* it will mean consolidation of what will eventually turn out to be 100 mmbo+ oil field.
* it will mean said entity will have production capacity of 45,000 bpd from said giant oil field.
* it will mean that we will have a tax holiday for the remainder of 2013 and as the current MMT CEO has suggested...we will have favourable tax outcomes beyond 2013E.
* we will become an indigenous oil company whereby 51% will be controlled by the Nigerians and 49% by others. The Nigerians will never be allowed to sell their shares on the open market until the time of an eventual buy-out...my guess it the Chinese...as they would lose said indigenous status at that point.
* the only way that the Nigerians can actually get paid as the company progresses then is through the regular dividend payments. The company would then be encouraged to increase the regular dividend as the Nigerian share-holders will be required to maintain a 51% controlling share in terms of the corporate structure. That means that we would expect, over-time, increases in the regular dividend.
* it would mean a favourable operating and tax bias on a go-forward basis as well as any IOC blocks for sale or Marginal blocks up for bids would be placed into the hands of the "local oil companies" and we would thusly be classified as one.
* the proposal under the current PIB is to decrease on-shore tax rates from a current max of 85% on profit oil...current blocks...to as low as 50% for said "local oil companies" operating marginal oil fields. Keep in mind that the current tax is 65% on profit oil for marginal field producers.
* we would need to fund a divy for twice as many shares at said merger point so that would require more cash flow but that will not be a problem as the pipeline is being cinstructed now and that will take us to 3x our current production and more in time. The Nigerians want the deal to get done sooner than later as they do not want to see MMT collecting 62% to 80%+ (app) on a cost recovery basis once the pipeline comes on line. Getting the merger done sooner rather than later makes sense.
* MMT share-holders would need to be compensated by a cash transference from the Nigerians for them to be able to take a controlling interest in the company.
* the company would then seek a listing on the AIM and TSX main board and likely to a smaller share roll back so as to get it qualified for larger fund holders to buy...$3 to $5 range...and also make it marginable.
* once the transformation is completed you have will have a 1.5 to 2 billion dollar market cap company that sits on a very large oil asset with tremendous production and cash flow all the while having the highest net-backs in the country for any on-shore oil block for the remainder of the year. That cash and cash flow would be utilized to aquire one or more assets to set the stage for the next growth cycle in the company.
* you have a real chance to run the table again with MMT.
* do you think I have put some time and effort into this post and thought process?? The FE report and this post and the actual MMT drill results say all that you need to know but as always.....
.....you can use or flush!
I will let the critics and the doubters doubt....me....I just go out each and every-day to make some money!
Oiljack
Re: What would a merger mean to a MMT shareholder?
1. A special one-time dividend, likely ... so cash in hand
2. Indigenous Tax status .... so more net income
3. Streamlined decision making process ... NRs that on take 2x as long as they should rather than the current 5x...
4. Greater incentive to drill wells, as no more cost recovery oil .... so increased prod, faster
5. Opportunity to bid on additional properties as a Nigerian entity ... so greater ability to build the company
6. TSX/LSE listings as a $1.5 billion mid-cap energy producer , maybe ... more investor exposure = higher SP multiple
Etc., etc., etc