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DB on CIE: Cash is KingDB on CIECobalt – Sale of Angola assets to Sonangol for $2.15bn (inc recovered CAPEX) While not the deal anticipated, we view the sale as a significant positive for the company. Although removing some of the potential L-T upside, the move further capitalizes the company at a difficult point in the cycle addressing market concerns on execution and financing risk, while preserving a high-quality development queue of attractive assets in the US GoM. The $2.15Bn total consideration ($1.75bn headline and $400m capex recovery) is slightly below our assumed $2.4Bn (at $80 long-term oil) valuation, and implies ~$70/bbl LT (~$65/bbl ex-2015 capex recovery). Although the move trades some of the LT upside potential for current cash in hand, we view both the valuation and strategic implications as positive. Future execution risk is reduced materially, while financing concerns are effectively eliminated, with ~$3.75 Billion in PF cash and the forward cash burn reduced to $500-$600m/year (vs. $1.0 Billion previously). Separately, we note that Sonangol has to date not operated any of Angola’s deepwater blocks and see potential for the sell own of its now extended interests in Blocks 20/21. |
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Msg # | Subject | Author | Recs | Date Posted |
219 | Re: DB on CIE: Cash is King | delt1970 | 0 | 8/25/2015 10:41:23 PM |