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Art is 54 - really?! That is far less believable than £24 per share :-)
Apologies there was an error in formulae - my bad, now sorted
However, the now accurate options are below. But, and this is critical, my calculations are for a sale price this year and sooner rather than later.
The sale price is for the new asset not including any other aspect of the business. Basically, to buy the P2 reserves based on the Inbound CPR. As crazy as it sounds the metrics are conservative and based on the current going rate.
If an oil major wishes to wait to be sure, they will almost certainly pay more - see Black Stout post.
So, as I see it, very big corporations with very deep pockets and human nature collide to purchase a US core strategic asset at the lowest price possible. We are not I don’t think in that habit of buy one barrel get one free therefore any suitor pays for every barrel.
On that basis, take your pick below
$5 14% 1.6 billion barrels = £3.98 with sale price at $1 billion (and change) - given recovery is more likely to be 40% with the gas flood and $10 more likely price for p2 reserves currently
$10 40% 1.6 billion barrels = £22.76 with sale price of $6 billion
But, I hear you say Art is likely to be conservative and the upper 1.9 billion is likely to be less than the confirmed CPR, Art is understated so let’s take 1.9 as the possible mid point of the new discovery following CPR release, still $10 and 40% recovery and an immediate sale now we have £28.83 with a $7.6 billion price tag
The purchaser though at $85 WTI has excluding opex, capex, tax, gross figure $64.6 billion. Given POO is increasing steadily and notwithstanding anymore global shocks will keep rising in the next decade (with significant negative impact for millions in the real world) the asking price paid quickly now seems utterly reasonable.
I sense people are now starting to come to terms with the enormity of this and setting aside the incredulity of such large numbers are now seeing calculations set out more reasonably
Suggest a hold way way way beyond £10, a purchase is a purchase, pay at time of sale.
Very exciting few months ahead.
Ok so here we are, I’m all our different guises. And all so what agreed for arguments sake or fair value without discovery of £1 - £3
The new discovery we are all reckoning prices, again for arguments sake from £3 - £30
Now short term we should be looking to attack £1 just to get close to what we already have.
Short term we also may confirm a huge oil discovery.
Long term that discovery has the potential to bring us those higher estimates 1-3 years say.
Arthur is only 54 years old and on a good salary of nearly 400k a year, not including his share option value and personal assets. Basically he’s alright for cash.
I don’t think he will be selling this company at this stage or soon unless it’s a very, very good price. I think he wants to become a proper oil man leading his own major company and retire / sell, feeling like he achieved his goal.
Which is why I’ve been thinking he might do or has done another placing ( he’s got new drills to fund, licences to acquire and Cuda to buy, manage his borrowing and running costs etc etc, plus it’s been a cold winter with lower production. For now.
He’s not going to hang around to save up bit by bit. He will want to go full throttle.
Right now the market has our lower production figures, a unverified discovery and a history to look upon, recent placing shares to shift and also Atomics owner cashing in his shares as well from the sale. And this is all set to change in a heartbeat.
I guess what I’m saying is there is only really two options if this cpr confirms what he said.
1) we go it alone, have a few raises on the way up and within 2-4 years look back from many multiples. Easily £10 _ £15 share even with more dilution. Now, 10k invested now to be cashed in at those figures is a seriously good return for waiting a year or two.
2) Majors, the real financial guys looking at the risk / reward here, the big companies. This is on the radar, it has to be. They will be watching and talking and planning, and are most likely. There is a real chance of a takeover or JV etc, but Art won’t be giving it away, he is not a stupid man.
3) “acts of god’ will always be there, there is always a complete unknown that can change anything. And can’t be planned for. However climate change will increase the oil price as sea level sites are lost or abandoned. Countries will look to produce more on their own lands. Oil is here for a decade easy. Too many vehicles and needs for it not to be a commodity for a good while yet. The transition to new energy is coming but it comes way past our peak operation targets a few years away!
As so many shares in private hands I feel the real short term risk is looking past the short term manipulation and holding on to your holding. Stop losses will be attacked I’m sure.
In conclusion, for my Sunday thinking, and for the above, we must be at the edge of some real major change.
Nigeria always lurking.
When it comes to valuations, MM’s have there own rules, COPL v 88E as an example.
Lots of calcs and opinions when we get there, 1-5 years.
However, who is to say that once CPR confirmation, the MM’s price the lot in even before a single drill has turned?
Even with increased BOPD we could get quite crazy very quickly.
Watch COPL when all is confirmed and we are on Bloomberg.
Would I accept a low ball take over of £2 in 6 months time? Probably
Would I happily wait for 5 years for £22.24...Definitely.
Different people will have different targets and aspirations and timescales to others.
Of course the landscape may well be entirely different in 5 years time as we slide inexorably to a lower carbon future.
Carbon Capture - do not under estimate the difference in the value this could bring to our new oil find. The US Government pay $30 per ton sequestration.
A few local heavy CO2 producer, fertilizer plant or Power plant Co could pipe 15000 tons per day to sequestrate.
$30 x 15000 tons pd x 365 days = $165m pa.
Not a small figure, but combined with our Green/ESG credentials would be excellent. Money from Uncle Sam looks good as it is guaranteed payments.
Do not under estimate this side of the business, it can add hugely to the EV of the company, long term.
I’d be happy to take these valuations and half them so that someone else pays for and fast tracks development for 50%. Otherwise we sell. Can’t be bothered with the slow ramp up over 4 years.
Black stout - my spreadsheet on goes to 100 bags - that is a lot more calculated columns…
All good buddy :-)
@AJEP, I absolutely appreciate that post and take your comment on board re the name calling. It was a rather immature comment on my behalf. And yes I agree in relation to the the value of this board. GL to all investors. Lets see what the following weeks and months will bring.
And that right there black stout is what I am talking about. What a great well reasoned post. My working are on a sale basis, the fore short term. I now look at those calculations and think that looks likes a much better strategic direction.
Food for thought - onwards and upwards
Hi Bones, apologies if it seems I took offence. I really enjoy the level of debate on the board and think perspectives can be challenged without the ‘looney’ name calling. Looking on other boards they frequently descend into personal insult which is unnecessary. No harm done, this is not personal, I and others just like to focus on a good debate. In the end each of us is looking after their own hard earned and will act as individuals. However, this bb can support all making the best choices.
Onwards and upwards - loads of good things to follow at 2, 5, 10 20 or my favourite £22.24
I thought I'd throw my hat in the ring if we're looking at potential valuations. Starting with a look at the potential revenue and profit at the planned optimisation period just on the Federal Deep Units in say four years time.
From the data we have 51sq mls @ 3wells/sq ml which gives us 153 wells in total.
The wells should produce between 1000 and 3000 bopd we're told. So say using 2000 bopd average we get.
An annual production of 2000 bopd X 365 for each well which is 730k bopy.
Total production from 153 wells is therefore 153 X 730k bopd giving us a total annual production of 112m bopy.
If WTI is $83/brl that's about $80brl net. So on that assumption annual revenue is going to be 112m bopy x $80 which is $8.96bn
If we're bullish and say COPL's WI is going to be 85% then COPL's revenue would be $7.62bn. So to my mind on that basis I have about $3.80bn as COPL's annual profit before tax and roughly $2.70 bn net profit or "earnings" after tax.
If that's right and you use a p/e ratio of 15 we get a Market Cap contribution for COPL of 15 X $2.70bn which is $40.50bn. $40.50bn is approximately £30.00bn at today's exchange rate.
£30.00bn is close to a 45,000% increase to COPL's current Market Cap. Or 450 bags from here in say four years time.
If we allow for some equity release and say COPL might have 250m shares in issue then Federal Deep's contribution to COPL's SP could potentially be 12000p.
If you do the calculation using an Operating Netback and use $50/ brrl with no more debt and WTI at around $83/brl your answer should be about the same.
This is just a paper calculation for the Federal Deep Units in about four years time as things stand. However I'm in little doubt things will change. The price of oil will undoubtedly change which will make a huge difference for instance. As will restructuring COPL's current borrowing facility which I believe we're about to see.
Just my take.
For me, a target of £1.50 would have been acceptable pre-find.
Doug, I take your opinion on board and certainly don't disagree. The problem is none of us really know where Art's head is at. I don't think he's some Guru/Oracle, I think he's gotten very lucky and he probably knows that himself which makes me inclined to believe it wouldn't be impossible for him to decide to do a cut and run deal.
Now loonies… treading very heavily there especially as I cannot see any alternative costed calculations in your post…
I have created and factored in all knowns to the estimates, if other aspects to consider arise they will also be included.
Just to confirm a looney calculation and please do pull it apart based on the aspect you believe are not reasonable - by doing so it will become more reliable
Absolute conservative estimates here although NO timeframe included
CPR confirms 1,000,000,000 boo
40% recovery rate
$5 per barrel p2 probable reserves
Assuming a t/o for this aspect of the business only
194,000,000 shares
Exchange rate .736 £ to$
This equates to
Individual share price $20.62 = £15.18
Market Capital $3.6 = £2.944 billion
No angle here just invested and seeking to calculate the return.
who knows with what we have witnessed on copl for the past 13 months Harry
kaboom it should lol
I for one would not be surprised, such a huge volume , we could see a 3 mile
lateral placed into it , 1-3 mile laterals common in the states, 3 miles of oil
exposure v a 50-200ft vertical depth well , can throw some curve balls lol
and ps , mentioned it a few times , we have a Wyoming 8000 bopd well drilled
not that far away from us , for balance 2000bopd common but some lower
also.
Right things to do
manyana banana's
Tradinglad, would agree with hostile buy-out from small investment house / hedge fund for IF the field figures are half as good as they are thought to be as then would possibly elevate the oil to almost a strategic asset level.
Disagree though with your suggestion of AM bailing out at £2 as the numbers then don’t compute ie. £2 x AM’s current share holding does not afford a private jet.
Hence why I see AM trying to keep a tight grip on this.
Which then makes it quite awkward for us shareholders, as no serious O&G players imv would settle for just a NOP slice of the cake, considering their commited interests towards shareholders compared to AM’s lack of concerns. And of course those dire communications issues.
Then puts you thinking of field development, with possibly only a minor JV (that AM could control) and that then takes away any computations involving 100+ wells all simultaneously producing. Short term figure for me might then be around 20 horizontals at any one time. Enough to slowly build the company up & more than enough to then allow AM his next wee Bombardier.
@Tradinglad...I only know about that story from watching "The Social Network". Within it lies so many lessons about both value and greed.
Yes I’m just saying really would be a great price for me someone who has lost a lot in other shares everyone has a price in there heads what they would sell at maybe if it went to £1.50 next week I would wait for £3
I have only been in this share a short time and like a few others here I would be VERY happy with £2.00 a share.
You would be happy with £2 a share the same way Roy Raymond was happy with $1m for Victoria Secret and look at how that turned out.
Well I would be over the moon with £2 I have 150000 shares I would be very happy
Its great to be excited about this share. As previously mentioned, I'm cautiously optimistic. A lot can happen in the next 6 months. I'm no technical expert and don't do a lot of TA, but I, along with most of you can obviously see value in this share.
Not wishing to get rampy, what would happen if the first deeps horizontal in August actually flows 8000bopd (not unheard of).