These comments are obviously pre-yesterday's bad announcement (potentially very bad, not yet clear) re Italian drilling bad see http://www.stockopedia.co.uk/content/italy-restricts-offshore-drilling-44035/. In view of this, I won't go into loads of details but will cut to the chase...
Slide 5 summarises their assets. Very nice too:
Guandalina will triple current production by end next year
Ombrina Mare planning well under way . Capex large, but they have 100%, so should be able to manage by farming out a large slug and debt financing for the rest - will have a bankable project by mid 2011. Curretly assesing whether to buy or lease a FPSO - big impact on upfront costs. I asked at what oil price the project was profitable - answer $35-40 is FPSO bought, clightly higher if leased
Monte Grosso is potentially huge, expected to spud mid 2011 but residual local permitting issues and query re rig availabilitybut the well is deep and will take 15 months to drill. est cost 55m euros plus for testing.
Tarxian will also need farm-outs.
Financing obviously extremely tight, but they had managed to extend the BoS facilty and were talking cheerfully about the options for OM and MG.
At this point everyone else had stopped asking questions, so I decided to ask my remaining question after the meeting ended.
The BoS debt facility is for 18m euros. They had 5.9 in the bank at the start of the year. I asked if this was going to be enough to get them through the Guendalina development which needs 15m plus VAT. Answer NO. There is a restriction on the BoS facility that only 10m can be used for Guendalina.
eek. They only have 20%. And if they farm down any of it, the amount of the BoS facility they can use decreases. Basicall they need 5m NOW. Which means a placing is imminent.
Darron's comment last - why don't ENI put them out of their misery? - spring to mind. I sold my small position that afternoon.
With the new uncertainty about drilling, I can't see a placing being feasible at anything but a dreadful price.
PS sorry for later report - writing up Serica took priority