Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Welcome! Daceon's summary COPL.
THE ATOMIC DEAL
Two operated oil fields: the Barron Flats Shannon Unit (57.7% WI) and Cole Creek Unit (66.7% WI) located in the Powder River Basin in the State of Wyoming, USA:
· Current production rate of 1,400 bbls/d (gross) rising to 5,000 bbls/d (gross) in 2022 and c.7,000 bbls/d (gross) in 2026 (2P reserve case, Ryder Scott Report).
ROAD MAP TO OWNERSHIP OF ATOMIC
• Deposit (non-refundable): $1 million - COMPLETE
• Initial Debt-Financed Payment: $8 million for 15% of Atomic's Working Interest in all of its leasehold on or before December 31, 2020. - COMPLETE
· (Note: If the acquisition does not complete, the Company will retain this interest)
• Assumed Debt: $26 million at closing – FINANCE APPROVED PENDING COMPLETION OF AUDIT
• Total Additional Debt and Cash: $15 million at closing – FINANCE APPROVED PENDING COMPLETION OF AUDIT
• COPL Common Shares to Atomic Shareholder(s): $4 million priced at closing – TO BE ISSUED AT CLOSE OF DEAL.
The final possible completion date is 15/3
From the latest RNS Thursday 18/2 “we are working with the Lender to complete loan documentation in the coming week." – Ryan Gaffney, CFO.
VALUE TO COPL
Total Cost $54m
Estimated SP on completion of purchase of Atomic : 1-2p
DEVELOPMENT OF THE ASSET
- Roll out tripling of the gas injection programme at Barron flats
- Drilling cole creek plans
- Production ramp up - monthly updates expected all positive incline so no surprises but each one adds to the market cap and net worth
WHAT ABOUT THE OTHER OWNERS OF THE OIL FIELDS?
There are good reasons to believe that a 100% purchase the asset is possible.
- NOP (in financial distress) buyout would take us to 85%
- Chinese own 15% (being forced to sell by US Govt)
There is a $20m accordion facility built into the finance agreement which may be earmarked for this very purpose.
DOES COPL HAVE ANY OTHER POSSIBLE REVENUE STREAMS?
The Atomic deal came as a huge and very welcome surprise to the shareholders. The main reason that we had been holding was for the expectation that COPL’s interest in OLP226, a large offshore asset in Nigeria, being developed.
1 - PSR is assumed - no evidence to state it will not be agreed. It has been delayed several times however most shareholders would agree that it is likely to still occur.
2 - Oil is found already, next to a producing prolific field - drill planned is appraisal not exploration
3 - Essar want a rapid ROI to date on $70m exploration spend - can spend a lot, drilling costs very low and would want to capitalise on that asap - COPL are carried
4 - Nigeria have much to gain from their oil assets getting to production.
With 60k bopd assumed production
COPL share at 15% (5% with option to increase)
Oil at $40/b
tax 70%
lifting costs $20/b
This equals $19.4m net profit p.a
mc $331m
Note: Oil is currently approx. $60 per barrel
I can understand why this still hasn't moved. People do not trust anything that comes out of AM's mouth until it is 100% secured.
Personally, I don't see how he could F this up and I have continued to increase holding on the dips. But other bigger investors will only start pumping money into this when finance is fully secured.
"The Company has been notified that its previously announced US$65 million Senior Credit Facility ("Credit Facility" or "Facility") was APPROVED by the Investment Committee of the Lender" - i.e. not secured/not signed/not 100%
"The terms of the Facility are market competitive and availability of the Facility REMAINS SUBJECT TO EXECUTION OF FINAL DEFINITIVE LOAN DOCUMENTATION and satisfaction of customary conditions precedent." - i.e. not secured/not signed/not 100%
Next RNS, if and only if it is saying we have the finance and we can actually use it, will you see any sort of meaningful rise. Until then, sit tight, buy the dips and wait.
Good point, I was going back to the resolving of disputes last year and just had it in my head the Atomic news was 2.30 which it wasn't. My mistake. Having the news at 2.30 would line up with CSE opening though.
As I said before I would happily take good news at any time of the day
Nobody can tell you a definitive answer to that question. Do the research and make an educated guess yourself and stick to that, don't listen to others spouting random numbers. There are plenty of posts in this forum that give you the numbers to make the calculations
That is my thought too, you don't get a mortgage approved and then complete in the same day? Surely this will be very similar, funded gets approved, finish off the rest of the paperwork etc., and then complete the deal?
The way I see this going is RNS stating the closing of finance at some point next week. Only then a slow increase of SP after that has been 100% confirmed. Then we will have probably another 2-3 week wait until the final purchase of Atomic is signed off. In this time the SP will have somewhat softened the $4m dilution and everyone is happy.
Once atomic is 100% confirmed then we can all celebrate the new SP of anywhere from 1p - 1.8p IMO.
Until then, too much trust has been lost with AM for investors to be "sure" things are going ahead, all the posts about "now about to rocket" are complete BS, until the next RNS either hold or top up where you can if you believe in AM and COPL (which I am heavily invested in before anyone asks).
Charlie, I included the dilution shares (at the current SP into your calculation) for those that will say they are not priced in.
Current SP = 0.2485p
£2.95m ($4m /current exchange 1.36) / 0.002485 = 1,187m more shares
NPV £184m / 10,844m total shares = 0.0169
New SP = 1.69p
I think that's right? First time I have tried to calculate a share price :)
Charlie, I included the dilution shares (at the current SP into your calculation) for those that will say they are not priced in.
Current SP = 0.2485p
£2.95m ($4m /current exchange 1.36) / 0.002485 = 1,187m more shares
NPV £184m / 10,844m total shares = 0.0169
New SP = 1.69p
I think that's right? First time I have tried to calculate a share price :)
I have to agree with LB28, in normal circumstances, this SP should be through the roof, but previous actions have caused doubt within the market and will continue until things are signed and sealed.
LB28, if this is signed on 15th Feb what are your opinions on what SP will be closer to?
Personally, I can't see more dilution (until the $4m for Atomic shareholders), the remaining debt is quite a lot and to dilute that much would just be horrendous for those already involved, I can't see how Art would get away with it from the new 10% investors.
I think that the PSC will also be extended for at least another quarter, hoping this is not the case and we get some great news in the next 2 weeks, but the language Art used in the interviews screams of delay excuses already.
SP end of march if all my theories are correct ~ 0.6-0.8p. If we get the PSC extensions as well, then could be anywhere around ~1.5p.