RE:Norvarg...thoughts on Valiant acquisition
Since the Valiant acquisition Brent pricing has been the friend of the combined company....just under $80 M of cash flow last quarter. Just because there have been some production disruptions does not take away from the overall accretiveness of the aquisition. The reserves are still there and the production from Causeway and Fionn will be back in full swing soon. What many seem to forget is the $500 million in tax credits and the $26 million Norwegian tax refund (which climbed to $88 million as of last quarter). The tax credits have a NPV of ~$330 million. So in effect, Ithaca paid very little in actuality for the Company and the timing of burgeoning cash flows being produced now and over the next several years will largely convert net operating profit before tax(NOPBT) into net operating profit after tax (NOPAT) for about three years. Valiant was an amazing acquisition a perfect fit and the exploration committments were mostly all farmed out with a $8 million net contribution from the farmout process. What else can we ask for. If one of these exploration or appraisal wells hits great! But if none hit great. Ithaca did not buy Valiant for the exploration potential but for the reserves and production net of tax credit an tax refund effect. The dilution was less than one quarter of the total purchase ($359 cash and debt assumption and $100 million equity. Any Valiant investors that were smart enough on to their Ithaca shares are up %40 since the acquision with much more to come. Also remember the huge production de-risking that took place. Almost too many positives to list.