Apparently (not related to the trading Halt) there was a broker...

Apparently (not related to the trading Halt) there was a broker presentation yesterday from BYE. Some very interesting points raised. The following from the Marcus Today newsletter, but I have no guilt reproducing this as I feel that everyone should have access to the same level of company information (I have omitted the MT editorial though):

It was a small affair very personal held by a broker. Presenting was non-executive chairman Doug Battersby. Doug is an old oil hand and was formerly one of the teams behind Petsec (PSA) which was taken out at a big price. This is the end game for BYE. The company is targeting to sell itself in a trade sale in around 2-years time. Big price in mind too.

To put this in perspective, last year the company raised $28m at around 7c to drill and produce from its SM71 project. In only a year the company is nearly paying that investment back. SM71 is throwing off US$3m in free cash flow every month.

The company believes that to be attractive to an industry player it needs three producing assets and some good prospects waiting in the wings. Currently, it only has one producing asset in SM71. It is currently drilling at a second with Bivouac Peak. We should get some news in the next week or so on the success or otherwise of this prospect. For BYE it is a high risk well with only a 30% chance of success. Usually, the company has around an 80% success rate. So any disappointment should be temporary. The big game is next year when it starts to drill the EI 77 Field and SM74.

Importantly for shareholders, the company can fund its exploration and corporate activity out of cash flow. It has no debt and US$2.2m of cash in the bank. The share price is currently valued at the 2P reserves on SM71 and takes no account of the upside.

The key for BYE is the use of data. The company is using technology to find oil. They seem to be able to find oil where others have failed. Technology has come on in leaps and bounds in the last few years, and this has enabled BYE to make these discoveries.

The company is also very patient and happy to wait for others to drop blocks and make a quiet move to consolidate areas. This has paid off. Still the strategy.

One interesting aside is the changes that Trump has brought into the region. The previous royalty environment dropped from 18% to around 12% under Trump. Big help. Also too has been the lodgement of large environmental bonds. These were heading into prohibitive amounts, but under Trump, these have returned to far lower levels.

The company is very efficient with its development costs. Gross find and development costs were around US$13 for SM71 which with oil at US$74 is a pretty good profit margin.

Interesting too was the talk on US gas prices. Currently around US$3.30 with some predicting a US$12 price. Battersby suggested that this was a little optimistic but a harsh winter in the US could have a significant uplift effect on prices.