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I will email Cathy and ask that they specifically cover the requirements for the Prospective resources to be upgraded to contingent resources in their presentation.

Hi All

I'm not a n oil man, I'm an accountant, so when I read this morning's RNS I got all excited and then started to ask myself if I understood what it means. From reading other people's posts it is clear that some people really do know what a Contingent Resource (1C, 2C, 3C) is and they have rightly pointed out that these total 23.747m in Frontier 2 and 4.079m in Dakota - so almost 28m of net risked contingent resources recoverable.

This left me asking myself what is a Prospective Resource? From spe.org I read that they are: those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations. I then go on to read in the RNS that:

"the Company plans to further evaluate the three Frontier 1 sands through coring and open hole testing in the first horizontal well in the Barron Flats Federal Deep Unit targeting the Frontier 2 Formation during Q4 2022. Following the completion of this well, the Company will drill and complete a horizontal well in the Frontier 1 in the Barron Flats Federal Deep Unit. In addition, the Company has identified suitable well bores at its Cole Creek Unit to re-complete in the Frontier 1 for production in Q4 2022. As such, the current resource estimates as outlined are likely to be revised and/or reclassified after this evaluation program".

Again, I'm a bean counter, not an oil man, but I am pleased to see that of our first 3 wells, 2 are into Frontier 1 . The results of these wells will presumably help to show Ryder Scott what is there and allow them, if supported by the facts, to reclassify some or all of the Prospective into Contingent 1C, 2C or 3C.

I note that about 10% of Frontier 2's OOIP is considered 1C, 2C or 3C. If the same proportion of Frontier 1 were contingent resource that would be a further 70m 1C, 2C or 3C. I think we can see what Art and Mr Scott may have been discussing for the past month: A: "What can we do Mr Scott for you to report this as Contingent?" R: "I have a reputation to uphold Art, and I'm always prudent, so I won't classify this as contingent until you bring me more evidence it is, so go away and drill some more holes and then we can discuss upgrading this." A fair enough response to my imaginary conversation!

Still, a tremendous find and I have every confidence the 1C's will become P2s in time and the Prospectives will become Contingents. In fact, I see this happening very fast based on the speed with which good funding could see this developed. And yes, I do expect good funding!

Stas - I think you picked up the frontier 2 number (217m) instead of the frontier 1 number (704m)! Now that’s a big number with 40% secondary extraction. For those without a calculator or mental arithmetic: 281m barrels!!!

Prospective Resources in the Report for the Frontier 1 were determined probabilistically with the associated risk factors determined by Ryder Scott.



· OOIP: 704,728, 000 Bbls. (Probabilistic, High Estimate)

Prospective Resources Drfinition: Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective Resources are further sub-divided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity.

Just looking at my stats update email from LSE. You won’t be surprised the hear that this COPL board had 1,853 posts in the past week, 500 more than any other board!

Our resident “person of knowledge” Tiburn is in the top 5 most recommended posters, just behind guru 3LP (I made that last bit up :)

And finally, COPL is top of the share risers board in the week commencing 8th August. That might be made up but it could be true!!

Define “not great”. Would over 1.5bn be great; between 1.1 and 1.5bn be not great; and under 1.1bn be terrible?

The redemption fee is a late-redemption fee. If you read the small print we can repay the loan with cash early and avoid the redemption cost. Which should be easy- I already have other banks knocking at my door.

Will I want to sell it? I might turn it into a country club and charge £10k a night to stay. Forecasts suggest I could make £20mil a year net profit!

Zeros13: I shall have my vengeance in this life or the next! But please Art, i’d prefer it to be this life.

Deacon: we bought a house worth £200k for £160k. And we filed a speculative planning application for a 10 bed mansion complete with swimming pool, 12 garages for the ferraris and a side annex for the butler. I nearly fell off my chair when the planners approved the plans! I have the £1m equity I need to get the build started and the bank are just signing off the £4m I need to complete the project, including the gold taps. Conservative estimates of the house value when finished are £50m. Oh, and did I mention that Madonna lives in next door and Justin Bieber is looking to move to the area; he has £100m to spend and there’s nothing on the market, except, maybe, my place when I’ve finished the build.

Also worth noting that the Hannam note assumes that net oil production by the end of 2025 will be 4,130 bopd! It shows how worthless the report is.

Trujack - you could work for a tabloid the way you selectively quote Hannam. The sentence actually says:

"The deal has resulted in significant dilution of >70% (we treat convertibles and warrants as equity)."

I'd be shocked if the convertibles get converted; they will be cash settled.

BTW you are in the green box as of now so don't bother replying.

slow out of the starting gates (caught napping again), here comes Billion Dollar Boy on the outside...
as the other horses begin to tire BDB seems to be getting faster as he kicks of the burden of his convertible (paid in cash) and changes up a gear.
i think we'll need to get him drugs tested if the stewards can ever catch him.

Tiburn, Anavio only subscribed to €16.8m of the bond, so another investor/lender(s) took the balance.

Surely the answer is that we were going to 23p when the market thought we could get a RBL to pay for CUDA. Then we got told it’s an expensive convertible which everyone assumes will be converted. Aside from that nothing’s changed, so the sp remains at 17.

I must admit, I got very excited when I saw the RNS at 7:30, especially the paragraph about RS expected to confirm the huge oil discovery. But then, as I took a cold shower, I asked myself what the share price would do and deep down I knew it would do nothing. We don’t know any more today than we did yesterday. The RS report may tick the sp up in a week or 2 and a good RBL facility that funds lots of wells and pays off the expensive CUDA convertible loan (I personally don’t expect the loan to convert, I expect cash repayment) will tick up the sp, but the real driver for share price will now be bottom line profit which is driven entirely by bopd. So we need to produce 5k a day for starters, then look to increase that by 5k every 6 months until we have 25k a day (or more) being produced. This is entirely achievable and today is the first step in realising that goal.

Jiddy, if LSE rules forbid it he shouldn’t have told you! Unless of course your under NDA!

Investing in COPL has been a really important life lesson for me. The story of how it will end still needs to be written but nevertheless I feel it has opened my eyes and taught me a lot to date.

So what have I learnt?

Firstly, it’s virtually impossible to make a quick profit. Patience is needed! Assuming this now moves as I expect into year end, it will have taken me 3 years to make the level of profit I originally thought was possible in 3 months.

Secondly, it has taught me a lot about how to value the potential of assets and how risk averse the market is. Personally I believe the company should have a market cap of £150m right now based on its P2 reserves, assets above ground and oil production. But the market disagrees so I must be wrong. The market sees a company that is yet to break even or generate surplus cash. I see a company producing much more oil in 6 months time, with cheaper debt, but the market sees a company talking about cheaper debt and the hopes of producing more oil and won’t assign value to either of these until they are announced. I see a company that has found 1Bn OIP but the market sees no proven resources yet.

Finally, I’ve learnt I need to spread my investments thinner. I‘m overweight here and could really be panicking over the loss I’m sat on. But I’m not for the reasons set out below.

So those are my lessons learnt and they have changed my investment mentality.

What’s next? Having worked at a number of small cap businesses that have gone through the acceleration phase to mid-cap business, I recognise the signs here of imminent take-off. The CUDA deal is undoubtedly fantastic. To own 85% - 100% of all the produced oil will be immense.

The key though is the access to RBL. Why? It unlocks our development plans! We need to spend money on multiple drills and get oil out of the ground at $100+ bbl to boost our revenues and free cash flows. This is what generates shareholder value. If a bank goes thorough due diligence on our development plans and is happy to lend us $80m it also gives the institutions the confidence to follow suit and build a shareholding.

The drills in August on our Deep find are just a cherry on top! What’s interesting though is how AM and his team have sensibly pivoted their strategy. When you only have a finite amount of cash to spend you must decide which project to spend it on. Prior to the find our priority was MF and pipeline improvements. Now, our priority, quite rightly, is delineating and proving up the Deep find. This should add more shareholder value more quickly and that is what we all want.

Ultimately, I will breath a sigh of relief when CUDA is announced (which it will) AND the RBL is signed. With these we have some security that we are here for 10 years, not on the path to bankruptcy, and with 5k - 7k bopd producing mid 2023, a tidy profit and £500m market cap. I will be breaking out the champagne if RS say anything higher than 500m OIP and 20% recovery rat

Hi Jiff
I don't have any specific RBL experience so it's hard for me to say. I know that the debt markets are pretty soft at the moment and it is proving hard for some sectors to raise debt, but would that apply to this buoyant oil sector? This might be the one sector where money is being lent, albeit at higher interest rates than would have been charged a year ago.
Cheers
3LP

The original guidance was that the deal would close between 10th June and 10th July and this was quoted in the video. Court approval then followed slightly later than expected and the RNS then confirmed 18th June to 18th July. This isn’t a blunder in the video, it’s a change to the timeline after the video was made.

I would expect the deal to close on 18th July and an announcement on that day or the day after. Corporate transaction like this rarely close early as there are consent timelines, debt draw down notices to be delivered and lots of others things for the lawyers to do.

Tiburn - I think the answer is NO. Atomic was an S-Corp structure, which is like a UK partnership. The tax liabilities and the losses flow up to the owner.