Member Info for blackstout

The BFSU has a NAV based on P2 reserves of over $200m net to COPL.

As a direct comparison COPL's Market Cap is just around $20m!

GLA

We are now into day 50 after the BFSU injection started.

Do the math and listen to Eazy!

RNS Number : 8786G dated 24 July 2023 confirmed that “The Company operates two production Units”. Those being the Barron Flats Shannon Unit (miscible flood) of which it currently owns 85% WI and the assets currently under negotiations with COPL’s chosen JV Party.

We've been told that COPL intends to keep the Barron Flats Shannon Unit (for now at least) and we also know that it has a notional NAV for the BFSU based upon P2 reserves is somewhere around $240m. So COPL’s share is $204m! Reality check this compares directly with COPL’s Market Cap of under $19m! mmm?

COPLA started increasing the gas injection in the Unit some nine weeks ago on 9th October. It began by ramping up the LPG significantly, mixing it with the recovered gas through the new system. By design whilst the purchased methane was kept relatively flat at that beginning the mix may well have changed by now.

We know that oil production is directly proportional to the gas injected, and it's my understanding that as a measure of progress all the injection wells are now online.

It should have taken about 4 to 6 weeks to see a relatively rapid increase in production coming through. That fits with what we were told in the recent RNS and the public report from Southwestern so I wasn't disappointed or concerned by either.

Using the previous production profile as a guide by my calculation COPLA may well be producing near 2000 bopd about now. If correct, that would put COPL above breakeven. At today's WTI price and with no hedging COPL’s break even is said to be approximately 1800 bopd.

If what I've outlined is about right then I'm anticipating two events happening within a matter of days. Firstly an RNS telling us the breakeven milestone has been surpassed. And secondly the SP begin to re-rate.

As always AIMHO and let's hope we receive some good news on the BFSU in the coming days.

1 of 7

If we look at where we are in terms of value we know than in a simple analysis we have two areas:- viz

Amongst other things RNS Number : 8786G

dated 24 July 2023 as well as a Letter of Intent had been issued to COPL’s chosen partner it confirmed that “The Company operates two production Units: Cole Creek 100% WI, Barron Flats Shannon (Miscible) 85% WI.”

Further it went on to tell us “in addition to 85%-100% WI non-unitized lands between the production Unit boundaries.”

It went on to clarify “The contemplated JV does not include the Company's Barron Flats Shannon miscible flood EOR project.”

So to put it simply the JV will be covering all of COPL’s Wyoming assets except for the Barron Flats Shannon miscible flood EOR project.

We know the NAV of the BFSU is roughly $240m so on that basis it represents about 9p/ share and in my view this is what we should be seeing until such time as it's reasonably profitable. Then we can look at it using a different metric. When it's operating in an “optimised & steady” state it should run up to 4x that if not more. But I think we're looking at Q2 next year at least before that happens.

2 of 7

Having been involved in most of the discussions and briefings COPL has held, this is now how I see value being returned to COPL's shareholders over the next 12 months.

I see the ROI for us coming in two distinct and separate stages. Initially then from the JV being successfully completed and announced. So let's consider potential numbers for this phase.

There'll be several fundamentals under consideration but two of the main ones are sure to have been the OIP and the likely recovery rate.

From what I've read most shareholders believe there's around 2bn boip. I think that's a considerable under estimate to be honest. 2bn may only just about cover the new FD discovery on its own.

The best initial guide to the new discovery was RNS’d in January 2022 which put it optimistically at about 1.6bn brrls. It was made known at the time that Ryder Scott had it as more and the JV had it more than Ryder Scott.

I can tell you that further work has been done by both parties to the JV and the estimated boip has increased

3 of 7

The new discovery, as huge as it is, may not be as big as Cole Creek in the analysis, which we're told has hitherto has been largely by-passed. So to my mind we could be looking at nearer 4bn boip if not more counting both areas.

The first indication the market had came via an RNS a year later in January 2023 when AM said it would be a “gamechanger” for COPL. But for AM I think the first indication he had that there could be something substantial there must have been when he was going through due diligence before buying Atomic.

4 of 7

It's my understanding that there were old wire logs and survey/ drilling records in the data room that led him to see the possibility. CC has been worked albeit in a small way since the 1930’s and records from those days are hard to decipher.

The first well was a tube hammered in that took over a year to bottom. So before Howard Hughes invented the oil drill that made him one of the wealthiest entrepreneurs in the world. Anyway enough said on the history but to say I can see why it's been bypassed.

The RNS quantifies part of the area and from that you can see it's massive.

5 of 7

But I think the story doesn't end there. We also have non-utilised land and possibly new licenses to consider.

So where I am is we could be looking at between 4bn boip and 5bn boip! As shocking as that may seem I can tell you I've done my “checks and balances” in drawing that conclusion! As best you can I suggest you do the same.

The oil in place and how it flows will have been key fundamentals the JV parties must have been appraising now for a while. It's been a moving feast - hence the two confidential and appraisal wells currently operating under seal.

I wouldn't be surprised to hear we're looking at $6bn - $7.5bn in total value for the assets if we include the CO2 potential. But some of that will be because of who the JV Party is and what they bring to the table.They will know by and that will have an impact on both the value and what they're prepared to pay for their share.

As a guess I think COPL will hold onto 70% - 80% of the value initially and I wouldn't be surprised to see our SP run up to more than 100p by the beginning of the new year for the first phase. We're looking at a completely different market and catchment area for a start.

6 of 7

Now my take is that the JV party will see the next nine months or so as an appraisal and honeymoon period before making a takeover offer for the assets under their part ownership. I believe COPL's BOD are well aware of it and both parties will be going into the JV knowing the JV Parties intentions.

The method of valuing the assets at Takeover stage however, is likely to be very different. I believe it will be done on a discounted cash flow or NPV basis. Here's my take what that might look like:-

If we assume we have 4bn boip with 50% recovery using CO2 as a stimulant. So oil recoverable on that basis should be around 2bn barrels.

To keep the math simple let's also assume an oil price of WTI @ $100/brrl and an "effective life" of the several fields is 30 years. That would give us an average production of around 80m boo/annum.

Annual revenue from that would then be $8bn and netback or earnings of at least $4bn/annum. As shocking as it may seem then, we could be looking at a $60bn market cap for the JV excluding CO2.

There's sure to be several ways of looking at what CO2 could be worth, but here is a simple one. Production of 80m boo/y is pretty much 10.5mt's of oil per annum. So if the JV puts back the volume of oil it extracts in tonnes that's 10.5mt's/y of oil extracted vs putting back around 13mt's of CO2.

7 of 7

We know that the credits for CO2 are different depending upon its use. But to keep it simple let's assume a netback of $50/t after costs. Again a p/e ratio of 12 which I think is reasonable. So we have 13mt's x $50 x 12 giving us a market cap contribution of around $7.5bn.

But CO2 doesn't stop there. We should A

also consider how much CO2 can be captured in the abandoned wells. So for now I'm going to say the contribution for CO2 should be around $8bn.

So in 4-5 years time I'm at a MC for the JV of around $80bn. On that basis and assuming COPL would have kept 70% I think we could be looking at COPL's notional value to COPL at that time of around $55bn.

If we discount that to say Q2/Q3 next year at a rate 30% ROI I think a fair valuation of COPL's holding could be around $15bn.That would be in a takeover situation.

I'm at 2bn shares in issue, or thereabouts by then.That may change of course. But that would give us a notional SP of roughly $7.5 or 617p.

From these calculations I don't think we should be thinking of less than 400p a share and perhaps 500p as a minimum if the BFSU also forms part of the deal.

AIMHO and let's hope we have the news we've all been waiting for very soon.

Ashwaldo I don't normally comment after posting ,but this time I think there's an important point to make without saying too much.

The monthly production figures produced by Southwestern don't account for oil being produced by COPLA’s two confidential well's in Cole Creek.

They're both horizontal wells similar to one which is operating quite close by on adjoining land. The neighbours well is said to be producing over 900 bopd unstimulated.

Nothing has been or can be said yet about the revenue from the confidential wells obviously but to my mind their revenue shouldn't be ignored when considering COPL’s cashflow position or going concern status.

I've no doubt the production will be accounted for properly at some point in accordance with accounting convention. But for now it seems the details must remain under seal.

Just my take although you and others might see it differently. I understand that.

When I post on here it normally runs into several pages.

Today is very different.The opposite in fact. I only want to say two things:-

Firstly I think many will be reading there's about 2bn boip under the JV. I think they're about to be told that's wrong. I've been working on 4bn boip for some time now and I’m starting to believe even that may be conservative.

Secondly I believe H of T’s were agreed several weeks ago albeit in principle and perhaps with caveats. Work in “formalising” those terms and resolving the caveats has been going on since then. If you think it's going to take several weeks longer to conclude the agreement, I believe you're about to be proven wrong.

AIMHO as usual and good luck to all sincere investors. I think you're about to be rewarded and find it's been worth the wait!

1 of 2

After the market's negative reaction to yesterday's RNS I think it's worthwhile trying to unpack its tangled content.

For me there's at least three items that perhaps deserved to be issued under separate cover. They are 1) Refinancing 2) Restructuring and 3) Cost Savings. Taking them in reverse order:-

Item 3 - Cost Savings I think it was good to read that the COPL continues to implement cost savings in the interests of its shareholders and to reward employees based on kpi's wherever possible. Without repeating them all from the RNS these proposals and tightening of the purse strings have to be welcomed by the markets.

Item 2 - Restructuring. This came as not just a surprise but a welcome one as well. I personally think that AM's skill set will be better suited to his new position. I also think he's been a square peg in a round hole until now and it's time for COPL to have a better Hopefully anyway

However, under this category I think more importantly the RNS is telling me that Heads of Terms look to have been agreed with the "JV Co" now. I believe what we're now seeing is the agreed restructuring is being implemented. It may be just my take but I think we're very close to hearing the JV agreement has been finalised. It could land anytime. So again this piece has to be positive.

And last but not least we have item 1 - Refinancing. In this exercise amongst other things, the oil hedging gets unwound which improves liquidity and increases revenue substantially. But for me moreover the Oil hedging should be seen alongside the satisfactory completion of the GGS and the rising price of WTI. All of which are linked and very positive.

Unwinding the oil hedging alone catapults liquidity by roughly an additional $4.5m per month with WTI at $85/brrl which is incredible value vs costs! The placing enabled COPL to do this and to restructure the Company in readiness for the JV amongst other things

Take my point that the three aspects now takes us into a positive cash flow position however small. The bonus here makes the question of whether COPL is operating as a going concern or not redundant. These developments collectively should be taken as a valuable "step" change.

"Yes but your views aren't balanced. You've not mentioned one negativity" I guess some might say. So ok let's look at the fact there'll be more shares issued.

Whilst it should be clear the bonds are not being issued to "keep the lights on"! The further share issuance on their conversions should therefore be seen to be accretive not dilutive!

Do the math you'll see the increase in value by just unwinding the oil hedging alone easily outweighs releasing the additional equity as I've said.

2 of 2

An additional $4.5m/month revenue from the hedging unwind lifting us from under the "going concern" cloud vs issuing more bonds with a value of around £8m converted at some time in the future, if at all has to be exceptional value.

So the question on this point should be: was it in best interests to raise the additional £3.5m via Bondholders? What's unknown and therefore questionable is was there a better alternative?

I could have gone into greater detail but I think in this case it's best to keep things simple. The RNS has been too complicated. All in all is a poorly presented RNS that's full of very positive news.

As always AIMHO and let's hope we hear the news on the JV we've all been waiting for very soon now. Fingers crossed!

If you look at my posting history you'll see I'm not a regular poster on here. I only post every few weeks or so. I do that intentionally to try to make what I say as interesting and sincere as I can and to avoid being labeled an avid ramper. The last time I posted was about two weeks ago.

Generally I try not to repeat myself or comment on the very informative posts made by some of the excellent posters on here.

So FWIW here's what I think are a couple of milestones we'll be seeing over the coming weeks perhaps even days. I think these milestones will be game-changers as AM might say. It's the one most of us have been waiting for.

We know from the recent RNS that " the gas gathering system is functioning and was commissioned on time". I understand the system is performing better than anticipated and as such by doing the math I believe we should be producing positive cash flow in no more than three weeks time even with the oil hedging in place providing WTI doesn't fall below $80/brrl. If that's right we should see an end to any "going concern" comments.

And as if we needed reminding we also know from the RNS issued on 24th July that "COPL and an established energy company ("JVCo") have entered into an LOI for the negotiation of definitive agreement(s) for a Joint Venture".

So from this we know that the parties have now agreed commercial terms have been involved in definitive negotiations for almost a month. I take RNS as confirming the parties have been dotting the "i's" and crossing the "t's" to enable lawyers to prepare the formal agreement(s).

It isn't too difficult to work out with some degree of certainty who the JVCo is and I can tell you there are strong indications that we're now close to a JV announcement. Very close.

Please don't ask me to elaborate on my comments or justify them, unfortunately that would be a betrayal of my confidence. They're not meant to be a ramp. They're meant to be more of a "heads-up" and well meant.

Like most if not all of us I have no idea what the JV agreement will look like. That said I think AM will want to hold onto as much of the asset as he can. To put a perspective on it the JV is looking at an oil asset with an in-ground value of circa $160,000,000,000 as things stand. That's massive by any measure!

All IMHO as usual and good luck guys. I'll post again on the other side of the meaningful news!

Although attempts are being made to keep the JVCo's name under seal there are signs it isn't working too well now. Here's some of what we're being told:-

"COPL and an established energy company ("JVCo") have entered into an LOI for the negotiation of definitive agreement(s) for a Joint Venture (the "JV") to develop and exploit its oil reserves and resources at its Cole Creek project in Converse and Natrona Counties Wyoming."

If you dig deep enough you should be able to work out with reasonable certainty who the JVCo is and the underlying reasons why their name is being kept under seal.

I've done whatever research I've needed to and if my reasoning is correct the SP should jump at the mention of the JVCo's name.

Although I'm less sure of the exact timing, the SP's positivity is telling me that by association more people are getting to know and taking positions despite the NDA being in place.

I doubt we'll have to wait very much longer before the name is announced.

Fingers crossed and good luck guys.

I'm in no doubt that many of us will have been speculating on how the use and capture of CO2 may feature in the soon to be announced JV.

Well I firmly believe we'll hear that it's likely to be considered for use as the prime stimulant in the new wells along with how it can be captured.

Until more is known its value it could bring will remain highly speculative.That said and FWIW , here's my thoughts on a quick and very approximate way of valuing its use.

From what we're told the Federal credit for its disposal is $65/ tonne, so that's one of the fundamentals I've used. 1 cu m of liquid CO2 weighs just over 1.1tonnes but for simple math I've rounded it to 1 tonne, and that's another.

So if we first take the estimated oil recovery of 1bn barrels for the new discovery and add a further 40m barrels from the BFSU we get 1.04bn barrels as a sub-total.

If we then add the displacement from drilling along with other possible civil works and count the old depleted wells I believe we could be looking at roughly 1.5bn barrels equivalent overall.

There's about 6.24 barrels of oil in a tonne. So on that basis we could be looking at disposing of 250m tonnes of liquid CO2 over the life of the fields which according to the Company is currently estimated to be around 40 to 50 years. I'm hoping the LOF will be much less by the way, but we'll see.

All this would suggest an average disposal rate of CO2 of 5m tonnes/ year which using the $65/t credit rate would give the JV an annual revenue of $325m.

Annual netback arguably could be as much as $250m which, with a p/e of say 10 would give the JV a $2.5bn Market Cap contribution.

So fully diluted I believe we could be looking at an additional $1.25 or 100p per share if not more.

Please note the values I've arrived at are averages. So in the early years the values are likely to be less than average as the site will be ramping up its production.

As some of you may know there's a CO2 pipeline about 25 miles from the site and to me it makes sense to tap onto that source for the supply. However I think it will be necessary to deliver the CO2 in road tankers in the short term whilst the connection is being made.

As always this is just my take. But the case I've made looks very compelling from many aspects.

My fingers are crossed all aspects, especially the JV works out well for us.

I don't mind at all nmike.

Great post!

Good luck all.

1 of 3

In the COPL book I think the bondholder chapter is turning out to be more complicated and damaging than most pi's first thought. FWIW here's my latest thoughts on it.

To unpack the story and to keep things simple I don't think we need to go back any further than last March when we saw not only radical changes to the previous bondholder agreements but also a new agreement to raise further finance with a newly formed group of investors.

Within the new group we saw Anavio the main bondholder continuing to show strong support together with 7 minor bondholders of which just one was a new addition. Viz:- "The Company has signed purchase agreements with their current institutional stakeholders, and a new institutional investor* ". Bookmark this as I'll refer to it later.

Amongst other things Anavio were given a seat on COPL's BOD, thereby ensuring an even closer relationship between both companies. For me it's impossible to imagine that "inside" company information hasn't been shared between AM and Anavios' new Director since then.

In this analysis therefore I don't think it's unreasonable to divide the new bondholder group into Anavio on the one hand and the minor bondholders on the other.

Given the "minors" activity I think it could also be argued that their subset of 7 should be further split between the longer-term stakeholders and the new institutional investor*. I haven't purposely done that here to keep the chapter simple.

As things stand we know the face value of each Bond is $200k and the conversion price is 6.75p. These two fundamentals are fixed. However, subject to exchange rates it can only be said that each bond is worth roughly 2.5 million shares and this fundamental is therefore variable.

If the share option is chosen by the

bondholders when converting there's two derivatives also to consider. Firstly the addition of interest and secondly the fees in connection with the conversion. Both of these are % additions on the conversion price with the number of shares being calculated upon the previous five day VWAP. So these derivatives are also variables.

At the current SP of around 2.00p the derivatives convert into more shares than the bonds they relate to. Hence there's a strong incentive for the bondholders to short the stock thereby driving the SP Down enabling them to convert at the lowest possible price.

The situation is just madness and highly damaging in my view. I very much it's is a situation that COPL either foresaw, intended or is now pleased about. So let's take look at what's going on.

In the analysis out of the new group let's first consider Anavios situation:-

In late March on COPL's refinancing Anavio appears to have had a resultant holding of 138 bonds out of the total of 187 released

2 of 3

Between March 27 and June 29 Anavio converted 12 bonds into 29m shares. These shares and the associated derivative shares were sold onto the market during the period. Anavio is very likely to have also been trading them at the same time as selling. This is normal practice and Anavio has openly said as much.

On June 29 Anavio then converted 18 bonds into 44m shares and the associated derivative shares of around 52m.

It appears these 100m shares or so are currently being sold into the market rather than traded. The sells started last week. I counted roughly 80m in high value sells in total which I believe we're Anavios stick over the five market days. If I'm correct and the churn continues unabated, in theory the selling should be complete by Tuesday/Wednesday this week giving Anvario little time and much less shares to enable them to short. By the end of next week I'm hoping we'll see the bulls having it for a change!

Anavio currently holds 108 bonds out of the outstanding. It's unclear whether Anavios has stopped converting for now for all intents and purposes I think there's strong indications it may have done so.

I think there may have been other factors involved but in a statement Anavio said that it sold its shares for "internal risk purposes and remains committed to working with the new board and management of the Company to deliver the most value for all stakeholders and shareholders" recorded in its recent early warning notice.

If true this implies that Anavio has been a forced seller since March and as I say with a little luck its activity will hopefully have come to a halt, for now at least.

It's no coincidence to me that Anavios selling began when the banking crisis started to bite in around April. It was then that regulators got involved mainly targeting banks governance and by extension perhaps institutions such as Anavio too. If not then the crisis is likely to have given Anavios BOD a wake up call.

The SEDI filings and Anavios early warning notice filed on SEDAR confirms most of the Anvario story I'm telling.

So now let's look at the minor Bondholders situation:-

In late March after COPL's refinancing the 7 minor bondholders appear to have been holding 49 bonds out of a total of the 187 released.

It's not clear whether they all held an equal number although simple math may indicate that's the case.

After a number of conversions the minor subset now holds 20 bonds having converted 29. The number of holders has also whittled down to 3 from the original 7.

Unlike Anavio there are clear signs that the minor bondholders have been converting and focussing on trading rather than selling. Albeit they may have also sold part of the derivatives to pay for the conversion fees and the like. It's difficult to tell but it certainly looks that way.

Worst case I think is they all continue to convert at the same or perhaps at a quickening pace given the incentive to do so with the SP as low