Author Topic: ORC.B - Orca Exploration Group  (Read 7228 times)

Sergio8

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Re: ORC.B - Orca Exploration Group
« Reply #10 on: May 06, 2019, 05:18:29 AM »
New insider buy by CFO Blaine Karst: 4000 shares at 4.85 CAD.


Sergio8

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Re: ORC.B - Orca Exploration Group
« Reply #11 on: May 17, 2019, 07:46:08 AM »
Q1 numbers are out and can be accessed here: http://orcaexploration.com/pdfs/2019-Orca-Q1-FULL.pdf

These numbers are fully in line with my estimates and tend to validate the thesis as:

1) Cash and equivalents (including $ 3.97 Mil USD of investment in Swala) increased meaningfully and reached $ 145,5 Mil USD, representing $ 4,12 USD / $ 5,56 CAD per share

2) Although Orca still provisions $ 58,5 Mil USD for Tanesco receivables, Tanesco keeps paying its bills despite increasing amounts: « Subsequent to March 31, 2019 the Company has invoiced TANESCO $5.6 million for April 2019 gas deliveries and TANESCO has paid the Company $9.2 million »

3) CFO (before interest payments) stood at $ 13,5 Mil USD in Q1 with contained capex.

My net asset value estimates are thus unchanged.

Next catalysts may be:

- Continued increase in sales and cash-flows (very likely)

- A quarterly dividend announcement (very likely)

- A good acquisition (if available)

- An extension of the Songo Songo license (we don't count on it, but it is possible as gas deliveries need to increase in Tanzania and PAET is the best operator there)

- Normal Course Issuer Bid (to be discussed by the Board on investors' request, though the Board would prefer to increase liquidity in the stock)

- A sale of the Tanzanian business (we don't count on it, but there have been interested parties in the past).

Sergio8

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Re: ORC.B - Orca Exploration Group
« Reply #12 on: May 28, 2019, 09:17:08 AM »
Mr Blaine Karst (CFO) looks more bullish on the stock than ever: he purchased 10 000 additional shares of the company recently as can be seen here and on SEDI: https://www.canadianinsider.com/node/7?menu_tickersearch=ORC+%7C+Orca+Exploration+Group+

Sergio8

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Re: ORC.B - Orca Exploration Group
« Reply #13 on: May 30, 2019, 07:45:06 AM »
I would like to share some highlights from the shareholder meeting yesterday (where there are usually no shareholders).

1) The situation of the company is better than it has ever been and, as shown in yesterday's press releases, the improvements in gas deliveries are now contracted through a long term agreement (https://web.tmxmoney.com/article.php?newsid=8540588228431028&qm_symbol=ORC.B)

2) Capital allocation could improve in the future. The management and the board of Directors are fully aware of the fair value of Orca's shares and are inclined to consider share buybacks.

3) While waiting for it, we get an increased dividend (which is already an improvement): https://web.tmxmoney.com/article.php?newsid=8967217454614167&qm_symbol=ORC.B

3) Board compensation is aligned with the appreciation of the share price.

4) Management's operating priority is to get the Songo-Songo licence extended (which would significantly improve intrinsic value).

Overall, I believe our talks were (very constructive as I have had all my questions answered, even the most challenging ones.

Sergio8

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Re: ORC.B - Orca Exploration Group
« Reply #14 on: May 31, 2019, 10:02:41 AM »
Orca announced today that it has received a bid at 7.5 CAD per share for the company. The Board has (rightly IMO) rejected that bid and announced its intention to buy back shares: https://web.tmxmoney.com/article.php?newsid=5720849231951558&qm_symbol=ORC.B

This is a huge improvement as every dollar spent on a buyback at these prices has an immediate return ranging between 100 and 200%. I can only applaud that move.

I believe recent changes in the management's mindset are strongly increasing our odds to realize good returns on this investment going forward.

Foreign Tuffett

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Re: ORC.B - Orca Exploration Group
« Reply #15 on: May 31, 2019, 10:46:48 AM »
Orca announced today that it has received a bid at 7.5 CAD per share for the company. The Board has (rightly IMO) rejected that bid and announced its intention to buy back shares: https://web.tmxmoney.com/article.php?newsid=5720849231951558&qm_symbol=ORC.B

This is a huge improvement as every dollar spent on a buyback at these prices has an immediate return ranging between 100 and 200%. I can only applaud that move.

I believe recent changes in the management's mindset are strongly increasing our odds to realize good returns on this investment going forward.

Based on Swala's most recent IR presentation the company is 45% Tanzanian owned. I see that a sitting member of the Tanzanian Parliament is the company's non-exec chairman. Does the Tanzanian government have an ownership interest in Swala?

Sergio8

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Re: ORC.B - Orca Exploration Group
« Reply #16 on: June 01, 2019, 09:35:32 AM »
The Tanzanian government has no ownership in Swala shares. The company is controlled by the estate of late businessman Reginald Mengi who recapitalized it twice.

If we want to be more precise, although the Tanzanian government has a share in any company through taxes, it only controls TPDC and Tanesco.

Sergio8

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Re: ORC.B - Orca Exploration Group
« Reply #17 on: June 04, 2019, 10:21:44 AM »
Here is Swala's version of the facts regarding their proposal to acquire Orca : http://swalaoilandgas.com/documents/Proposal-For-Orca-Exploration-Group-Inc.pdf

What is interesting in there is not really the content in itself, but the following: " Swala respects the decision of Orca’s board to reject the Proposal and intends to review it in the context of recent operational announcements made by Orca subsequent to the date on which the Proposal was submitted to the Orca board".

It is my understanding that Swala could make another offer at a higher price.

Mitch07

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Re: ORC.B - Orca Exploration Group
« Reply #18 on: June 08, 2019, 06:43:30 AM »
They could. But with that said, Orca was patient in working with Swala for well over a year based on the agreed terms of $130M for 40% of PAEM.  For Swala to come back and say they want the balance of the 92% of PAEM + Orca for $55M seems dubious.
Current cash and bonds should be around $150M. The $53M IFC loan and funds payable to TPDC should partially be offset by the Tanesco receivable. They seem too far apart at this time.


NCIB approval should be announced shortly. Last time they issued a NCIB I don't recall it purchasing very much of the Orca float at that time.

Sergio8

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Re: ORC.B - Orca Exploration Group
« Reply #19 on: June 10, 2019, 05:50:30 AM »
Mitch, you are right on your remarks.

I'd like to make it clear that I don't count on any bid from Swala in the investment thesis. I just highlighted Swala's wording. Their bid is a much better idea (for them) than buying the remaining stake in PAET on the initial terms where they paid the full price for PAET's reserves because they felt confident about the possibility to extend the license. They couldn't have made it with David Lyons at the helm of the company, but I guess they hope to be able to have better deal terms if they acquire the company outright, and I guess they start a negotiation process with a low price for Orca.

They didn't make a lot of buybacks with the NCIB last time because Lloyd Miller III and David Lyons couldn’t agree on buybacks in the past, but their passing allows buying back shares now. I am not sure about how many shares will be available to trade though, and they could also tender for their shares at some point.