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euddoggwyn,
good thought provoking post. I posted before that DINA = Putin. And I am almost serious. :) “St. Petersburgh” is Putin, “military” is Putin, etc. NWOG and RussNeft – two emerging private companies that are swallowing oil assets all over the country. They are designed as future economical refuge for two branches of Russian power: presidential (NWOG) and executive (RussNeft). BTW, RussNeft is more successful so far. DINA is whoever represents the President.
<< If 300 mill are issued for Yemen deal, those shares are going to be part of "Dina's" plan.>>
Agree… I think those shares will be placed among “military supporters”. Didn’t NWOG said directly that wants to give them access to corporate headquarters?
As to US pinky holders… they haven’t even noticed that gift from NWOG management – entire company, instead of 2 Saratov divisions. The plan was simple: why bother with double accounting for pinky and non-pinky parts of the company? They can just dilute US part to “acceptable” level. This is a traditional way to bring partner-competitor down. For example, that’s how Gazprom pushed Sibir’s Chigrinsky out of MNPZ. The share of US pinkies in NWOG O/S fell from ~11% pre-merger, to ~6% now, and to ~4% if “DINA” takes those 300 mln shares. So, we own 3 times less part of the company than we used to… The rest goes to DINA…
I don’t expect from them "integrity" and “respect”… I just want decent return on my investment. With my current ~0.18 average I am watching DINA’s moves with curiosity and hope. Unless they sell the company or take it private for pennies, I am safe… I hope.
Brent,
there is at least one "new" news in this PR. It’s official now: NWOG-MOL branch is also covered by “former NDOL”. So, nothing left outside our scope. This board is too sophisticated and knowledgeable. All news are discovered even before they happen. I know everything they can tell us for weeks ahead, so, I am already disappointed… in advance. :)
<< I really do believe there was a buyout on the table>>
I think this statement is offensive for old NDOL management. You are, actually, saying that they are stupid… I disagree! :)
Klyon is not producing (and probably won’t be before 2008… at least). It’s not well known even to Russian analysts (according to detailed report I posted some time ago). Klyon is not “immediate money”. It requires significant investments and time for development. When I read Kinross’ lines about synergy in Chukotka region I think about Klyon. How about Aurus-Kinross JV? May I dream?
Interesting analysis of Kinross-Bema merger
http://www.resourceinvestor.com/pebble.asp?relid=25516
They think that KGC is overpaying, and give estimates for Kupol, including "Russian discount" (2C they also use this wrong term :)
In any case, this merger and publicity that Kupol gets now, is very positive for AURC. Somebody will start paying attention to our Klyon assets. IMO.
This is a great rumor. :) Small shareholders are so exhausted and disappointed, that NWOG would be able to buy almost all float below $0.4. With ~ 40 mln “free trading” shares they would need less than $16 mln to do this – Surgut-7 proceeds. And NWOG does need shares for AIM trading. Imagine what happens if they announce proposed tender, when company is buying back 30 mln shares at $0.4?
IMO. Quiet buying at the open market, and even official tender at small premium is not exactly ethical (after claiming that $2.17 is not good enough). OTOH, they have never demonstrated good manners. :)
Putin Seeks to Form State Nuclear Firm
By Yuriy Humber
Bloomberg
President Vladimir Putin wants to give state companies the right to own the nation's nuclear assets and have power to form joint ventures with foreign operators, making the industry more efficient, a State Duma deputy said.
Putin's bill, proposed to the Duma on Thursday, would let the companies group together under a new state-controlled holding and try to put Russia's atomic energy industry on a commercial footing, in the manner of Paris-based Areva. The holding company would compete in all markets related to nuclear energy.
"We need to have the organizational structure in place as soon as possible,'' said Viktor Opekunov, chairman of the subcommittee for nuclear energy of the Duma's Energy, Transportation and Communications Committee.
Legislation currently forbids enterprises to hold nuclear assets, with companies like state fuel monopoly TVEL operating merely as trustees. The bill would allow all nuclear companies and institutes to be collected under the aegis of a full-cycle atomic energy holding, preliminarily named Atomprom.
Russia plans to increase its dependence on nuclear power to 25 percent of its total electricity needs by 2030, freeing more gas for exports. The country seeks to reorganize its atomic sector, mostly run by state enterprises that are not joint-stock companies, into simpler, corporate structures.
Atomprom, devised along the lines of Gazprom, would provide a broad brand name for nuclear products and services in direct competition with Areva and Toshiba's Westinghouse Electric. Atomprom would be one of a select number of companies permitted by the president to own nuclear assets.
The holding could be registered before the end of this year, by which time Putin's bill is expected to enter into law, said Sergei Novikov, spokesman for the Federal Atomic Energy Agency.
"If all goes to plan, without too many corrections, then the bill could be approved by parliament within this year,'' Opekunov said.
Federal Atomic Energy Agency chief Sergei Kiriyenko, who acts as the president's adviser on the bill, has said he wants all nuclear activities to be self-sufficient and run like businesses, not as part of the state.
Although Atomprom will be fully controlled by the state, the companies in its holding will be free to form joint ventures with private businesses, Novikov said.
The bill also allows for foreign companies to own nuclear material on Russian territory. This would allow mining companies such as Australia's BHP Billiton to send uranium ore to Russia for processing and enrichment, and then re-export.
Russia, which has the world's ninth-largest uranium reserves, wants to buy the ore from Australia, which has the world's biggest reserves of the element, although laws in both countries currently prevent this, said Vladimir Smirnov, head of Technsabexport, the state nuclear fuel trader.
http://www.themoscowtimes.com/stories/2006/11/07/047.html
euddoggwyn,
thank you for your kind words. I am not “working” here :) I am trying to entertain myself while stock is moving in wrong direction. It’s nice that somebody else finds this worth reading, but, really, I would do it anyway – mostly of curiosity… but you know this since you greatly contribute to this entertainment program yourself.
I have a problem checking your data - old Nord Oil website is dead, and I don’t store addresses, PDFs, etc. It would be also helpful to have some links to those “suspicious” businesses. Thanks.
"...enjoying that other Russian stock at the moment"
Hmm... let me guess... "Stolichnaya"?
"The addition of Russian operations and exploration opportunities through
the acquisition is a natural fit with our proven track record and expertise
mining in the country," said Burt. "Bema's Kupol project will be a cornerstone
growth asset that is expected to begin production in 2008. Kupol is fully
financed and will continue to be staffed by Bema's Russian management and
construction development team."
http://www.newswire.ca/en/releases/archive/November2006/06/c8706.html
First, this is a 14.55% change from the last trade on Nov, 1 @ 0.11 EUR ~ $0.14.
Second, the volume is zero at the moment (just a price “fixed”).
Third, this 0.094EUR is about $0.118 – 0.12 – exactly where we finished on Friday.
http://ifbdppi.infobolsanet.com/ServerDataPump/dbpi/ifbTest.srf?env=DU&lang=en&module=M_Equi....
An example of similar business in the same region (Tatarstan, where Strat plans to expand these operations):
Tatoilgas, a joint venture of TatNeft with the German firm Mineralol-Rohstoff-Handel, GmbH. Tatoilgas recovers oil from sludge that is stored in sludge ponds. TatnNeft has also JV TATEX which installs vapor recovery equipment on their oil storage tanks. “All of our storage tanks have such equipment”.
http://www.tatoilgas.ru/e1.html
http://multiphase-research.org/web-content/MPUR/MPUR%20Archive/MPUR%2002/03-Badretdiniv~TATOIL.pdf
I don’t know whether Tatoilgas covers all needs of TatNeft for this kind of operations, but the point is: there are competing businesses over there. And Strat needs to find it’s place in existing oil processing structure. I wonder who is the “Russian Company” they are working with in “Strat Nafta Ufa"?
It’s not easy to “control Russia from behind the scenes”. Putin himself was a personal choice of Yeltsin with the same purpose, and what? Now he gained unlimited power, jailed Yeltsin’s “oligarchs”, keeps redistributing the wealth. Just yesterday I saw an article, where “analysts”, based on the same TV "talk with the nation", concluded that Putin will be elected to the 3rd term – constitution will be changed as Russian people will ask him to stay in Kremlin “to protect the nation”. One more scenario: Russia is merging with Byelorussia and Putin is elected as the first time president of new State. This scenario was very popular a year or so ago, but now Russia-Byelorussia relations are worse than they used to be. I like the version, you posted, more. That’s how I understand Putin’s answer to that question during TV line.
As to NWOG… the story will be written by 2008. That’s my final deadline (another pivot point – June, 2007). Only early “unfriendly” buyout can hurt small shareholders. Hopefully, they wouldn’t dare to make bad cash deal ($2.17 is still in everybody's mind). But they could give us some XYZ shares and explain that this is “better than cash”… Keep your average low, just in case – that’s my mantra. :)
Yes, English is not even my second language. :) I used to live in Russia (Ukraine), and think I understand the situation pretty well. “Current political climate in Russia” is a good topic for dissertation, and my opinion is subjective like everybody’s else. I would answer any concrete question, but let’s better do it on Brent’s thread (I saw your posts there)… if he doesn’t mind, of course.
BTW, by "support of local government" I mean seeing their names in Strat Nafta Ufa (SNU) .
I have been with SPRL (watching/trading/investing) for a couple of years now. Could someone enlighten me: what exactly ties Sam with Russia? Why not Zimbabwe, Poland, or Singapore? I mean… what kind of contacts, connections does he have there? Relatives? Friends? Those are very important question when you invest in Russia, and Strat is my only Russian holding, where the answer is not clear to me.
Unlike previous SPRL “traditional” projects, current “oil sludge” enterprise is a brilliant idea. What they call “oil waste” in Russia, where many refineries use old non-effective refining technologies, is, actually, precious source of revenue for any sophisticated producer. The problem is: if it's genius – it's usually simple. The business is easy to enter, and mobile plants could be built for less than a million dollars. At one point big refineries may decide to do this kind of processing themselves, a number of small businesses with better connections and local government support can enter the game, etc. So, Strat’s strategy should be: keep quiet, buy in advance as much sludge as you can, put in place forward contracts, that would guarantee delivery of sludge with certain physical characteristics for years ahead, etc. This place will get crowded in a year or two. Similar units are working in some other Russian regions, and Sam happened to be in a right place in right time. I, personally, understand his attempts to keep things quiet. Strat should use this time to position itself, that it couldn’t be ignored and bypassed by competitors. Then they will have to buy us out in a couple of years... and we all get rewarded.
Again, now, when it looks like the business is up and running, I would like to know what kind of support Sam has in Russia.
$30-50 mln with 1 bln O/S and P/E = 10 (just for example) will give share price $0.3- 0.5.
Last time earnings (pre-merger) were reported in
http://secfilings.nasdaq.com/edgar_conv_html/2006/05/24/0001144204-06-022374.html
for the first qrt 2006:
Income $3 942 075
Operating Expenses ($2 870 407)
...
Net Income/Loss $192 543
Net Income/Gross Income ratio: ~ 0.049
Assuming that those projected $600 mln revenue numbers are correct (I haven’t checked them) and using the same ratio (which can, actually, be higher or lower) we will get net income of $29.4 mln.
Of course, this is just arithmetic exercise, because we don’t know real numbers, especially for pre-merger NWOG. I do believe that NDOL production could be doubled as stated in PR… But, to do acquisitions they borrow money and dilute shares, which makes “per share” numbers worse.
Personally, I expect good results… why would they bother Deloitte otherwise? :) OTOH, if this audit is a sign of coming buyout I would want to keep my average below “worst case scenario” price. What is the worst case - is everybody’s guess.
<<Neither Creditline nor NWOG are in the refinery building business.>>
CreditLine is just a shell company created by Piriev when Syria contract was almost finalized. He spent a lot of time negotiating this as Director General of Stroy Trans GasOil Progress Company http://english.people.com.cn/200511/07/eng20051107_219592.html . And Stroy Trans GasOil is building pipeline and NG-processing plant in Syria, has close relations with Gazprom, etc. So, it would be safe to say that CreditLine is in this business. And, you are right, CreditLine itself wasn't worth much, but CreditLine backed by Stroy Trans GasOil and Syrian contract is worth a lot.
Question of “middlemen putting the political pieces together” is very interesting one. Isn’t it the idea of the model implemented by NDOL, AURC, and many other shell companies? Look at background of CEOs in SERG, SIBN, and others. They weren’t born in oil business, they use “connections” to put pieces together and either find someone who can, actually, work, or (more often) re-sell business. NWOG has exceptional connections and support. For some time I was sure that they are building stand alone integrated oil business that will compete with Russian majors. There are some signs, however, that make me think they may be just the “next middleman”. Sale of Surgut-7 was one of them. For any business, that is ready to put some efforts to exploration and development, this asset would become the long-term source of stable revenue. Especially, if you plan to acquire other assets in the same region (like Magma). NWOG’s choice was – quick profit and next deal. This could be a pattern for future: collect the basket of Middle East projects and sell them to… TatNeft (?), or sell the whole company at one point.
Interesting, that “middleman” approach is a real problem for Russian oil business. Licenses for many small perspective oil fields belong to businesses, who have no intent to produce anything. They are just waiting for the price to go up enough to resell them to somebody else.
<<Syria don't want to be against Russia, believe me.....>>
That’s for sure: Russia has forgiven them billions of debt, sells weapon to Syria and Venezuela, equipment for nuclear plants to Iran. Finally, Russia is their only protection against UN sanctions. The question is: would Russia be interested? I am afraid NWOG may become the card in big political game. Iran and Venezuela – evil anti-Western block with crazy ideas of “multi-polar World”, Russia – moderate force with decent level of responsibility. Syria has it’s own interests and some historical problems with Teheran. The wise strategy (both for Russia and US) would be to play on those differences and support Syria as alternative force against Iran. This refinery game could be the evil plan to pull Russia into joint Syria-Iran-Venezuela-Russia project. This enterprise would have clear anti-American taste. Venezuela is trying to cut it’s oil refining in US, and move it to other countries. They need Russia. I don’t think Russia would be interested in taking such a radical position.
Anyway, I still think that Syria deal isn’t lost (although, could be adjusted a little). We have Yemen (and that’s where additional 300mln shares go). We are bidding in Jordan. As I pointed before, this project was entirely built on personal contacts and connections. I would expect that Mr. Pereiv (CreditLine) is packing his luggage right now to visit Syria and talk with new oil authorities.
All IMO.
Hmm... I haven't seen this. It sounds worse in Russian.
I, actually, agree that $350 mln is too much for Magma. NWOG just desperately needs to improve production numbers, so was ready to overpay. BTW, NK Alliance has approximately the same situation.
BTW, NWOG's refinery "is based in Der-ez-Zour Province in Syria":
http://biz.yahoo.com/iw/061017/0173593.html
- North-East of the country.
Iran&Co refinery is planned in "two possible locations for construction of oil project near Damascus":
http://www.irna.ir/en/news/view/menu-234/0610319290195959.htm
- South-West of the country.
http://www.infoplease.com/atlas/country/syria.html
Looks like the second project was also negotiated with Russia (the same Pereiv):
http://www.worldtribune.com/worldtribune/06/front2454032.122916667.html
But this article looks a little suspicious to me like re-print of year-old news.
For now, until proven wrong, I conclude that these are two different projects, and Kommersant article is an example of irresponsible journalism.
good point.
To make the picture even more gloomy :) I suspect that your point
3. The JV with India Oil
may not the case anymore, because it's my understanding that the purpose of this JV was to acquire Udmurtneft, and the tender was finally lost to Chinese company.
I would also add that sale of Surgut-7 to MOL was rather negative event (from long term perspective). Although... we don't know where they are going to invest that money...
I am currently reading all Syria related stuff (will look closely during weekend). My first impression: there is no way for Syria to cut NWOG deal if NWOG is supported by Russian government (military) NWOG deal is valued $3.5 bln, Iran& Co - just $1.5 bln. NWOG would build refinery and petro-chemical complex, Iran&Co - just refinery, etc. Again, I have not done much DD yet, but it could be that those two deals will complement each other. Look at recent Russia's agreements with all participating parties - they are not going to disappoint "big brother". So, the question is: how strong is the "upside support" for NWOG deal.
BTW, NWOG has a contract, and Iran & Co. just "memorandum of understanding".
IMO.
According to this article (Russian):
http://www.toplivo92.info/anons.php?id=204
Sibir Energy has good chances to get control over Moscow NPZ in exchange for Magma and other assets. 55% of MNPZ shares belong to Moscow government, which likes the idea of getting oil assets. This deal would guarantee energy security of Russian Capital for years ahead. With those Moscow shares Sibir would get 75% stake in refinery. The only problem (as it was mentioned in previous post) – Gazprom-Neft is also trying to acquire those 55% shares… Gazprom is State monopoly, and, despite of it’s sympathy to Sibir, Moscow government may won’t be able to complete the deal.
P.S. Following euddoggwyn’s links… I can’t find any connections between NK (“oil company”) “Alliance” and NWOG…
I've just placed low bid order, just in case... addiction. :)
Don't kill the messenger:
http://www.kommersant.com/p718940/Refinery_construction/
Magma again…
This article (Russian) provides some explanation why Magma is not for sale right now:
http://www.ma-journal.ru/monitor/10.10.2006/
Summary:
1. New player – company “Alyans” wants to buy a few fields in HMAO, including “Magma” and claims that is ready to pay “significant money”.
2. They are talking to Sibir Energy now. The purchase can be completed even this year, but the competition is big and there are a few obstacles.
3. Last year Sibir decided to sell Magma, and even announced the tender. According to Magma, today this deal is stopped. The main reason – Chigrinsky (owner of Sibir) is negotiating with “Gazprom Neft” the conflict about MNPZ (Moscow refinery). Gazprom is trying to get control over MNPZ, but, instead, Chigrinsky wants to give them Magma + his stake in “Evihon” (JP with Shell).
4. For now, Gazprom hasn’t agreed for this exchange. They want to keep MNPZ. So, there is still a hope for “Alyans” to get Magma.
NWOG is mentioned nowhere in the article. They are talking about Alyans as the most probable buyer, if the Magma sale ever takes place.
P.S. After posts like this I usually receive a few PMs that blame me for posting links on “foreign languages”, explain how to work with babefish, and ask to use it and post the English version. Let me state: I don’t have time and desire to do this. I encourage those, who know how it works, translate the article and post it here. Otherwise, you have no choice but rely on my amateur’s summary. :)
Just delayed name change in Frankfurt, today is the first trading day under the new name:
http://boerse-frankfurt.com/infoxetrapip/news_e.php3?jahr=&news=43800&tag=
This is possible, and this is not necessary a good news for those who paid high price for their NDOL shares. I’ve seen too many cases when shareholders were hurt by “unfair” buyout price… and NWOG doesn’t need our vote to do this.
They don’t need to trade all shares in London. It could be ~100 mln that left within current limit. Although, I don’t think it would be a smart decision because US pinks will dominate then and pull AIM prices down. Other scenarios include reducing US float (using tender or forced buyout), freeing some insiders shares (doesn’t look right), or additional dilution (harmful for AIM price). It was discussed here before. They can not trade 1 bln shares in London and “replace our shares by NWOGF”. Owning ADRs still means owning shares, so this would mean 100% dilution. The worst thing about NWOG diluting it’s shares now – it will affect AIM price, doesn’t matter how restricted those shares are. Why would they do this? Another question: why would they hire Deloitte for audit but wouldn’t use it as nomad (according to debelg)? Doesn’t make much sense (IMO) unless plans are changed, AIM is not a target anymore, and solid audit is a requirement of a potential buyer…
IMO.
Thanks, I do need to stop talking and start reading. :)
Another question I'd like to raise (sorry again if this was done already): Deloitte & Touche as NWOG's auditor. It always was my conviction, based on what I red about other AIM IPOs, that audit is a part of Nomad's work to prepare company for trading in London. If this pattern can be applied here, I couldn't think about better nomad for NWOG. It would be very impressive and solid IPO.
http://www.deloitte.com/dtt/leadership/0,1045,sid%253D120192,00.html
IMO.
Tatarstan is an autonomy ("autonomic republic") in Russian Federation. Unlike other autonomies (that have, actually, "oblast" status) Tatarstan has extended rights which makes it look "almost independent" - because of it's size, importance, etc. Tatarstan was unlucky - it didn't have borders with foreign countries - the main condition for "big" republic in Soviet times. Otherwise, it would be independent State already (like Ukraine or Kazachstan). So, Tatarstan is part of Russia, and if somebody considers this as "legal loophole" - this could be resolved only by using weapon, in Chechen way... will never happen. IMO.
Sorry, if this was already discussed here, but this Russian article is pretty fresh and dated 10/30/2006:
http://www.fcinfo.ru/themes/basic/materials-document.asp?folder=2821&matID=118566
According to the article “Gazprom Neft” is looking for investments in foreign oil production & processing. One of the targets – the only Jordan’s refinery that belongs to Jordan Petroleum Refinery Co (60% shares, the rest 40% - Jordanian government). NWOG and TatNeft are mentioned as other interested investors. I am not sure about Gazprom, but, as I mentioned before, TatNeft is one of the major Russian players in the Middle East (maybe because of it's muslim roots). NWOG has cut them in Syria and Yemen, and now competing in Jordan. I am looking at TatNeft with increasing attention.
Hi, euddoggwyn.
Safarov was the reason I started looking at SERG and bought a small position in ~1.2 range. As no board existed on iHub I started moderating SERG board… Think it was a mistake because now I feel that moderator's functions restrict me from expressing any negatives I may see/suspect – like if I am obligated to support stock under any circumstances. :) And I do have some questions (even contacted IR with them). For now I took profits, and just watching… Will check it out – what is new. As to Safarov, my short answer is: look for “Armenian trace” just like it was in NDOL/NWOG merger – Artiir Dzhalovyan was the main shareholder of Volga-Neft. Again, there are some questions… I wouldn’t recommend buying at these prices, but I could be terribly wrong. :)
Hello everybody. Just checking in. Back from vacation, 2 weeks w/o English and internet. Found my account down $8K with 90K more shares of NDOL (last purchase: 20K @ 0.13 a couple of days ago). I need some time to get up to date, and understand what’s really changed except the stock price. The board looks so negative… my feeling that even 300 mln dilution and disappointing price action can’t justify this, but maybe I’m missing something important. Would appreciate if anybody can summarize this “negative important” in one post.
I am leaving for 2-week vacation in Europe and not sure if they invented internet already. :) So, here is my summary:
From the first post on iHub my main theme has always been: NWOG is not a scam, it’s a future leader of Russian oil industry with government connections and support. The only question I had: how much of this future wealth and power they are ready to share with “poor US pinkyholders”? The terms of merger were so confusing (intentionally or not) that could easily leave us with Saratov-Samara assets if they wanted to. The huge news is not Syria contract (which we have been discussing for a week now), but the fact that “former NDOL” is now a part of NWOG’s future expansion and success. Now NDOL can’t be separated from other related projects (like Transpetrol). Maybe NDOL is NWOG after all, because not much else left after selling MOL division.
One can flip shares back and forth, we do have a few resistance levels and a big resistance in 0.38-0.42 area, where all bagholders could decide to get out… but after few news like yesterday people will finally realize that they are flipping “future Lukoil”. I wonder what will be the stock price in June, 2007?