TXN - Texon Petroleum

[KurwaJegoMac]

could someone clear up some points for me.

1. why do companies do trading halts anyway for capital raises? what is the benefit of the halt? why not just let the trading continue anyway?

As a capital raising is considered market sensitive information, alt needs to be initiated close to the date of the announcement (as this is when the information could potentially be made public prematurely).

Alternatively, the halt can come at the same time as the raising is announced in order to give investors enough time to review the offer and make an informed choice about participating.

2. why does txn need a capital raise? is it to secure more acreage?

Don't know the reason for this - but they will detail it in the capital raising announcement.

3. why would a capital raise decrease txn share price? is it due to more potential debts accrued by the company?

Yes that is one of the potential reasons - the second and more common reason is that the share price will be impacted by the amount of new shares that will be issued as part of the raising. Essentially the shares are being diluted and are thus perceived to be worth less.

4. i'm guessing it's a good time to buy shares in a company you like the direction of after a capital raise since its share price reaches a low point? why do so many investors sell after a capital raise and jump ship?

Can't comment on the first question - financial advice. As to your second question, some investors sell right after a capital raise because usually the new shares are issued at a discount to the current stock price. The investor is therefore 'in the money' straight away and sells to bank this profit. This is a tactic employed by short term traders generally.

5. how does a capital raise work? does txn get a loan from another company? or do they go to the asx and order a bunch more shares to be traded (therefore lowering the value of the share price).

Basically they can seek funds from a private institution, institutional clients, sophisticated investors or the public. They either take a loan out at a bank for example, or issue new shares at a discounted premium to institutions and sometimes the public. You buy these new shares straight from the company, so they therefore get the funds (less any fees for setting up and managing the raising)

6. how does one buy the discounted shares? is it an 'invite-only' type thing. what determines the price?

Sometimes it can be an invite only where the public cannot participate. Sometimes it's issued to existing shareholders only. Other times it can be completely open to anybody who wants to participate (whether they are existing holders or not).

The company will determine the price together with advice from a consulting firm. Generally they pick a price below the current market price to act as an incentive for people to purchase the new shares.

 

[Agentm]

could someone clear up some points for me.

1. why do companies do trading halts anyway for capital raises? what is the benefit of the halt? why not just let the trading continue anyway?

2. why does txn need a capital raise? is it to secure more acreage?

3. why would a capital raise decrease txn share price? is it due to more potential debts accrued by the company?

4. i'm guessing it's a good time to buy shares in a company you like the direction of after a capital raise since its share price reaches a low point? why do so many investors sell after a capital raise and jump ship?

5. how does a capital raise work? does txn get a loan from another company? or do they go to the asx and order a bunch more shares to be traded (therefore lowering the value of the share price).

6. how does one buy the discounted shares? is it an 'invite-only' type thing. what determines the price?


agentm or someone could clear this up for me crazy fast... thanks..

in a rough sort of way.. this is a quick response probably full of holes and errors

1. why do companies do trading halts anyway for capital raises? what is the benefit of the halt? why not just let the trading continue anyway?

its against the practices to trade at a advantage or disadvantage, so a company puts in a trading halt, the company has allowed time for in this case a CR to happen, then it can trade again with all knowing whats on the table

2. why does txn need a capital raise? is it to secure more acreage?

not been disclosed, but imho its part of it, and to fund further wells or a more rigorous well program in unison with more acreages

3. why would a capital raise decrease txn share price? is it due to more potential debts accrued by the company?

it may decrease the sp, particularly as in most cases, the CR is at a discounted price, but.... many cases the addition of assets or the value of the project announced in the next announcement can often cause the share to maintain its value and i have seen many times where a CR has not meant a considerable dint in the sp at all..


4. i'm guessing it's a good time to buy shares in a company you like the direction of after a capital raise since its share price reaches a low point? why do so many investors sell after a capital raise and jump ship?

who knows if its a good or bad time, its really where you sit in a risk reward envelope imho.. some would profit take and move on, some would hold,, and many would also think about adding.. usually a cap raising comes with an addition of some form of pay off, and in the case of oil.. it can come quick.. so often its a case of first in best dressed.

5. how does a capital raise work? does txn get a loan from another company? or do they go to the asx and order a bunch more shares to be traded (therefore lowering the value of the share price).

texon adds shares to their register, and in this case, through a broker, allocates a price for those share, in this one its .65 and it will be taken up in a heart beat.
the broker charges a small fee for their services, and organises the CR as the company requires it, so if its only to sophisticated investors, they have a roll of many on their books that will fill a small cap raising in a few hours. if its larger it may also involve giving shareholders an opportunity to add, and in this case i believe it will happen also. so they send out forms to all shareholders and get it put away.
under a certain % any company can raise capital and not need a vote by all shareholders, i think this one will be under the requirement for a extraordinary general meeting.

6. how does one buy the discounted shares? is it an 'invite-only' type thing. what determines the price?

rbs is running this one, they will sell a % to their regular clients, and for the rest of the capital it will be offered an allotment by notice to all shareholders

 

[Magic Man]

Great answers there, what price do we expect the CR. 0.60 - 0.65 cents?

 

[Agentm]

Great answers there, what price do we expect the CR. 0.60 - 0.65 cents?

.65 is the price ..

texon has got a lot of places to expand, either through rights with seitel or with expansions into the efs.

we can only pray the sp itself tanks to .65...

 

[Magic Man]

Too buy more??

 

[Miner]

It looks like joe has relaxed the 100 character restriction.
I also noticed in the last few threads there were suggestion on the future price of TXN after the trading halt will be.
Sorry for my ignorance if earlier restriction not to predict price policy has also been relaxed.

It is time to call Johny Howard back to have comfortable and relaxing mood

disclaimer : Holding TXN and watching the behaviour of market in next few days.

 

[Agentm]

Too buy more??

indeed.. but i have a strong feeling that announcements may on the horizon that may interfere with my hopes

It looks like joe has relaxed the 100 character restriction.
I also noticed in the last few threads there were suggestion on the future price of TXN after the trading halt will be.
Sorry for my ignorance if earlier restriction not to predict price policy has also been relaxed.

It is time to call Johny Howard back to have comfortable and relaxing mood

disclaimer : Holding TXN and watching the behaviour of market in next few days.

miner as .65 is the price of the CR, which is confirmed by those whom have had the offer given, then a hope we have is that the sp will tank in that direction and we can buy more on market on top of what is offered by rbs

price predictions of the way the sp may go is merely a hope i have, its a possibility, and so the possibility a whole swag of news stops and added value item can be announced which would possibly prevent such a dream of a sp drop to occur, and we are only able to get the discounted stock that is offered by rbs solely.

my view on the matter is that texon has not been idle for one moment, and its momentum into other plays like the wilcox, pearsall and other plays in other counties are being vastly underestimated

fingers crossed the sp tanks... it offers opportunity for those whom see the value..
all imho and dyor

wilcox map for mcmullen county for those whom want to figure out how lucrative it can get

 

[Agentm]

i am pretty impressed with petohawk and with anadarko in the efs well development. recently i have been monitoring some amazing flow rates from both operators in both mcmullen and dimmitt county..

i know conoco were working hard with halliburton in expanding the cobra frac into the efs wells but these reports from petrohawk are great news for the efs operators imho

petrohawk have used the hiway frac system on their more recent wells in hawkville

go here for the slide presentation

Company Employs Breakthrough Schlumberger Frac Technology Successfully in the Eagle Ford Shale

Petrohawk implemented Schlumberger's MP7 (HiWAY) flow-channel fracturing technique since October 2010 on a select number of wells as a trial to determine the impact of this novel methodology on horizontal multistage production in the Eagle Ford Shale. The initial tests were located in various areas of Hawkville Field. The HiWAY fracturing technique combines fit-for-purpose fracture modeling, fracturing fluids and high-frequency proppant pulsations. The HiWAY method effectively creates flow channels within the fracture network and increases the overall stimulated reservoir volume and permeability.

Initial production results from this limited set of wells reflect average production increases of approximately 37% in the areas with gas and natural gas liquids and an average of approximately 32% in the high condensate yield areas. Additionally, EUR increases from the limited trial, based on internal estimates, ranged from 25% to 90% higher as compared to offsetting wells completed with conventional fracturing techniques. Petrohawk has converted 100% of frac services provided by Schlumberger in the Eagle Ford to HiWAY. Currently, Petrohawk is utilizing all available capacity of this technology.

Any changes to expectations for the Company's Eagle Ford Shale productivity and EURs as a result of the use of HiWAY will be made after additional data is gathered. The Company has released additional data on its results using HiWAY on its website, www.petrohawk.com.

 

[Kremmen]

They now have an extra 1140 acres in Eagle Ford, at 95% WI, taking them to 5640 net acres in Eagle Ford.

 

[condog]

Texon advises that Peeler #2 (“P#2”) has reached its total depth of 2,774 metres (9,100 feet). This is the ninth well in the Leighton oil and gas field – all of which have been successful.
The Olmos in P#2 has similar reservoir characteristics to the Olmos in the previous eight (8) Leighton wells.
Oil and gas shows were also encountered in shallower Wilcox reservoirs. These shows will be evaluated using high resolution log analyses techniques, combined with side wall cores and pressure data to assess their importance to the Company.
It is now planned to run production casing in the well after which the Olmos will be fracture stimulated in March and then the well will be connected for oil and gas production.
The rig will now move to Tyler Ranch #8, the third well in the current three well back to back Olmos production drilling program of Leighton.
Texon has a 50% working interest (37.5% net revenue interest) in Peeler #2.

 

[Agentm]

ASX Release

23 February 2011

EAGLE FORD

ADDITIONAL 1,140 ACRES

Texon advises that it has secured lease agreements to purchase 1,140 acres near its Leighton / Mosman / Rockingham / Sutton (“LMRS”) leases and which are prospective for oil and gas in the Eagle Ford.

One of the leases is contiguous with the Company’s LMRS leases where the Company has recently drilled two horizontal Eagle Ford wells. The first of these has been on production for 60 days (please refer to the Company’s announcement dated 15 February 2011). The second Eagle Ford well has been drilled and is due to be fracced and tested in March this year.

The other leases are located about 5km to the south east of the LMRS and there are producing Eagle Ford wells nearby.

Texon will have a 95% Working Interest in the new leases.

The addition of these leases takes the Company’s Working Interest Eagle Ford lease holding to 5,640 acres, representing a potential of some 29 mmboe to the Company’s current Working Interests.




2nd announcement

ASX Release

23 February 2011

NINTH LEIGHTON OLMOS WELL - SUCCESSFUL WILCOX OIL SHOWS

Texon advises that Peeler #2 (“P#2”) has reached its total depth of 2,774 metres (9,100 feet). This is the ninth well in the Leighton oil and gas field – all of which have been successful.

The Olmos in P#2 has similar reservoir characteristics to the Olmos in the previous eight (8) Leighton wells.

Oil and gas shows were also encountered in shallower Wilcox reservoirs. These shows will be evaluated using high resolution log analyses techniques, combined with side wall cores and pressure data to assess their importance to the Company.

It is now planned to run production casing in the well after which the Olmos will be fracture stimulated in March and then the well will be connected for oil and gas production.

The rig will now move to Tyler Ranch #8, the third well in the current three well back to back Olmos production drilling program of Leighton.

Texon has a 50% working interest (37.5% net revenue interest) in Peeler #2.
Please refer to Texon’s website for announcements by the Company: www.texonpetroleum.com.au

Oil and gas futures prices (Source: NYMEX March 2011 contracts)
Oil: US$94.06/bbl
Gas: US$3.86/mmbtu (approx. US$5.80/mcf for all Texon gas - including US$6.60/mcf for Olmos and Eagle Ford gas which currently make up 65% of Texon’s gas production)

 

[condog]

Chris Brown from RBS has just released a new TXN research paper

risked valuation $1.26
target price $1.16

Builds on the business plan - and gives the focuses as
1) new leases
2) third EFS (mosman-rockingham) + due to swift drilling one adjacent to the Leighton-Sutton field, under the terms of the lease TXN will be obliged to drill a forth EFS there.
3) Olmos development
4) Wilcox evaluation

FY11 forecasts
Rev $23.5m
NPAT $6.4m
EPS $0.031

FY12 forecasts
Rev $51.5m
NPAT $19.1m
EPS $0.085

Valuation and risks
Our risked valuation of TXN shares has lifted to A$1.26 with a stronger long term oil price,
although offset ion part by a stronger A$/US$ exchange rate. We have also increased the
valuation of the exploration acreage to allow for the drilling in 2011 of the two high-upside gas
wells, and the two vertical Wilcox wells. Our target price is discounted by 10% to A$1.16/share ?
our previous valuation. Upside to this valuation would come with further development, and
exploration success at other prospects.
Commercial production from the second Eagle Ford Shale well within Texon?s leases would add
substantial value and reduce the discount currently applied to the valuation. Success in the highupside
gas plays such as Coolangatta would also be expected to have a positive effect on share
price. With over A$20m in cash and no debt, Texon is adequately funded for its next phase of
drilling, expected to demonstrate the commerciality of the EFS and quadruple production from the
Olmos reservoir. The risks relate to exploration success, prospect size, and the oil and gas prices
in the US, as well as the AUD/USD exchange rate.

 

[AngusSmart]

Question regarding the C/r are us Investors going to get a bite? or is it to the big fish only?

i bought in just on a week ago, and am keen to get more, i need another AUT...

 

[Agentm]

ASX Release

23 February 2011

CAPITAL RAISING ACTIVE WORK PROGRAMME

Capital Raising

Texon Petroleum Ltd announces that it has successfully completed a placement of 24,166,681 million shares to sophisticated and institutional investors at an issue price of $0.65 per share to raise approximately $15.7 million. The placement, was very strongly supported by existing shareholders, institutional and sophisticated investors. RBS Morgans was the Lead Manager to the placement with the support of Patersons Securities Limited.

The new shares will be issued in accordance with the 15% Listing Rule 7.1 which does not require shareholder approval. The price represents a discount of 12% to the last closing price of the Company’s shares traded prior to the Company requesting a trading halt.

The Company also plans to offer eligible shareholders the opportunity to subscribe for additional shares under a Share Purchase Plan (“SPP”) in the near future at the same price as the placement. The Record Date for shareholders to participate in the SPP will be 5:00pm AEST on 22 February 2011. The SPP offer will be posted to shareholders on or about 7 March 2011.

Work Programme

The funds will primarily be used to drill, frac and test a fourth Eagle Ford well. The Company’s third Eagle Ford well will be funded from existing cash and cashflow. These wells are scheduled for drilling in May and June, and fraccing and testing in August. The raising will also fund the acquisition of 1,140 acres of Eagle Ford prospective leases near the Company’s Leighton/Mosman/Rockingham/Sutton (“LMRS”) leases (see separate release dated 23 February 2011) as well as 3D seismic over these new leases.

The funds will be used to frac and test one and possibly two existing vertical wells on the LMRS where the Eagle Ford is present.

Also, it is planned to drill and test the Wilcox oil shows referred to in the Company’s release of 21 February 2011 in two vertical wells, one in the Leighton area and one on

Mosman.

The Company has embarked on an Expanded Mapping Project to more comprehensively investigate the 180 3D seismic surveys for prospects for drilling in 2012

In addition to the above projects the Company plans, from existing cash and cashflow during 2011, to:

Frac and test its second Eagle Ford well in March;

Prepare and adopt a plan to monetize and develop its Eagle Ford lease holdings;

Drill seven (7) Leighton Olmos development wells;

Conduct 3D seismic over its Mosman-Rockingham leases to enable more thorough
mapping of the Eagle Ford, Olmos, Wilcox and Pearsall targets;

Drill the Coolangatta and Scarborough prospects in Q2 and Q3 respectively. These projects have a combined upside potential of 34 mmboe as to the Company’s Working Interest.


The coming months will be an important time for Texon when successful project outcomes could see an increase in the value of the Company.

 

[philly]

Question regarding the C/r are us Investors going to get a bite? or is it to the big fish only?

i bought in just on a week ago, and am keen to get more, i need another AUT...

hey AngusSmart,
yes we will. Late release to the ASX today :-
The Company also plans to offer eligible shareholders the opportunity to subscribe for additional shares under a Share Purchase Plan (“SPP”) in the near future at the same price as the placement. The Record Date for shareholders to participate in the SPP will be 5:00pm AEST on 22 February 2011. The SPP offer will be posted to shareholders on or about 7 March 2011.

65cents a share will be peanuts by the end of this year

 

[AngusSmart]

hey AngusSmart,
yes we will. Late release to the ASX today :-
The Company also plans to offer eligible shareholders the opportunity to subscribe for additional shares under a Share Purchase Plan (“SPP”) in the near future at the same price as the placement. The Record Date for shareholders to participate in the SPP will be 5:00pm AEST on 22 February 2011. The SPP offer will be posted to shareholders on or about 7 March 2011.

65cents a share will be peanuts by the end of this year

Think... and one shall receive. good news!!

 

[bbker]

I've missed out on all counts - CR and coming SPP


I wonder how the share price will look tomorrow, up to 7 March 2011 and in between.

Anyone care to speculate?

hey AngusSmart,
yes we will. Late release to the ASX today :-
The Company also plans to offer eligible shareholders the opportunity to subscribe for additional shares under a Share Purchase Plan (“SPP”) in the near future at the same price as the placement. The Record Date for shareholders to participate in the SPP will be 5:00pm AEST on 22 February 2011. The SPP offer will be posted to shareholders on or about 7 March 2011.

65cents a share will be peanuts by the end of this year

 

[condog]

I've missed out on all counts - CR and coming SPP


I wonder how the share price will look tomorrow, up to 7 March 2011 and in between.

Anyone care to speculate?

Generally after a CR, selling will increase and the sp will move towards the CR price, till the supply side returns to normal. The 1140 acre is a bonus as it immediately adds to reserves of around 20%. Thus it may help the sp to have a minimal post CR hangover.

 

[philly]

I've missed out on all counts - CR and coming SPP


I wonder how the share price will look tomorrow, up to 7 March 2011 and in between.

Anyone care to speculate?

hey bbker,
trying to pick the bottom of a SP is a difficult no its an impossible task.

As Condog says
Generally after a CR, selling will increase and the sp will move towards the CR price, till the supply side returns to normal. The 1140 acre is a bonus as it immediately adds to reserves of around 20%. Thus it may help the sp to have a minimal post CR hangover

Sometimes it pays just to be in it and enjoy the ride. There are 2 questions you need to ask yourself
do you like TXN and the way it is conducting its business?
Do you think the current SP has some upside?
If your answer is yes to both then buy it
by the end of the year whatever price you paid for it will look cheap
All IMHO & DYOR

 

[zzaaxxss3401]

Sometimes it pays just to be in it and enjoy the ride... All IMHO & DYOR

Good advice philly. I dipped in on Monday for a couple of thousand shares. I'm hoping I'll just scrape under the record date. Fingers crossed. I'll definitely be buying up big, if I made it. :