Given this thread is dead for a while I wanted to check feedback on Selan’s takeover by Antelopus. Seems like a very seasoned management backed by Oaktree (oil companies: Oak Tree-backed Antelopus to buy controlling stake in Selan Explorations - The Economic Times).
Antelopus Corporate Presentation.pdf (1.5 MB)
At the current valuation if the management is just able to ramp production and deploy the cash in acquiring oil fields that could be a game changer.
Could only acquire an additional 9.46% position in the open offer apart from the 30 odd% from the promoters. So they would have c.a. 40% ownership in the business.
New board constituted. Some heavy hitters out there. Waiting for new business plan/direction.
Hi, thanks! That’s some great insight If the management does their part well, it could turn out to be a good investment. .
The burden of royalty has increased drastically on SELAN and it is hampering their profitability.
If any members can shed light on this, will be helpful 
(as it is conveniently omitted from notes to accounts in AR)
Are the new promoters in any way linked to the previous promoters? Would be interesting to see, if anyone has valued the oil reserves for this company, to reasses the valuation. I’m here because I believe we might see a massive rotation from tech to value and this perfectly fits that criteria.
I have tried to summarize my understanding of the business and catalyst in this post. Hope this helps. A small cap with a potential to turnaround - by Pawan Kaul
Fully agree,
Disclosure: Invested
Great write up Pawan. We are also seeing a lot of chat about underinvestment and lack of supply in the energy sector globally, which could be a good narrative going for Selan. My thinking is once the market fancies the narrative that we need more supply in the energy sector, these exploration stocks will start to do really well. Did you come across any good articles which show clear interest from the GOI to reduce oil dependence and the steps and reforms taken in order to move in that direction?
Around the industry section in my piece you see regulation evolution. Check out the Ministry of Hydrocarbons (https://dghindia.gov.in/) where you will find a lot of data.
In particular, GOI’s DSF III proposal is an important one to read up on. Business Standard has some good coverage (the good, bad and ugly) on the O&G space that’s worth checking out.
You can also check out competitor presentations such as HOEC and Reliance’s O&G presentations.
Hope that helps.
DSF III Proposal.pdf (2.5 MB)
DSF Round 3 auctions_ 32 contract areas comprising 75 discoveries on offer _ Business Standard News.pdf (1.3 MB)
DSF-III likely to see more oil and gas discoveries, fewer new players _ Business Standard News.pdf (870.5 KB)
Why would promoter exit a business at Rs.200/ share (306cr mkt cap). They have around 185 cr of liquid asset. A business generating so much free cash flow(on a consistent basis).Makes no sense to to me
Well the promoters haven’t completely exited they still hold 10% position in the company. Check the open offer documents and letter of offer. So they are still economically still aligned.
I am not sure why the promoters haven’t been able to create value (reasons range from macro to a lot other things see earlier posts) over the last decade (that’s where price has been).
The risk could be a) the cash on books is fictitious. Possible but when a pe does a transaction they need a big 4 diligence report so I hope and believe someone has checked bank confirmation. b) the promised 2P reserves aren’t there. Possible but I am relying on the management to have done adequate commercial diligence (after all their incentives are tied to fortune of the business ).
For me the valuation handicaps these risks but one could take a different perspective on them.
Still makes no sense to sell at dirt cheap value. Why not announce buyback or special dividend ?
Great questions. I have no clue why did they not opt for buyback/dividends. Just summarized the facts and my observations on it.
The setup is interesting for me to keep a tracking position on the name and build/exit a position as and when facts emerge.
Disc: Invested
Maybe they feel that the new promoters can bring in more value as p2018 mentioned (reverse merger) and do a better job at selling Selans story to the market. Narrative sells better than the actual value today. The new promoters may also convince foreign investors to invest long-term, thereby attracting long-term capital. Seems like something is brewing and there lies good value ahead. I felt buying into the dark would pay off considering the downside risk in terms of the price being very low at this point. Curious if there was anything suscpiscious in terms of the cash and investment positions they’ve been growing over the last decade? Any news or reports of it? I could not find anything and I am assuming it’s all safe there.
Has anyone looked at these news? I mean both these can be very impactful for the company, right?
With first news, now Selan is no more bound to sell the Produced Oil to ONGC. They have a dispute ongoing on price difference. Somewhere in their past presentations it was mentioned.
With the second news below, the new management has shown intent and started taking steps.
Waiting since ages to see the stock turn around.
Q1 FY22-23 Results are out - Brief Snapshot on quarterly financials
Overall Excellent set of numbers by Selan Oil
Disc:- Invested recently post excellent analysis by Pawan Kaul
Posting a quick run down of analysis on numbers. Mostly driven by higher realizations.
Latest Annual Report is out with AGM scheduled for 15th September. The first time that new management will address shareholders.
