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So Saffron is indeed dead. They didn't manage to tell us last year, and they seem to be dancing around having to tell us today, but we do learn that the higher-risk appraisal well in Trinidad was unsuccessful and that the Bonasse licence (including Saffron) is producing less than 20b/d.

So the pitch is please give us millions more to pay the debts, so we can do drilling that a year ago we ranked behind Saffron.

Use of proceeds. $0.6m cash plus $5.5m from the raise will makes $6.1m. But then they detail having to spend $11.7m in the next two years on debts, work commitments and financing costs. How does that work!

Personally I think Potter and Uliel knew what they were buying - how could they not - but bought it anyway. They would have seen all the production and financial data and the results for S1. If they really had an idea how the S1 problems (mobile shakes) could be overcome at S2 I think they might have been able to provide even a basic explanation ... but nothing, not before or after S2.

They bought it anyway because what they needed in 2020 was a second angle to spin. A second leg to the business that would make it look like P1 wasn’t totally make or break for the whole company. And something that they could buy with BPC shares: would a good company really have gone for that deal? The second leg was critical to raise the money for P1: the late 2020 placing, the CCN money (all £3m of it in the end) and even the Lombard scheme. All of those were aided by the fact that the SP didn’t crash to zero after the P1 result. It didn’t matter if CERP was a good buy or, at that point, whether S2 had any chance of success, it only mattered that it would keep the story alive. And it succeeded: even with the CERP assets it’s clear now that any shares owned in Feb 2021 were effectively worthless, yet the CERP angle - despite its abject failure - allowed them to raise more money in May and stumble on.

You’re right though about Leo Koot. Despite CERP’s position he found a buyer that needed him more that he needed them. Which meant he could claim his chunky payoff and, presumably, dump all his shares a year ago without having to declare it. Potter & Uliel on the other hand got only the chance of glory (P1 being successful) but that was a long, long shot.

Columbus Energy Resources Limited finally has 2020 accounts, signed of 30/12/21. https://find-and-update.company-information.service.gov.uk/company/05901339/filing-history

On the plus side, the auditors have signed CERL as a going concern after December’s restructuring, which means they accept CEG have a reasonable chance of funding the remaining shortfall.

The description of CERL’s 2020 start is striking. Saffron-1 is described as unsuccessful, putting them in a bad financial state made worse by poor performance from operating assets. I don’t remember that description at the time of the merger or when they were talking up S2 to justify the merger and more fundraising.

The entire value, £52m, of cash provided by CERL to its operating subsidiaries has been written off. That means the auditor have no reasonable expectation of any money coming back in from the subsidiaries. That’s not the operating businesses as a whole: the operations and loans are distinct. It appears to imply that not even the best assets (Goudron) will return any value.

$30m

Shouldn't your first concern be whether LLL's posts are accurate and relevant, rather than whether the motivation is well-meaning or cynical? Personally I don't think there's any doubt that anyone warning about the problems with this company has been in the right for the last year or two. So "pathetic"? No.

Meanwhile, today's bit of unreported news: as far as we know the Innis-Trinity licence expired on Friday, representing 30-40% of production. I wonder if we'll get an update on its renewal status as quickly as the Bahamas licences?

Missed this earlier in the month. CEG's Spanish subsidiary CPS is being put into liquidation.
https://www.diariodeburgos.es/noticia/Z7BF5330B-04B5-F6C5-FAE3D0606CAB2297/202111/La-compania-petrolifera-de-La-Lora-entra-en-concurso

In the accounts they carried about a $2.5m liability for their obligations to decommission the field. Instead they've walked away and left that safety/environmental obligation to the locals or the government. What a scumbag thing to do - this is not in the same class as telling LO or Stena they can't pay their bills. It's a social responsibility - after this none of their management should ever be granted another operating licence.

CERP/LGO operated the field from 2008 to 2017. None of the previous managements (Ritson, Koot) made any clear provision to pay for the clean-up. I'm sure they all saw it as a provision they could skip away from at the right moment so it hangs over them all too. Unless of course Spain has any recourse to the parent company CERL: they should have insisted on this but have virtually no history in oil licensing. As usual, it's good of CEG to keep the market informed.

For any ex-CERPers, Gordon Stein is a director of ZPHR though apparently he doesn't think that belongs on his director profile. Quite something to be more proud of your association with Madagascar Oil, Cadogan and Regal!

That's enough reason by itself for me to swerve ZPHR.

Well it looks suspiciously like the holding size of one Simon Potter, listed on CEG’s website as 12,436,472 shares.

We were told he owns 81m shares before the OO and took part for 33m more, making 124m pre- and 12.4m post-consolidation.

Qnard, did you read Monday's RNS. It is CEG themselves saying that a top-up premium may be sought by the insurers.

SvS, Eytan did say they won't be doing any "early stage appraisal". He said they had obligations to drill new wells in his last interview. There are no obligation on the Bonasse license so that must relate to Goudron, I-T or South Erin. So if they are going to be drilling 2 new wells, we know those wells are not on Saffron.

" 'E's not pinin'! 'E's passed on! This parrot is no more! He has ceased to be! 'E's expired and gone to meet 'is maker! 'E's a stiff! Bereft of life, 'e rests in peace! If you hadn't nailed 'im to the perch 'e'd be pushing up the daisies! 'Is metabolic processes are now 'istory! 'E's off the twig! 'E's kicked the bucket, 'e's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisible!! THIS IS AN EX-PROJECT!! "

No mention of Saffron, though they aren't going to be doing "any early stage appraisal" so I guess that project is dead. The problem is, without a higher-risk higher-return kicker, how is there any investment case here at all.

Basically they are saying we'll plough $4m into a low-risk programme next year and it should lift production by 15-20%. That would be less than 100 extra barrels a day. It might tip them into a positive operating cashflow position, but not more than $1m pa. Then what happens in 2023: either natural decline reverses any production rise and cashflow goes negative again, or they repeat the process: plough in another $4m of capex. Why would anyone hold shares for that scenario, or give them $4m to essentially make only $1m of it back as profits for one single year?

Coincidentally £35k is probably the amount Eytan will earn if he can string this out until year end. About the only beneficiary of the current slow-walk/silence.

The creditors of CEG (talking about the P1 and Bahamas creditors) cannot reach inside a subsidiary company just because CEG owns that company. The only exception would be if a specific sub-company gave a CEG creditor security or a guarantee as a condition of a CEG loan/contract. However the creditors of CEG can try and have the debt enforced by seeking to take CEG's shares in CERL.

CERL is not a new company, it is a new name for CERP, now wholly owned by CEG. I don't believe it is profitable, though assets like Goudron and I-T may be. In CEG's favour, the government of T&T would cancel contracts if some third party "took" those assets, so they won't be taken as individual assets.

I believe CERL may well be insolvent, which is why its 2020 UK accounts have still not been filed ( 5 months late). It has S2 debts itself than any near-term profits cannot cover, so it needs a commitment from CEG to fill that hole. The director of CERL (Eytan) know very well that such a commitment from CEG could not currently be relied on: if he filed that he could be personally liable to CERL's creditors.

I'm intrigued to see what happens first. Maybe CEG raise some money or go bust. But maybe CERL will run out of time/cash first. If CERL continues to fail to provide its accounts, eventually Companies House will strike it off. CERL will no longer exist and all the operating companies (in T&T, Cyprus, Spain, etc) will belong to the Crown instead of to CEG.

Forgot to link: https://www.energy.gov.tt/meei-consolidated-monthly-bulletins-january-august-2021/

The MEEI must have a decent intern at the moment because they've published the August data just a few weeks after the July release. August is interesting as it's the month S-2 came online.

Saffron is operated by the CEBL operating company. In July it produced 8b/d (from the old Bonasse wells and maybe S-1). In August 11b/d and that's 340 barrels for the whole month. We know S-2 was online by August 24th at allegedly 81b/d. If it was online from August 24th-31st at that rate it would have produced 648 barrels on its own. So, erm...

Perhaps one day soon the administrators will sell us BPC (Bahamas) Limited for a modest whip round. Outside chance of making our money back by suing the directors or writing a book. Or maybe by selling the data to Exxon. :)

I wasn't around in the NR and early LK days, but I would say Goudron never looked like a company maker for LK. In the LGO days they were reporting 500b/d IPs and oil was $100. I think we can assume those IP rates didn't last, and in the LK era very few people would expect oil to hold above $50-60 (with T&T SPT killing the economics at the level).

Essentially I don't think you can sustain a listed E&P company with a $1m executive cost base without about 3,000b/d of production. That's where TRIN is for example, but with a very modest £50m valuation. If you don't have that, you need a plan to get there. SWP was that dream: and a 30-50% chance of success is worth something. Goudron, if it's only an endless cycle of ploughing all your cashflow into maintaining 300b/d, is not an investable story. So LK pulled together every penny he could to make Saffron possible, and wouldn't waste the money on not-going-anywhere-Goudron.

Interesting close, offered at 0.65p all afternoon and then someone squeezed it up for a close back at 0.675.

Personally I still think another OO is coming. There's no business plan but I expect they'll come up with some sort of fanfare. I think the main pitch from Eytan will be that they've agreed settlement of the liabilities at a big haircut. After all I don't think any of the creditors want to end up having to liquidate the assets. Much of the $22m could actually be late payment penalties, and if LO are owed $2.4m then they've probably had most of their capital back: what they're owed is their "guaranteed profit" which they might be more circumspect about.

So it's possible we see an OO for $10m not $20m+. Basically they have to try, and almost anything is better than nothing for the creditors. But I wouldn't go anywhere near it myself and I don't see any concrete value in the continuing business.

Apparently there's not even enough money left to pay the directors to come up with a business plan either.

2021: Perseverance-1, Saffron-2, WNZ, 1500b/d
2022: Got some work obligations, gonna try and fund them. Hopefully +100b/d.

How do you think the $22m of debts will be paid off by year end. Do they have a magic money tree?