CVI 0.00% 0.3¢ cvi energy corporation limited

interesting wording in announcment

  1. 379 Posts.
    I preface this post by stating that I hold CVI and CVIO for the medium/long term.

    No doubt some of the recent entrants to CVI (and some of the longer termers, I'm sure) expected more detail in the announcement and have sold down to reduce/remove the ongoing risk that they perceive with CVI.

    More detail would have been nice. Perhaps there is more to come soon.

    I have some queries in relation to the specific wording of the announcement. MS is clearly careful with the wording he uses and, in my view, looking closely at the language used can provide useful some insight.
    1. Existing Offshore Permits - "...participation in four offshore blocks have been offered...". Offered by which entity/entities? Sonangol? Current permit holders looking to exit? Is this the confidential component? Quite possibly - and there would be very good reason to keep the identity of the ‘offerors’ confidential. However, the shorter term players in the market want the detail. This offshore development is potentially enormous. Potentially.
    2. Current Licensing Round - Previously, MS has stated that CVI did not have sufficient clout to participate in this licensing round. Perhaps the recent strategic placements have been critical in firming up alliances with "powerful Angolan groups". This is also potentially a huge coup for CVI. However, those with shorter term horizons will not yet price-in this potential - it is simply too uncertain and too long term for those with a short term focus.
    3. Onshore Kwanza - I find this one most interesting. I was of the view that Kwanza blocks had already been the subject of some focus from CVI. This latest announcement seems to carefully back away from Kwanza. Clearly, something has happened which has changed the focus. Perhaps it is the potential for offshore blocks which has caused the change in focus. Perhaps negotiations that were believed to be close to finalisation have fallen through and the announcement is keeping the market aware that CVI will keep options open with respect to Kwanza. The wording " actively involved in determining which blocks to focus on for acquisition." does make me think we are back to square one on Kwanza. Of course, I may be completely wrong.

    Having said all that, it is my view that the recent announcement is a positive for CVI. CVI management are negotiating in a setting which is in incredibly difficult in so many respects. The stakes are enormous. The risks are high. The potential rewards are high. That is the game we are all involved in. Some look for very short term movements, other look for movements in other timeframes and of different magnitudes. No arguments from me against those who chose to sell on the recent announcement – very understandable. However, my view is longer term and I’m very happy to hold.

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