I still haven't pulled the trigger on the Rights Issue...

I still haven't pulled the trigger on the Rights Issue participation. I probably will but ... as I posted earlier, I sold my entitlements worth of shares at $2.18.

It feels like someone has come in and stolen all our cash, diluted our holding and loaded us up with debt and increased our risk profile.

If you held one million shares pre GOM Acquisition, you were then given 3 weeks to find $550,000 to avoid dilution. Ridiculous. The CR was unrealistic in terms for retail shareholders.


At a SP of $2.50 and 600m SOI pre M&A, we had a MC of ~A$1.5b.

We acquired an asset worth A$1.152b ([email protected]).

So total MC is A$2.652b (1.5+1.152) less cash of A$274m ([email protected]) and new debt of A$480m ([email protected]) leaves us with A$1.898b and SOI of ~800m.

Accordingly a new post M&A SP of $2.37.


The exchange rate has now moved to 66.5c since the acquisition. So the value of the acquisition in A$ term has fallen by 70m but also our debt is now 30m less.


There is indeed tremendous resource upgrade potential at the new GOM asset and our recent recruit of deep water specialist, Mario Carmenetti may prove invaluable. However, it adds to the risk profile for KAR.


On the plus side, the new acquisition meets the BODs plans to secure KAR's future and especially streamline its cashflow into the future, certainly the next 15 years ... and with Neon development and GOM resource confirmation potential, perhaps much longer.

Accordingly, where KAR was once seen as a single asset Company with strong near future FCF but questionable future, it was not afforded a high P/E by the marketplace. That must change now.


I'm expecting announcements re new wells coming online at GOM in December and January.

I'm also expecting the Company to pay its maiden dividend next year. Whether it be announced in Feb23 at the Company's transitional 6 month year ended 31Dec24, may be a bit hopeful. THAT is what the SP appears to be waiting for.

Our FCF already looked great but with the GOM acquisition dated 1Oct23, we'll have more FCF banked before the end of the year. Perhaps A$60m? I know we have the Petrobras deferred acquisition payment of US$84m in Jan24 but a dividend of 10c announced in Feb24 and payable 31Mar24, doesn't feel out of the question.

It would certainly send a statement to the marketplace and put a little oomph into the SP.