leaving us wondering how this changes oil in place expectations, and recovery/flow/cost factors. Importantly these are needed to feed into a DCF model to establish core value. Management have steadfastly refused to make any comment on when the much talked about reserves update and valuation report will be finalised and made available.

I think that most of us now have accepted that the report when it comes will be disappointing, and potentially worse, and have already factored this in to our new thinking and appraisal of the company. The only excuse for management not now coming clean is that to do so might be misleading (but as time goes on this reason wears thin), or that there is an underlying corporate transaction that prevents any discussion (we thought that might be the case with ref to the 140k acres – where did they go to? – but if there…

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Isaac

1st Jul '11

Didier purchased 350,000 SHARES! Love it!

Are the directors playing follow the leader (ee) ? :-)

http://www.investegate.co.uk/Article.aspx?id=201107010700105384J

djpreston

Not just Didier either - Tony and Mike picked up some as well (albeit small beer).

As I just said elsewhere:

Lets not forget that compensation is made up in many different ways.

Perhaps it should be noted that total cash compensation in 2010 totalled $1.037mn……or about £650,000.

Pensions and small benefits in kind account for a further $189k and the accounting charge for the 8.5p options (which obviously can’t be spent!) was $653k. No options have been awarded to anyone on the board since January 2010.

So, the directors have bought (including today's announcements) c 1.5m shares for roughly £100k. Roughly 2 months of cash compensation.

Personally thats a decent investment by the directors ahead of potentially very important news. They didnt need to put in any more cash as they have the options but doing so is Id say, a vote of confidence.

That some posters seems to be getting rather heated over the matter seems odd to me, perhaps it is just a reflection of the poor sentiment in the sector and the falls seen in some of their own large positions recently (EO. SLG, XEL etc etc)?

Two weeks into the drill and another 7 or 8 weeks to go. Time to go back to sleep Id say.

thegreatgeraldo

Didier seems to have been a bit slow off the mark!! Most impressed with Brian's purchase, taking his holding to a nice round number. In sharp contrast to a certain non-exec, who has a very untidy number of shares.

emptyend

...tsk....after I complemented you on your hairstyle too.... ;-)

TSK indeed - you won't let it go, will you???? ;-#))))

LOL :-))))))

I'd forgotten that was T***K*R's ticker . Must be 10 years nearly now?

ATB

ee :-)

Just over 10 years..

http://www.investegate.co.uk/Article.aspx?id=200104061610007938B

morality

17th Oct '11

So where to from here?

Currently it's attractive as a bombed out punt on the Ntorya well but it's likely that will fail and the price should go below 2p then.

Assuming that happens what next? Are there any drilling commitments that will require large amounts of cash?

COV and DPL are operating in the same area geologically (Rovuma). The DPL license there was valued at $100 million in the recent farmout. Nyuni-1 has 233 BCF and while Nyuni-2 was suspended it was abandoned. With lots of firm noises about a chinese pipeline the Tanzanian acreage still has potential to be worth a lot.

On the downside nobody would pay a bean for the KEY assets at Nyuni and TLW have pulled back from Ruvuma.

I am still betting that there is value in Tanzania though. The key for making money is not to be diluted to worthlessness on the road there.

So how about this for a future direction. Drill Ntorya, probably get spanked on that, then get KN-1 on line, continue sweating more out of the US assets, although possibly delay the two planned US wells if funds are tight, and then hang tight for a year without major expenditure.

Hopefully increased income from the US and new income from KN-1 will turn the $2 million loss in to a small profit in 2012 and larger one in 2013.

In the background the global economy recovers, oil share prices creep upwards from the late 2011 battering, drilling continues by others in nearby acreages and discoveries start to mount. Andarko commit to an LNG plan, the chinese pipeline is finished only six months behind schedule, hope value returns and cash is raised through either farmouts or dilution at a reasonable share price.

repobear

Hi morality,

It could well turn out something like that. However clinging on in the hope that the company may get another fundraising away further down the track and existing shareholders don't get diluted out of sight is hardly what this oil and gas investing game is all about, imv.

There are other far better places for my money.

repo

26th Oct '11

Does anyone have the time or the will to reconcile this post with comments i've made in the past several times over the years with those made in this post on TMF :

http://boards.fool.co.uk/i-dont-like-this-share-anymore-12389662.aspx

"I don't like this share anymore! "

Amazing how these types of posts have got 66 recs, when back in my days on TMF they got moans and groans and complaints from vested parties who only wanted to told what they wanted to hear.

Difference is I sold all my Aminex at 15p, this chap is selling at 3p.

Being a step ahead of the consensus always pays in this game.

Moral of the story :

Don't listen to the horseshit from 'experts' on bulletin boards, analyse the facts and think for yourself.

chriswalden

"Don't listen to the horseshit from 'experts' on bulletin boards, analyse the facts and think for yourself"

You write as though you're an expert - should I treat your contributions as so much h*******t?

Since you appear to be concerned about numbers of "recs", why don't you pop over to TMF and answer the post to which you refer? - you might exceed that tally.

Fangorn

I share the TMF posters frustrations, having been invested in this dog for about 5 years or so now. have thought several times about cutting loss and running but still holding, much to my regret.

Still can't win them all. AST or AEX - Who will seek yet more funds first?

salty64

So why the comment, "Didier purchased 350,000 SHARES! Love it!"

I bought quite a few looking at the risk and was encouraged by the buying by Directors. Why did you love it?

Well Chris, we have never met in person. So in reality I could be anyone - this applies to pretty much everyone here.

So why would you take my comments with more then a pinch of salt? Afterall they are just opinions based on the research I have done, the knowledge I have and the experiences I have had from Investing in the markets and my circumstances and risk profile.

So without knowing a) the research I've done, b) my knowledge/background and c) my Investing experience d) Circumstances/risk profile - why would you use my comments or anyone elses to make decisions about buying or selling shares?

It does'nt matter one jot the kind of success some on these boards have had in all honesty, they are only as good as their last trade - Fact. There are no experts here. We all make mistakes regardless of how long we have been in this game.

We all just try to do our best to avoid them and maximise our returns.

Recently I made a bad call in waiting it out for the markets to bottom out, I felt this would happen in late Oct/Early Nov but time has shown it probably happened early Oct. Although early Oct I did think far too many people were bearish and when that happens it usually means it's time to go on the other side.

But I have no regrets about my decisions as they were made based on my circumstances (where I had a large sum already invested in the markets) and risk profile - I was much more comfortable to hold a bit of cash then Invest and hope I've caught the bottom.

As things stand I am not too happy with Soco remuneration over the last 4 years, the lack of RNS stating buybacks have occured is frustrating given the cash sitting on the balance sheet.

If the company is going to be sold for £6+ and the shares are trading at £3.40 then SURELY it makes sense to buy back and cancel the shares, it just seems the most obvious way to add value with little risk. Yet the lack of action seriously frustrates me.

I also don't care about management's shareholdings - What I know is the company is worth more then the current price so they should take action rather then build cash that is being eroded by inflation.

Past performance is NOT a guide to future remuneration - Please bear that in mind, salaries should go down as performance declines IMO. Africa...they had better find some Oil...Patience is thin..

badday

28th Oct '11

New PSA now signed at last it would appear. Although neither HOIL or AEX have yet issued RNS to confirm.
For those of us invested, lets hope this provides AEX some flexibity in doing a deal or two to assist in loss recovery!

http://michuzijr.blogspot.com/2011/10/hotuba-ya-waziri-wa-nishati-na-madini.html

(Originally posted by Jamesbabie on ADVFN)

31st Oct '11

Confirmation of the new PSA from AEX today:

http://www.investegate.co.uk/Article.aspx?id=201110310700241079R

Let's hope the new CEO gets it right, he has started with a bold claim.

Commenting on the announcement, Aminex CEO, Stuard Detmer, said, "Signature of the Nyuni PSA extends Aminex's position as a leader in offshore Tanzania, one of the most exciting exploration provinces in the world. The Company has already made two discoveries in the Nyuni area including the Kiliwani North field, which it expects to put into commercial production next year. Aminex believes there is considerable scope for establishing a new play fairway on the continental shelf, which could share similarities to recent deep water drilling successes in the region."

Proselenes

11th Nov '11

Broker Note :

http://www.aminex-plc.com/files/111104_Shore_Capital_Company_Update.pdf

16th Nov '11

The IMS is out and the situation appears at first glance to be possibly better that feared and with more cash in reserve than was feared by some. For my part I will be holding on for some time yet as there are seems a good reason to do so but I am not able to dally any further:

http://www.investegate.co.uk/Article.aspx?id=201111160700111581S

peterg

News from Nyuni 1 is a disappointment, but it's probably not a great surprise that the well bore appears to have deteriorated. At least we know the initial logs were not a figment of anyone's imagination, though something a little more concrete would have been a lot nicer!

fuiseog

16th Dec '11

Big changes at the top, with Brian Hall and Didier Murcia resigning from their executive roles into non-exec positions. This could be seen as confirmation that the Board is confident that newly appointed CEO Stuard Detmer is the right man for the executive management of the Company.

http://www.investegate.co.uk/Article.aspx?id=201112160700180953U

And of course that role doesen't come without it's potential rewards, with the granting of 3 tranches of 7,500,000 options to Stuard Detmer exercisable at a price of 5.07 pence under "certain performance conditions" up to 2021.

http://www.investegate.co.uk/Article.aspx?id=201112160700181014U

At some stage, annual report/AGM, shareholders will need the "certain performance conditions" explained to confirm that the incentive fully aligns Mr Detners interests with their own.

IMO it's good to see that what appeared to indicate a succession plan with the appointment of Mr Detner shows signs of being progressed satisfactorily within the business.

fuiseog

Aminex - Where to from here?

USA Assets

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Dbfromgb

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