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CAPEX costs all come back over time - such as when they are monetising the Schlumberger assets in the future. it is all well and good to talk about ignoring the gas but at $120k per month that quickly adds up to be a valuable asset. Is it going to turn the company around on its onw - of course not but it is twice the annual salary of the directors so it is not to be sniffed at.
As my grandfather used to say to me - if you take care of the pennies, then the pounds will take care of themselves.
They can only recover sunk CAPEX against revenue
If the revenue does not cover OPEX and overhead costs, salaries and the like, cost recovery hardly helps. They need to demonstrate that the gas production makes money on a day to day basis,, if that is the story they are peddling, and it probably doesn’t. I think it would be better to drop the gas and focus on the oil. This Bago line will not be in place in 3 months and then everyone will be on their backs about broken promises again just when they need to raise. Full marks for Schlum deal it’s a game changer for them, but can they drop the bs about 1mmscf of gas being a saviour. 2020 report card is mixed. A farmout in 2021 would turn the tide, and $75oil :-)
Nice work AJ
Yes ! As usual excellent reporting of relevant information AJW .
Many thanks .
I understood AJ. Thanks for your research.
MP
Thanks AJ, so Bloe basically get 75% of revenue till costs are "recovered". In hindsight, the the 12m raise back in 2019 is a blessing for holders in at 3.7p. With much of that 12m recoverable from production.
MP
And the 155 bopd from WR at $43 dollars a barrels gives another $2.4m a year from WR plus we have the gas sales. If Bloe do raise next for the reworks I think they'll raise just a couple of mil.
AJ do Bloe claim back the cost recovery from WR sunk costs before the gov split kicks in? Im assuming this is the case which gives Bloe some decent net backs in the near term.
MP
So with new employees the new wage / operation will be at guess $137k per month giving a yearly bill of $1,644,000.
excluding drilling cost and pipe lays + materials
Solisitors, Broker, PR etc, sharp adds up but the former should reduce dramitcally now the deal has completed.
The EPF needed to be paid for Hepseal. I don't think Block have any exhobourant expenses incoming other than the wage bill.
MP
All true Bobby but i am expecting some kind of financing package early next year for a few million. This isn't necessarily a bad thing if it's to fund the "low hanging fruit" which would increase production and cash flows. We are still a good prospect, zero debt and cash generative assets with upside on the new gas prospects.
MP
Bobby.
The RNS of April 7th referred to a cash balance of $3.4M when cost cutting commenced.
The cash balance at June 30th was $2.2M
So as I said the cash burn from April to June was at the rate of $400,000 per month
As soon as taps are switched on at WR then we have a combined 500+ boepd which must be in the region of $5 million a year revenues. Low hanging fruit on the way to hopefully double this figure pretty rapidly!
From April 7th RNS :-
"the Company has postponed all new capital expenditure and has reduced the monthly cash burn in Georgia by 40% from US$107,000 to US$64,000 through a combination of cost-cutting and deferral of operating and administration expenses"
Where has this pie in the sky $400k a month cash burn come from?? Untruths , untruths and more untruths. I don't know (shaking my head emoji)
So at present production being 220 Barrels of oil a day , giving a sell value of $3,854,400 before taxes
Gas connected with Bago $1,440,000 after Tax + by-product of oil as bonus.
As always correct me if wrong
Hepseal ~ 11.14 , The kitty is almost certainly near the point of requiring a top up ; I posted to that effect on 25/11 :
"In view of recent developments , a somewhat disappointing share price .
What are the MM`s up to ?
Are they waiting until they actually smell the GAS .
Do they want confirmation of sales to BAGO ,
OR;
Have they / others got wind of some C R .
Recognising that a raise is possibly required at some point , I would be very disappointed if they had slipped it in so quickly at this price level when further news is likely to be so close ~ nearer .6p , or even well beyond that perhaps .
Of course there would likely be `Some` who would strongly support a raise at this level , because adding now will probably dramatically increase their gain in the future and / or provide `Them` with a great opportunity to raise their own interest in the business , especially as they are likely to be very close to the story unravelling here ~ "
I`m sure it`s coming , it is required , it will drive the business forward , the issue is the all about the numbers :
How much , when , what price , which method , whose support , what dilution affect ?
Those taking the long view will be relaxed (probably involved ) traders , short termers may be disappointed .
Who knows , the 12% support group will probably be delighted , perhaps even more involved !
I hope that they can run on until that GAS starts to contribute to income , that the sp is higher and any dilution is minimised .
Overall , i remain very confident that next year will prove spectacular .
GLA .
I still don't think they will go for a capital raise the way you make it sound.Yes they will need money but I am still of the opinion that it will not involve dilution of shares.I might be totally wrong and you are spot on but I don't think so.Stay positive.
Hepseal I tend to agree
Either way they will need to go to the market soon to raise capital. It’s not a massive issue unless it comes as a shock to all involved/ invested.
Bringing on wells negotiation of sales contracts etc etc is not done for free by some local benevolence fund. Basic economics - can the cash flow from oil/gas production less overhead and OPEX translate to profit at these low prices?
If not they will need a raise. If it can the question should be why as nobody else managed to do it over the last 15 years when prices were 50pct higher. Best to stick to reality.
AJW - I am still firmly of the view that there is actually a lot less than $1M remaining in the bank balance at the moment - You are welcome to think otherwise if you wish.
Orange196 - I would say Geowiz has a point - I would guess there is actually less than $1M remaining at the moment.
The balance sheet showed $2.25M on the 30th June and they did sell $568,000 of Oil in August.
However the cash burn from April to June was at the rate of $400,000 per month even though they had adopted cash saving measures. The revenue from the oil sales was probably used in part to pay deferred salaries in Georgia.
They will also have had to pay for the installation of the pipeline from WR38 to the EPF and various Technical and Legal consultant fees.
Now that the Schlumberger deal has gone through they will have increased outgoings each month although in fairness they will have the extra revenue from 200 BOPD to help with this.
I strongly suspect that the recently gifted 29, 000 BoO from Schlumberger was probably a necessity to keep the lights on until we have commencement of gas sales and resumption of oil production from WR.
When first gas sales are announced I would assume an increase in the share price followed possibly shortly afterwards by a placing to fund next years development plan which as PH has indicated will probably include utilising the four unused connections to the EPF.
DYOR
The development plan will cost many 10s of millions of dollars. So it’s a double edge sword. They will need to farmout to progress.
Question is do they need to raise some to keep the lights on until they get a decent partner which might be in a year or so.
What’s the balance sheet look like ? I’d guess $1mm remaining.
A nice bit of news before Christmas will do me .They could start with the 3d results,they obviously have them,so why have they not been released. Our day is coming.Stay positive.
After being a bit disappointed with the share price action this week, reflecting on it I’ve come to realise we shouldnt have expected much more. The completion of the deal is use but in itself it doesn’t do much as it’s largely a static asset. The excitement comes when we get details of the development plan, that for me is the lift off moment if the plan is as exciting and game changing as we think it might be.
No worries Trip. Obviously I meant I think the company is entering a rich news flow period. Modern technology is both a blessing and a curse with those mobile phones.
MP
Cheers MP, thought that was the case but thought that I would ask just in case they did?