Member Info for 3littlepigs

I don’t expect non executive directors to buy shares in the company. They are there to offer independent advice and objectively challenge the executive directors. They shouldn’t be buying in to the company to send a message to shareholders. It’s ok for Art to do so and it would be nice if Ryan did too, but he’s younger (a similar age to me) won’t have as much cash to hand and I don’t expect him to buy in.

If this was a company struggling to raise finance or which had doubts over its ability to raise its production, the CEO wouldn’t be buying more shares with his own money.

To me this purchase says “I’m confident in the company and I’m putting my money where my mouth is!”

I’ve read here a couple of times today that it hardly seemed worth us drilling the exploratory well in the deep if it wasn’t going to be assigned any value.

I admit that I’m disappointed that such a huge find hasn’t pushed the sp much higher but do I think the drilling was a waste of time? Of course not!

Why? Before the deep drill I thought we’d progress our bopd output to 7000 a day by mid 2024 and would see the sp move to around £2.50. With debt on board I didn’t think we’d see much sp increase until we had at least 3,000 bopd but once past that thought that each 1,000 barrels would add 50p to the sp. I still think that’s the case, but whereas I thought we might plateau at 7000 bopd I now think we’ll kick on to go to 30,000 to 50,000 bopd. That’s what the deep find offers us! I also think it will accelerate our growth. Instead of 7k by mid 2024 I think we will get there by mid 2023 as the horizontals will add production much faster (1000 - 2000 per we’ll) than the recompletion works at Cole creek would have (150 extra barrels).

Good luck. It’s going to be a painful 3 months but a good reserves based loan plus continuous increases in output will soon make a big difference.

AABL should read as a RBL

Generally speaking most lenders require some form of security over an asset. The convertible bonds have security over the company itself, but not specifically any one asset.

The RBL will have security over the oil reserves themselves, which I assume translates to the land associated with the oil. Typically, AABL would be senior secured borrowing over the assets, giving the lender first charge over the oil assets in preference to the lender who has secured a loan at the company level.

My understanding is that we would take a RBL facility to repay the existing senior secured lending that was put in place 12 months ago when we acquired atomic. After taking out the RBL we would have two loans, being the RBL and the company level loan which was used to fund the purchase of CUDA.

If we can crack on with putting the RBL to work by drilling new wells and pumping lots of oil, we will be able to repay the Company level CUDA loan before the conversion date.

Thanks wwal. I’ve just ordered some paralax on amazon and sent it to Art c/o Copl, PRB, Wyoming.

Interesting just how much production increased with the wax treated.

I think there’s some confusion here over what we bought. CUDA didn’t have any wells of their own; they had a working interest in the same wells that we had a working interest in. So we aren’t focussing on improving CUDA’s wells, we are improving the wells we’ve always been the operator of, in the knowledge that 85% - 100% of the improvement drops into our pockets.

One of the little takeaways from yesterday’s interview was that there’s is no (I repeat no) additional overhead from taking on the CUDA interest. No extra people, offices, vehicles etc. We just reprogram they computer to 85% from 58% and carry on as before. This is where the money is! Whether you call this synergy, economy of scale or something else, this is the beauty of the CUDA acquisition. Much improved margins borne out by higher net backs of 55% and rising, versus 44% the prior quarter.

Thank you LargeGin. Really helpful and educational. That’s what a bb should be for. Cheers.

Get the wells flowing and this tiger will be purrrrrring.

Maybe we should borrow $50m and put the cash to work in steel tubing fabrication for the O&G industry!

Hi,
On risk 4 - in the interview he described the casing - I know nothing about oil extraction but he said that they have different size or types of pipes at different depths of the well and they have the bottom section but not the top. So I'm afraid 50% x 2 is 50% of 2, but doesn't equal 1 whole one!

Strobe,
That paragraph is a standard accounting requirement recommended by the auditors and doesn't cause me any concerns. It is basically saying that if we don't secure a RBL, and failing that if there isn't a net operating cash flow after meeting borrowing obligations, and failing that if they can't raise funds another way, then they won't be able to realise the potential of the assets and will go bankrupt. But I don't need this paragraph to tell me that. Plus I have my own assessment of each of those risks and I can see it in the share price!

Furthermore, it is these types of risk that mean the reserves are C1, C2, C3, not P2 - permitting, funding and other commercial risks to extraction are all reasons why the oil in the ground is contingent, not probable.

Personally, I think this is a really positive RNS. The strong cash position is nice to see, but for me it’s the increase in operating net back and the progress being made to increase production that are important.

Taking the first, operating net back: this is such an important metric. It shows us how much gross profit we are making from every barrel. By acquiring CUDA and reducing our gas injections we have a really health net back. This means that if we control our overheads we can and will make profits. Simple! I’ve seen some calculations on this board of our potential free cash flow and commentators used $45 net back. Could you re-run your numbers please to add 20% more cash to your result!!!

Secondly, production is increasing and I think some will be surprised by how much we are producing by the end of q4. Each well that converts to flowing, each well that gets the parrafin wax treatment will add up; soon they’ll each be worth 1000 bopd; and then they’ll do 10 more!

A step in the right direction.

this shows how much value we are getting from the CUDA acquisition.

I hate these deramping news articles:

“ COPL, targeting the high end, hopes the reservoir will ultimately produce about 666 to 826 million barrels of oil (but is unlikely to declare all of that oil recoverable).”

They said RBL in early Q4 with some updates to the market in late Q3.

3 of their big wells were offline in June as they converted from pumping wells to flowing wells. So that explains why June production wasn’t as high as expected. Back online they produce more than previously.

If you’re a genuine investor you will watch this presentation. It’s very good so far. He’s not even in his kitchen!

Unless he can give us some firm dates on when they will drill the new wells, when they will come on line, what range of production can be expected etc, I don’t think we’ll see much of a sp move as the market knows most of what he’s going to say as he RNSd it last week.

With a degree of guilt, I am also looking forward to topping up when my next pension contribution hits on 17th. Unfortunately, with an average price of 37p I have a way to go to break even. But one day Rodders....

The RBL can’t come soon enough.