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DROSS - what mask... oh come come DROSS you know what I refer to and you wear it sooooo well.
Toodlepip x
EggChaser1
What mask?
Keeping my posting to a minimum - I see DROSS is back. Shame as I was enjoying the peace - especially as the same old humdrum BS is still being peddled.
Amazing that someone that’s allegedly so successful in trading should so much time on what they think is a dead duck. DROSS are you ever going to appear from behind the mask??
Bully - utter nonsense on this nugget....
Sorry but that is ridiculous. Simon Potter can wish all he wants - he’s not recouping the $150m spend. That’s like me saying I spent £100k doing up my house so I want to recoup this even thou the house is only worth £75k as per estate agent valuations
Simply - just for you - no one knows what was found at P1 so quite how you can place a valuation is again utter BS...
Wait till the results are published before posting pish as they say north of the boarder..
Toodlepip x
Bully as per the words of Mark Twain " No matter how much evidence to supply you will never convince idiots"
B1985 - "anyone thinks they are getting $65m from a major to come and farm in they are out of their tiny little minds"
I agree, it should be nearer $100M ;-)
Glad thats cleared up. When you said "YOU" it read as though you were directing that statement at me alone.
Bully I don't know whether you have misconstrued my 2 posts this morning or if you are just saying in general that if "anyone believes a company will pay $65m to Farm In" then they are out of their minds.
Bully no official price has been assigned to the Bahamas Licence valuation or cost of a potential Farm/Out or JV agreement.
Based on the 2 video interviews the CEO has conducted since Feb 8th, I have inferred from his comments that BPC see the $150m they have spent on the Bahamas project needs to be recouped/monetised and so any Farm In/Out JV with a 50/50 split could/would come at that cost.
As I have said, if that figure is not what BPC are considering and it is indeed far less, then it would raise the likelihood of a potential JV in my opinion. Again a JV would be to pay to continue to jointly explore, rather than share production revenue because as yet, there is no production revenue. And if another well is drilled and discovers commercial quantities, it would require a further well to appraise and produce. Which would be fair to presume would push the cost of licence maturity close to or past $200M based on drilling costs alone.
This off-shore game is too expensive for a company like BPC to be attempting in my opinion.
Nice to see more constructive debating occurring and less insults. Personal attacks just distract from whats important; company operations.
Bohemia no matter what way I slice the numbers I find your summation to be in the realistic ball park. There is a financial shortfall and whenever that is the case, I find its better to have the placing debate rather than deny the possible of a one.
At least that way if one occurs, its expected and one is not caught off-guard.
This shortfall appears to be only generated from costs incurred from the Bahamas operations. That being said that is still outstanding debt that cannot be ring-fenced. Starchild provides clockwork financial breakdowns so its pretty easy to do rough calculations.
I am optimistic about production increases in T&T now that BPC is focusing all resources there. I am also hopeful that all 6 IT wells are now adding to daily production. It would be great to read news that production increases is generating enough income to meet some of the outstanding debt and that may help with negotiations regarding the settlement of those debts.
That being said we all know how ruthless financial lenders can be. So a issuance for them to their sell the stock to recoup their fees is logical.
With respect to the Bahamas, every time I read that basin report I get a little more information. I am using it as a data reference tool to help manage my expections. Advances in oil industry tech certainly makes sense where its financially viable to re-sweep areas & re-anaylise & update to see if targets were missed. However when previous operations were conducted by oil giants with relative unlimited funds it doesn't fill me with confidence.
The question I am left asking myself is why would a company pay circa $65M to Farm Into a non commercial find?
If the cost of a Farm In/Out was $100k or half the cost of the Bahamas licence renewal, ok its feasible to believe a company might take a punt. But $65M is twice the value of BPC's market cap & that kind of figure is usually given to a proven asset. I cannot hold the belief that 4 unproven licences are valued at 2x the current company valuation. That would then take the market cap to £100M based on current reported production of 450bpd with P2 reserves of 1.29m.
I retain the opinion that WHEN a commercial discovery in the Bahamas is made, a Farm In/Out will occur.
I don't see a JV exploration agreement possible with a buy in cost of $65M.
My suspicion is that the BOD had an offer(s) prior to P1 regarding a JV / Farm out. It seems too far fetched for me that they would throw their entire capital at a 1 in 3, without some form of assurance. Maybe they’re just renegades? I doubt they are. They know their game.
In a crude layman’s take. If P1 is absolute dust, no deal. If P1 finds a WPS, a sensible deal. If P1 hits the sweet spot, then a mega deal. And so on.
Position today is not perfect, but is not a write off either thanks to Columbus.
Cash in hand is transient as with any business. Cash coming and cash requirements are the focus. Farm in then we have cash a plenty. No farm in then we borrow and tip toe our way. Either way, there is a way. To be short here requires a nerve of steel.
My bet is on Old Macdonald.
Cheers
Patoir
or another way of looking at it is there is a bid war, as farm out potentials wont line up in an orderly queue, wait for a noddy court result.
BPC had unsolicited Major interest - so players they had never contacted before, who may have known little of the play, but P#1 result perked their interest - why was that?
Its all coming to a head, then we shall see.
I will accept there might be more to the well results. However I don’t believe a farm-out is around the corner, imminent enough to be a solution for their short term finances. These processes take time - I would think six months minimum. A partner would also want to see the court case resolved and understand the politics, especially if you think the partner would upfront pay substantial cash to BPC. I think just a carry, therefore limited commitment from the partner until a new well is permitted, is much more likely to be the form of any farm-in.
But even this option can’t progress beyond the finances. If BPC want a renewal they need to pay the licence rent ($0.4m I think in the past) and maybe a signature fee. If they can’t convince new investors of the Bahamas’ value (likely before any farm out occurs) they won’t be getting refinanced in my opinion and therefore they won’t be getting the renewal in June.
I also think there is a chance that, if the government want to wash their hands of BPC and deny the renewal, they could make an argument BPC didn’t correctly budget and finance the required drill with adequate contingency.
Bohemia
A tick up from me as the finance aspects you outline are real and urgent.
BPC obviously know how may pauls they can rob to pay Peter - they are assuming farm out will bail them out to whatever value or deal that can be gained .
P#1 wasnt as you describe IMO, they had to drill or lose the licence:
"I’m afraid I think P1 was essentially a worthless exercise - historic spend is no guide to the value of an asset and we know how management have talked up a farm-out in the past."
Because the results of that drill are substantial - analogous play to GOM - at 500m sea depth rather than 3km. previous farm out overtures I agree achieved nothing, but drill data is a step change that allows total recalibration of all models - Jurassic play is possible - BPC are upbeat for a reason.
Neither you nor I can be proved right until farm out is called either way, we wait.
Bohemia
I don’t have a lot of time for the BoD, suspect that the Bahamas are a busted flush, have a justifiably jaundiced view of the ex-CERP assets and expect the funding situation to prove more problematic (and the solution less shareholder friendly) than most on here believe, but on balance (if I had to choose) I would rather be long than short at 0.45p.
I keep seeing the attitude that, even if the financing position needs to be fixed and the news is difficult, the downside to the share price is limited and it will then move higher to 1p and beyond. On the other hand, I’ve said that I am short BPC at 0.45 so clearly I don’t agree with that view. I’ve sort of held off posting my reasons - I’m not really wanting to be a “deramper” or be responsible for anyone’s positioning, but I think the true position of the company will be clearer on Monday so it makes no difference now. Either I’ll be right or hold up my hands I was incorrect.
I’ve stated what I think is the company’s funding position: they’ve raised $55m since 2019 and their spending is $45m on P1, $7m on G&A and $12m on other corporate/merger/legal costs. So in order to settle all their bills they need another $9m. Then they need $4m for 2021 G&A . I don’t believe production covers this, and in fact I can see the $3m cashflow being used up on infill/workovers to sustain production and other costs I keep finding (they owe Touchstone $200k and they have decomm to do in Spain probably in the 1oos of $k). And they need $3m for S2, and they may need $3m to settle up with LO.
All In I think they need a fundraise of $15-20m, and this will be exceptionally challenging. I don’t think it can be less that that: no-one is going to give them money that only pays off the debts but doesn’t give them funding to move forward. $20m would be difficult for a £26m company. In one sense, IIs will buy in a discounted placing if they think it’s enough of a discount to sell the shares on to others (PIs) for a quick gain - but $20m would be a lot to shift to the current LTHs. Otherwise taking the placing is a fundamental investment, so the question is - is 0.3p or even 0.1p attractive?
At 0.3p, with $20m new money and the £5m of debt, the entry point for new money would be enterprise value of $47m. At 0.1p it would $34m. Are these valuations attractive enough for IIs to get onboard with a management who’ve been too willing to issue shares like confetti (as went AAOG, UKOG), have little experience themselves with Saffron and their T&T assets, and just went $10m over budget on P1?
I believe in a harsh but bottom-line valuation, the existing business is nigh on worthless. Low output wells that just about keep the lights on. What would you pay for any business that has a view cash-positive assets but burns all that cash keeping the head office lights on. I also don’t think IIs will put any value on the Bahamas - rather just want that sitting there as upside: I’m afraid I think P1 was essentially a worthless exercise - historic spend is no guide to the value of an asset and we know how management have talked up a farm-out in the past.
Basically the value of the business is Saffron: is that worth $47m or $34m. To me it’s debatable with S2 needing to come good. So there it is. If I’m right about the cash I’m unconvinced they can solve the shortfall at any s