anyone got any ideas about the block trades that went through today?

website: http://www.sterlingenergyplc.com/



weather: www.nhc.noaa.gov/refresh/graphics_at4+shtml/084938.shtml?50wind120

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The MM's love people like you

not really...obviously this has been well researched otherwise we would be deeply discounted by now. expect the price to move closer to 17 (and maybe slightly below) by Nov 20th. only because of the overhang issue. the reason why we are holding steady now is to reflect the potential premium concerning the drill programme. good news. there is a chance we could even see 20 soon and the issue be hugely oversubscribed....

there is a chance we could even see 20 soon and the issue be hugely oversubscribed....

Proptrade - won't the amount and the price already have been agreed with the purchasing institutions? How could it be oversubscribed?

not sure if it is a bookbuild or set price...of course if 17 in the fixed level then it will be first come first served but what will be key is how quickly the stock is placed. if there is/was appetite for more then these will bound through 20.

proptrade - and wouldn't it be in the co's interest to place as few shares as possible at the highest price? It would certainly be in my interest!

Re How good is the deal?

It seems to me we should be taking our lead from the company and the investors putting in the 97m. They have access to all the facts and presumably the inside track on the latest drilling data from Mauritania.
Our back of the envelope attempts to calculate the value of the deal and in some cases to suggest its not really good, can't help but be wide of the mark.

Got this from an other BB.

To me then there is no doubt that this must be a fantastic deal for SEY with 1 but. And its quite a big but and its the political risk.
We have already seen recently what happened to the Hardman share price when the Mauritanean government had to deal with a group plotting a coup (it fell from about 93p to about 77p). On the positive side the government seems to be very successful at putting down opposition. And of course much of Africa can be regarded as having unpopular governments or governments with a rebel group. So on balance I will hold.

From a personal point of view one further complication is that I also have a considerable holding in Hardman!
With SEY now mainly a play on Mauritania instead of a balance betwen the Gulf Mauritania and other countries, I have too much invested in one play. I think I will reduce Hardman though not Sey. The opportunity may come as soon as next week with the Capitaine exploration well drilling currently in block B.

MS

nice post, thx.

chinapete - a agree of course but any chunky investor needs a disc, however small. if there is great demand then that disc will be minimal

Thought this was of interest from Edmond Jackson today

Sterling deal not so stunning for private investors
The Aim-listed oil and gas exploration group announces a substantive investment in Mauritania, by way of a 97 million placing to institutions to exercise its right to participate in developing the offshore Chinguetti field.


The relative scale is shown by Sterling's capitalisation of 150 million (at a share price around 19p) and also reflects how importantly Mauritania is regarded among the dynamic small to mid-cap UK-listed exploration companies.


Harry Wilson, chief executive, says: 'This represents a stunning deal for Sterling, and establishes us as a key player in Mauritania, now recognised as one of the global hotspots for oil exploration and development activity. It cements our close relationship with the Mauritanian government going forward as we have been confirmed as a strategic partner to help it develop its oil and gas reserves.'


But it appears a less stunning deal for existing private shareholders in Sterling (SEY). A key aspect of equity valuation is - or should be - is the first right to subscribe for new capital raisings. As is regrettably the case nowadays, you can tell when a deal is truly juicy: brokers and institutions snatch all the equity.


The standard excuse from companies and their brokers is that management had to move swiftly to close a deal that was in the best interests of shareholders. There just wasn't time to raise funds via a rights issue, which would have been more costly too.


Neither of these excuses are robust. If a board has a strategic objective then it should raise capital when it is in owners' interests. Look at the example of Warren Buffett in the US, who makes a firm point of raising funds ahead of acquisitions. Secondly, cost to whom? If the deal is really so exciting, it is private shareholders cut out of any discounted fund raising who lose out. Let's not mince words: pre-emption rights are being flouted.


Evolution Securities is broker to the issue, but ultimately the Sterling board is responsible for safeguarding shareholders' interests.


Anyway, with the Mauritanian government exercising its right to acquire a 12% interest in the Chinguetti field, Sterling will gain an effective interest in the oil production revenues - with production expected to start in early 2006 at a gross projected rate of 75,000 barrels of oil per day.


A 10am extraordinary shareholders' meeting is convened for 18 November. If anyone can attend, they ought to ask why the board is cutting existing owners out of this promising deal.


My stance may seem sour, but unless this matter of pre-emption rights is tackled head on the City will repeatedly elbow private shareholders aside. It will be interesting to see if Sterling directors enjoy privileged status in a discounted placing.


Modest placings that are struck to fund smaller opportunistic deals, have a role. It is the scale of this one, with no sign the board has any concern for pre-emption rights, that puts me off (with fresh money). I still respect the Sterling management's track record, and my personal stance is also influenced by my having exposure to Mauritanian oil via a sizeable holding in Dana Petroleum (DNX).


With the shares unchanged at 19.25p it looks like the placing price may be in the late teens anyway, so existing holders have a chance to top up in the market. If institutions and directors were to get a material discount then it would be objectionable.


Existing holders should give serious consideration to buying more. Despite Sterling's rise from 3p a share in 2002, today's deal could be a watershed. The main risk is oil prices coming off the boil and consequent markdowns in shares. You have to be steeled for this.

The days of cheap oil are gone. I think at least $35/40 a barrel when they come off their highs some time next year.

MS

That is a great piece from Edmond Jackson

I agree with most of his points.

I have had all day out, and time to think. I will be holding on, I will be clearing the decks to obtain more stock, and I can't go to the city to ask for a share placing to cover the expense.

But I will still do it, this is worth a fortune barring political risks over the next 3 years or so imo.

Tells a story

I agree sww. This is my biggest investment by far. If this goes pear shaped, which it won't, it's back on the game for me. I understand King's Cross is a good place to start.
Now the serious stuff: It's my wife's birthday today so I'm the chef for tonight's family meal. Serloin sreak with the full Monty followed by apple pie and who know's what else. Did splash out on a bottle of champers, the real stuff not the usual Cava. So with any luck I'll be late on parade in the morning due to a sore head.
Don't know if I should grill or pan fry. Any suggestions?

MS

Depends how you like it?

If it is rare, then heat a pan with oil , (just a tad if it's non stick), get the pan and oil up to a decent but not burning temparature, (that would be smoking and far too hot), chuck 'em in and keep them moving, obviously you can do it the same for various cookings, i.e. medium and well done, with well done, I would do it under the grill, and again it is important to ensure that well done does not become charcoal.

Now we know why you starve most of the year, she must be a real tyrant!!!

Happy birthday from the SEY bb. people and have a good evening.

Any other questions I'll be watching.

MS
Rub the steak with oil and salt and pepper both sides and put into a very hot frying pan. 3 min. each side will cook it medium. Don't forget to save the bones for the rest of the week!

Sterling Energy eased 0.75p to 19.25p amid talk that the company is working on a fundraising at 17p to finance its acquisition of a oil well in west Africa.

off the link earlier.

Not bad at all, we were there last week and happy, so I will stay happy!

;-)))

sandrew64 a closet chef!!

Nice one.

From UK-Analyst

Buy Sterling Energy at 18.75p
By Stewart Dalby of Oilbarrel.com
Harry Wilson and his team at Sterling Energy, Chairman Richard O' Toole, Graeme Thomson and Nigel Quinton are serial builders and sellers of small cap oil and gas companies. In the late 1980s they built up Kirkland Resources and reversed into a listed company, which became Dragon Oil. They developed Endeavour Resources. In both cases, Kirkland and Endeavour, considerable shareholder value was added during the team 's stewardship.

Just before Christmas 2002 Harry Wilson had lunch with Oilbarrel.com and explained his ideas for Sterling. He planned to inject privately owned Sterling Resources into the near bankrupt Lepco, which had a listing on London's Alternative Investment Market (AIM). The assets essentially were six gas fields in the shallow water of the Gulf of Mexico plus some minor onshore sites in the US and Canada. There was also a licence for a stranded gas field in the Philippines. Harry explained that the idea was to generate production and some cash flow from the Gulf and look for exploration upside. At the time of the reverse takeover of Lepco Sterling's shares were 2 1/2p.

Two deals in the past year have lifted Sterling into another league from its position at the time of that lunch and illustrate Sterling's Style. In February 2004 Sterling purchased producing assets in the US Gulf of Mexico from Osprey Petroleum Partners, which more than doubled the company's production to the equivalent of 8.6 million cubic feet of gas per day. The increase in output was the main reason for the good results for the six months to June 30 2004. These showed a doubling of turnover to 5.3 million pounds and a 78 per cent surge in pre-tax profits to 1.98 million pounds.

Nigel Wray, Mark Slater, Evil Knievil, Tom Winnifrith, David Linton, Bill Adlard, Bill Johnston, the CEOs of 40 growth stocks - Master Investor 2005 on March 5th is the UK's Top Investment Show. Tickets are already half sold out. Click here for more news

But it was the hostile 40 million pound takeover of Fusion in the Autumn of 2004 which provided a seismic shift, so to speak, in Sterling's image. It was an audacious bid Fusion had stakes in a number of wells in the highly prospective West Africa area. Sterling was barely profitable at that time and was a small producer. The share at 11p at the time of the offer was arguably fully priced. Also it was an all paper bid but as the contest went on a part cash alternative was thrown in. Fusion resisted strongly saying the offer undervalued the assets. But Sterling prevailed and the company doubled in size.

That deal added some real spice to the company's portfolio, providing investors with some exposure to some of the most eagerly anticipated drilling prospects currently in train in the industry. The jewel in the crown at the moment for Sterling as for junior E & Ps is its stake in the licences off the coast of Mauritania where a multi- well exploration, appraisal and development drilling programme is underway. Sterling holds a 6 per cent royalty interest in PSC B and a 3 per cent interest in PSC A. In all Sterling is due to participate in some 20 wells - and, importantly, the company does not have to dig deep to fund these projects because of the free carries previously negotiated by the Fusion management team.

The highlights of the drilling programme in Mauritania include three exploration wells in PSCB on the Tevet, Capitaine and Merou prospects, with the latter two thought to be equivalenmt in size to the giant Tiof discovery. Two exploration wells are planned in PSC A plus four appraisal wells on Tiof and eleven wells development wells on the Chinguetti development, which, when it comes on stream, will generate further income for Sterling.

Mauritania should prove a very nice earner for Sterling in many ways. A deal struck between Premier Oil and Fusion in May 2003 means that Fusion - now Sterling - receives a discovery bonus from its fellow British firm once each field with in excess of 50 million barrels is declared commercial, which shouldn't prove difficult given the size of the structures lying in Mauritania waters. The bonus payments already adds up to a healthy US$2 million for finds in PSC B and US$1 million for Sterling. Apart from the Premier deal, Sterling has also announced that it has further increased its interest in Mauritania through a deal with the Mauritian government. It has reached a conditional agreement to share in the revenues from the government's 12% interest in the 120 million barrel Chimguetti field. Harry Wilson describes this as a 'stunning deal for Sterling' as it establishes the company as a key player in Mauritania.

Elsewhere, Sterling has signed up for a well on the Ntem licence in Cameroon. It plans to sink what it calls a high impact well here in the second half of next year.

The company also has boosted its African holdings with the award of two large exploration licences offshore northwest Madagascar. The Ambilobe and Ampasindava blocks cover 34,000 sq kms of undrilled acreage that has been home to hydrocarbon shows while heavy oil deposits have been recorded onshore.

Sterling's shares have motored up to 18.75p this year, but they are still a buy at this level.

Share price: 18.25 - 19p

Stockmarket: AIM

Symbol: SEY

Mkt Cap: 150 million pounds

Stewart Dalby is the editor of oilbarrel.com

Agree that it would have been good for holders to have been able to take part in the placing at a discount to the current sp. As Jackson points out, a good way to do business with the share holders interests at heart. But, how long did SEY have to put this deal together? I think that is the important part. If they did have to move fast then they might not have had time to get it all done and get the retail holders in on the deal. If i recall correctly, when a similar thing was done at Kenmare, management had more time to get the placing sorted out and it did take quite a while to complete.

I for one continue to hold and will also be adding more over the coming month or so. This for me is definitely a long term hold, not that it wasn't before, but even more so after todays news. I think that maybe a lot of the sellers early on today were expecting something different in the RNS, and perhaps some were expecting a short term sp increase. Well I am looking at the bigger picture and will be happy holding these for a s long as it takes. I have faith in the management to move this company forward over the coming years so am happy to back that up with investing a large chunk of my portfolio. Go SEY!

As to the political risk in Mauritania, we have had coups there before that have been swiftly put down. There is a lot of oil activity in the region and this will only increase over the coming years. Somehow I don't think that the Government will want to risk losing that and the revenue it will bring in. Perhaps it's not the most stable area in the world, but is the middle east or indeed much of Africa?

If it goes wrong then maybe I will be joining Mickey at Kings Cross. I will sit with a cup and sign saying ex SEY holder, please give generously!

To matters of a gastronomic nature. Steak for me is always well done, usually pan fried. I rub a bit of oil onto the meat then cook in a dry hot frying pan. Once cooked, i leave to rest a few minutes to let the meat relax.

Hope you and your wife both have a good evening Mickey.

I think this has been a fabulous day!

A real turning point for SEY which is everything Harry said it would be.

I will join pth and put my assets in a drawer to look at again in 18months to 2 years and then again in 3.

I think our hopes will be fulfilled, so much for locking in profit, I would not dare to sell any now, and as stated so much earlier I will add.

My recommendation is buy, if the placing is at 17p, you may see cheaper than today, but I think it will not last.

Team SEY lives.

Goodbye to those who left, see you again soon.

Oooo look!

There's new buyers jumping in!

No surprise there after the positives from analysts.