UK 22:36 Monday, 21 September 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
I am lambasted by a chap, who pretty obviously owns shares in 88 Energy (88E), who attacks my piece of yesterday using play number 6 from the mad bull responding to hard analysis playbook - "this is not news, it is all old hat, not worth reading, yadda, yadda, yadda". Well...ahem.
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Comments
Steve
Tom – I agree it is likely 88e will raise equity shortly, however your analysis yesterday did not take into account some key points so it is nowhere near a slam dunk. I’m not holding.
At year end they had $9.6million in cash, offset by $3.6million in net payables – effectively $6million cash available. All drilling was finished in Q4 so they have no further drilling expenses, so cash burn is down to $1million per quarter for operating plus they have probably spent another $1million on labwork – they are likely down to $4million in cash, so still enough to run the business for sometime yet.
The debt they have is a Bank of America facility that is fully secured by the tax rebates from Alaska state and includes pre-paid interest so they have no repayment or interest commitments on it. The debt will be repaid fully at the time Alaska state makes the rebate. The debt is currently $10million and the rebate is estimated at $13.5million so the loan is fully covered and some money will make its way back to 88e.
The next activity is seismics – again Alaska state offers 75% rebate against this, which allows them access the BoA facility to pre-fund a large part of the seismic activity. 88E will probably need to front between $2-4million of this, which is possibly within their existing capability.
Even if it is not in their funding capacity they do not need to raise a substantial amount – possibly 5-10% of current market cap which should mean they are not necessarily going to the bucket shops and it won’t be terrible for shareholders.
They also state in their annual report there are in a funding and farm out process – at this stage a small equity placing may be better for shareholders than an farm out in what is a buyers market.
This is oil exploration – fundraising and dilution goes with the territory and 88e have been fairly transparent about the options in documents such as the annual report. Is 88e being ramped – of course, although as a shareholder you probably want hot air and good promotion if you are in the funding territory.
However I don’t believe 88e is all hot air – they seem to have a good asset and the financial position is nowhere near as dire as you indicate due to the Alaskan rebate scheme and the facility they have available to them.
I’m not buying any oil explorers at the moment, however if I decided to 88e would be fairly high up my watchlist.
addick
I would hardly describe my post as ‘lambasting’ you, but if you choose to take it that way, so be it.
I don’t see much point in adding to what Steve has written as he covers most of the points.
It’s my view you are confusing Dave Wall with your other favourite person called Dave. They could not be more different and I suggest you take a few moments to listen to some of Wall’s podcasts.