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I think you find it’s beneficial on both parts Zebra.
Prd are not a proven or existing oil and gas operator nor do they generate any cash flow ( at present ) hence the requirement for a WPA. The concern for me would be it’s dependency on WPAs and multiple JVs...PRD would end up doing all the work and supply to then give a free carry for the field operator.
The purchase of FRAM (imo) would compliment it’s existing cash and potential commercial oil sales from the Saffron well. It would help CERP in its potential developments in the SWP and anywhere else they’d please, although it would lose ~180bopd from TI (which probably only wipes it nose) nor will they take further field commitments tied to licence renewals, hence why it’s ideal for PRD and it’s CO2 injection.
Hi Zebra
Prd have funded everything to do with the CO2 injection above ground. Cerp have carried out works to below ground with their workover rig and crew it's not Fram's so won't be included in any sell.
Bit short sighted if you still believe they will be better without Cerp, the $4.2m could become a millstone at these prices.
A joint venture is still the best economical answer for both parties in my view
ATB:))
Data collected from monitoring the AT-4 and AT-5X wells during injection and production will help assess the potential for reservoir communication and are required for planning the upscaling of operations to a full-field C02 EOR Project.
That’s what Paul wants
Hi bamps,
"the project is made viable by allowing for historical Fram losses against spt" if prd purchases fram the tax breaks will be passed onto us as they were to cerp.
I thought prd funded the costs of the co2 for the pilot, where did you get cerp funded the co2?
In your scenario where cerp is funding the co2, underground works, rig and crew. Its still beneficial to them at 50%. If we purchase fram we get 100% of the profits.
"I doubt very much that Cerp will allow theirs to go in that sell they are like gold dust on Trinidad." That's not up to cerp. If we want to buy they're obligated to sell.
Simply put there's no good reason for us to share the pie if the project is successful.
In your mind it may be a struggle but its no reason to give away 50% of profits. Looking at cerps historical performance, the sooner we disassociate the better.
Hi Zebra, MrMM
If you read back on the Rns from mid 2018 the economics is based on an oil price of upto $68 and the project is made viable by allowing for historical Fram losses against spt
A WTI price of $68 is still only about $37 to Cerp or PRD
With the price of oil dropping to $50 this is the worst possible scenario with the spt tax. $49 is much better as this would give revenues of about $37
Buying Fram is going to cost $4.2m not only that they will be funding all underground work as well which they haven't done so far plus the CO2 costs and all the dealings with Heritage which Cerp have been doing at the moment.
They will also need to source a rig and crew, I doubt very much that Cerp will allow theirs to go in that sell they are like gold dust on Trinidad.
Both firms need each other and to share costs so in my mind to go on their own which either one is going to be a struggle
ATB:))
*work* in that mix........... :()
All the best
Understood Zebra.........!
thank you............ :)
All the best (we do well together :)
@chesh yes we are working with cerp during the pilot.
What I mean is once the pilot is completed, It makes sense to stick to our original plan to purchase fram and move on from cerp.
Zebra................!
I may be mistaken here, but .................
"Columbus, the oil and gas producer and explorer focused on onshore Trinidad and Suriname, is pleased to announce the first injection of CO2 in the Trinity Inniss field. Leo Koot, Executive Chairman of Columbus, commented:"
All the best (https://www.lse.co.uk/rns/CERP/operational-update-trinity-inniss-s24fh3y6et6v9hx.html )
I don't see why cerp has to be involved in future co2 projects?
We planned the co2 project before cerp had purchased the old owner of fram. (steel drum oil company).
Once it's a success we should purchase fram from cerp and go our separate ways. We get it for pennies per barrel.
With the knowledge prd and massy have acquired from the pilot. We can continue with our exclusive partnership as we have all the surplus co2.
We are the ones with the highly experienced geologists running the company. They are the ones along with massy who have planned and executed the pilot.
With morroco fully funded, I think the question is what's in it for prd sticking with cerp?
Like another poster said, our cln (only debt) is now covered by the returnable Bank guarantee. Many investors hoped the returnable bank guarantee would be used to pay off the lender and end the conversions.
At 4p when the new shares hit the market we will be at 8m mcap. If we get back to 12 thats still only a 24m mcap.
The run up this time should be easier. At present we have continuous co2 injection, morroco fully funded and booked in and the cln taken care of.
Massy are the only supplier of CO2 and the JV with PRD ensures it’s the only company to implement CO2 recovery.
I’m pretty sure CERP have made it clear that CO2 is not viable in Goudron due to its geology with that being backed up by PRD indicating ideal sand packages ie Herrera sands found in Moruga, TI and Barrackpore.
To note Cory Moruga was withdrawn from the PRD SPA by CERP.
Hi Garnheim
Cerp would have to buy CO2 from an additional source as Prd apparently have sown that market up.
There's 5m tonnes of ammonia production in Trinidad at present that produces approx 2.8m tonnes of carbon dioxide for each tonne so that's 15m tonnes most of which has customers. Massy being the main supplier.
Working together I think Cerp and Prd is a good bet
Goudron though is a long way off CO2 injection, firstly it's pumping then water flood and last is CO2 but Snowcap looks promising.
I wouldn't be keen on joint venture with some of the companies in Trinidad but only my opinion
ATB:))
There’s just a few sticky points on how PRD will expand it’s CO2 operations and Business sustainability (I’m currently holding the view PRD are seeking a similar strategy to CERP with the Goudron field in regards to covering its business costs).
The knowledge and experience of installation and operation of CO2 injection is limited to Fram field staff and massy yard staff (Massy sourced, constructed tested the field equipment before field installation).For a new field development at present CERP would have to potentially be involvement in any potential new CO2 targets and take some of the profitable barrels.
PRD depend on historic CAPEX spend from Fram to gain a 100% return on its CO2 investment. Fram wouldn’t be able to offset some of the CO2 investment until the next financial year 2020-2021.
PRD would also acquire additional field production outside the WPA for CO2 trials upon its Fram purchase and CERP will have a reduction in company operating costs.
The original SPA stated that in the event that the two drill targets were not completed the costs of drilling would be deducted from the arranged purchase price, with the renegotiation of the IPSC and WPA I believe it has now changed to the implementation of CO2 injection.
I'm of the opinion that Cerp and Prd should continue their joint venture especially as their working very well together.
The benefits for Cerp of a sale is obvious they need the cash to progress their list of assets and also the CO2 supply but the long term financials outway the sale
The benefits for PRD I'm not so sure from an economical point of view
Why
The pilot programme recoverable reserves contain an estimated 890,000 barrels 10% of which can't be recovered so say 800,000 at 350per day = 6 years of production
Cerp have quoted $30 revenue at $60 WTI
But that has come down to $50 so revenues will be around the $25 per barrel
350 bopd x $25 = $3.2m per annum
It will take about 85 days to recover the costs and then Cerp will be entitled to half the revenues
Costs are capped at $10 per barrel so 350x15 =$1.9m divided by 2 =$950,000 per annum for 6 years
This would increase slightly if the spt was not enforced such as WTI below $50
Taking the pilot on it's own it doesn't look viable in my opinion without taking Fram's losses against spt into account.
If the sale goes ahead PRD will have all the costs involved in the maintenance and future CO2 project.
Working as a joint venture the costs are shared
What's in it for Cerp, the reserves will still be classed as an asset for Cerp, continued annual income, future joint ventures with PRD on possibly 5 producing assets and Suriname.
It's only my opinion, hope I have explained it ok
ATB:))
Well.. CO2 is pretty restricted to any field that produced from the Herrera sands in Trinidad.
If the pilot is a success then its a possibility. Heritage also owns plenty of mature fields where the process could be replicated. Paul has not disclosed who we have entered into agreement with only that they're owners of a producing field nearby.
Is there a possibility that PRD could expand their CO2 project from Trinity with their JV partner to supply CO2 (MASSY) on to The Moruga West Field as it is classified as a mature field and a Waterflood Project was implemented in 2013?