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Do we have a date for this dilution to happen?
Bully - "CERP can survive for almost one whole year without any revenue or cost saving"
In La La Land, maybe, but in the real world it doesn't work like that. I knew what you meant but it's a nonsense scenario.
The secret of survival for CERP is simply printing money each month (shares) in order to pay it's bills. Do contractors earn a premium for accepting share payment in lieu of cash? There must be some kind of incentive I would imagine, otherwise why do it?
If CERP had to pay all its debts in cash then I doubt it would remain viable for long.
Bully - which is it? lol
11:54 "If we start to take into account revenue"
14:48 "I am not taking into account revenue"
No need to answer ;)
Bully - "CERP confirmed in March 2020 they have £2.56m in cash with a further revolving credit facility with a further £1.5million available."
As regards the cash balance, you are reporting a GBP figure which is actually in US$.
"Cash balance of US$2.56m, including US$780,000 in restricted cash (as at 31 March 2020)"
The Lind medium term funding agreement is not a revolving facility.
There are conditions attached to the third tranche.
"Right to drawdown an additional US$1.5 million provided: (i) the Company's market capitalisation is above US$25 million ; and (ii) the outstanding borrowing from Tranche 1 and Tranche 2 is less than US$2 million ("Tranche 3")."
How can you take into account revenue when you don't know what it is?
I have no doubt that CERP can continue indefinitely as long as they can continue to issue shares in lieu of payment in cash.
There are material uncertainties around Innis-Trinity, Goudron IPSC renewal and success or otherwise of S2 drill.
The current sp could either be cheap or overpriced. Time will tell as only hindsight is a perfect tool.
LLL
There is always the possibility that in the current economic climate PRD may not have US$4.2m available to exercise the option to acquire FRAM within the permitted timescales. In which case if the CO2 inject program is successful this might benefit CERP in the longer term. I'm sure the CERP BOD would appreciate the cash injection to put into other more exciting projects at the moment but it's not a disaster if it doesn't happen. As i'm sure you are aware CO2 injection is a tried and tested method for extracting final reserves from EOL Wells and initial testing has been positive so not sure where you are trying to go with this?
'arry/in4cedros - "you forgot to mention the extra share issuance if PRD pay the $4.2 million on exercise of that option"
I wouldn't hold your breath on the likelihood of PRD taking up the option to acquire FRAM. The US$4.2m is often mentioned by certain posters as if it is a given. If it does take place then of course the funds would be a massive boost for CERP which I suspect is running on fumes and issuing shares simply to survive.
This is what PRD has to say on the matter in their Feb 2020 prospectus :
Under the WPA terms, the Company has until 30 September 2020 an exclusive right to acquire FRAM for an agreed cash consideration, subject to all regulatory approvals and consents. There is a risk that the Company fails to proceed to acquire FRAM due to technical reasons, if the CO2 EOR Pilot Project fails to deliver enhanced oil production and the Company’s share of profits;CO2 cannot be injected as currently envisaged;lack of access to financial resources to complete an acquisition;and/or failure to receive regulatory approvals and consents for the acquisition which may take into account in-country sensitivities regarding ownership of natural resources. In such circumstances the Company will only continue to receive its share of profits from the CO2 EOR production under the WPA but will not have any rights to actual production or attributable resources to the remainder of the Inniss-Trinity oil field not covered by the CO2 EOR Pilot Project,as would be the case if an acquisition of FRAM were to proceed.
There is a risk that repatriation of the Company’s net share of profits in USD from CO2 EOR operations in Trinidad under the WPA may be irregular and delayed if there is a shortage of available USDin the Trinidad and Tobago banking system for conversion of TT$.
The profitability of the CO2 EOR Project is substantially dependent upon negotiating favourable commercial terms with Massy for the initial volumes of carbon dioxide required to enhance existing oil production in the well or wells selected to test the potential for the application of this different technology in Inniss-Trinity.
The ability to upscale profits from CO2 EOR production in accordance with its business development strategy,in the event of a successful CO2 EOR Pilot Project,is dependent on: (a)the Company being able to finance an acquisition of FRAM and (b) Heritage receiving MEEI consent to proceed with the CO2 EOR Pilot Project. Failure to achieve any one of these objectives could materially limit the commercial opportunity for the business development growth potential.
LLL - you forgot to mention the extra share issuance if PRD pay the $4.2 million on exercise of that option - I still can't believe how you've viewed that as a negative historically - did you forget or have you wised up?
LayLadyLay... I think you need to be LaidLadyLaid... might sort some of your frustration out.. (unless you are a minor of course)
LayLadyLay - very funny - we are going up end of
The next batch of shares to be issued to contractors, Lind & BoD must be almost due.
Lay LL a refreshing honest posts,without the nasty name calling that other mental regards use against posters,there some time yet to spud s 1 twin 2 I expect to get my entry point for top up near to 1p keep up the posting I look forward to honest news.
LieLadyLie just opened another short and want to create panic amongst new investors, LTH know his/her tricks inside out. Nothing new though. O&G investment is based on resources, reserves and potentials so ignore the noise these flies make and carry on as normal.
GL all
You always get one or in our case possibly two or even three. Where do these people come from? La La Land? Perhaps that's what LLL stands for,any thoughts.
Bully - "asset sale expected by end of June for $4.2million"
I suspect this is a red herring. The deadline keeps being put back and I can't really see Predator seeing this as a prime acquisition. But stranger things have happened so we shall just have to see, but don't be surprised if the deadline is again moved back again. It's a carrot that is good to have in the background to keep investors wondering.
If Predator does take up the option, much to my surprise, then you have to factor in the loss of the asset to CERP and also CERP will have to issue additional shares to the sellers of Steeldrum as per the terms of the sale to CERP.
Good morning CERP-84.
As always, the proof of the pudding is in the eating. Whatever the outcome of S2 it is bound to be interesting.
Pure speculation on my part but it occurred to me that 'perhaps' the difficulty experienced with S1, necessitating a second drill to prove up LC, may in part have been attributed to something that happened during drilling. There's no doubt that the drill took an inordinate amount of time. This leads me to believe, and I stress this is speculation on my part, that the free carry for S2, in return for a share of anticipated spoils, may in part be a form of recompense to CERP and not solely motivated by the future prospectivity of the area.
Good Morning LLL,
There is always an element of risk with any investment of this type but IMO the risk with CERP is offset by the fact that they do not have all of their eggs in one basket. In addition, the fact that LK has offset the Saffron 2 drilling risk by using the same contractor and pad is a clever move. Lessons will most certainly have been learnt on S1 and the fact that the drilling contractor has agreed to finance the drill indicates they are very confident of success.
If i were a betting man (which i'm not) i believe that the odds are stacked in CERP's favour, and that this is not a 50/50 gamble as you would like to suggest....
ATB.
And lots of it IMHO.
Publication of annual accounts have been put back by 3 months to September. I can't imagine the numbers will be pretty and this is for a period before Covid-19.
There is some cash in the bank but in real terms it's not a lot; not enough for CERP to be able to pay its way in cash.
What will happen if S2 doesn't deliver for some reason or if it's delayed until next year? Would a duster be followed up by another free carry? Risk assessment!
Will a continued low oil price environment force CERP to raise funds?
How long will contractors be happy to receive payment in shares? What's in it for them?
Will Goudron IPSC be renewed? What is current production?
There are more questions than answers at the moment but operational and financial details will have to emerge sooner rather than later as investors are having to trust based on future projections and limited or no information on the health of the company.
The future could be good if S2 delivers but it seems to me to be a throw of the dice that has a 50/50 chance of success at best and maybe I'm being optimistic. S1 has shown that SWP has potential but there's much to be done to prove the commercial value. Dry oil is ideal, if it can be found, or else lifting costs will escalate if there is a high water cut as seen in S1 MC.
Interesting times ahead. Stick or twist? Your choice. atb