Member Info for Bohemia

It’s possible that instead of a storm, all we get on Oct 1st is an excuse that the accounts still aren’t ready and a “temporary” suspension of the shares.

Which could then give an even more eerie silence until we are granted an update.

Seems to have a poor memory.

The merger didn't provide funding for Saffron2 - not even BPC were claiming to be fully funded at that point and did a placing immediately after the merger, which only purportedly funded P1 not S2.

He didn't sell "some shares", he transferred 100% of his shares to his wife's pension. That certainly would have crystalised his tax liability at 2.19p but, unless his wife is a pensioner, wouldn't have given him any cash for that tax bill.

And apparently he left for personal reasons, and it was a surprised/disappointment to BPC. He's trying to re-write that as a planned transition?

The bigger elephant though is that S2 found a lot less net sands than he claimed to have found in S1. And the same, currently unresolved mobile shale problems in the lower cruse. So his key achievement may come to nothing (all whilst his 3 years appear to have raised production from 400 to 430 barrels per day, mainly through so faltering acquisitions). IMO he and CERP got very lucky they found a buyer who's desperate need to buy something with their paper trumped CERP's need to sell up.

Give that editor/PR man a raise. Any AIM company would be proud to have come up with "accumulation" as a moniker for what's actually an oil leak.

"’CEG believes the disputed remaining $xxx, can be resolved by year end and at a discount. Payment if any will either be by issuing shares at a premium price and/or a payment schedule which CEG believes can be adequately serviced from future cashflow.’"

Fortunately (if you value transparency and accountability) management don't get to mark their own homework when it comes to accounts time. The auditors have to review cashflow and creditor forecasts for the next 12 months and work out if the business can still be audited as "going concern".

Personally I don't see how it can be. At 400-500 bopd, Trinidad is not making any cashflow which can service old debts or other liabilities, and there is no capital available to drill more wells and increase production/profits.

I can't really accept your classification of the "disputed" amounts. Eytan explains here https://www.proactiveinvestors.co.uk/companies/news/948701/bahamas-petroleum-co-plc-shareholder-qa-948701.html, 5 minutes in, that the rig was zero rated during the delay but the cost overruns came from other personnel, services and equipment that were set idle. So even if Stena were at fault, it's not going to stop other contractors wanting their money. The only way to hold Stena accountable for the consequential losses would be to refuse to pay them for actual productive time, despite a contract no doubt making clear they are not responsible for consequential losses. I don't think it would be embarrassing for them to push for payment in that case; CEG would be laughed out of court.

So they are left trying to agree a settlement with the other contractors who did not cause the issue. This is where being short of the planned funding does matter. It's one thing offering $7m of creditors $3.5m on that basis that's all you have. But imagine trying to get them to agree a lower billing that even then you can't actually pay!

"Thanks for your $400k bill. To avoid a dust up, please agree to $200k so we can get our accounts signed off. Oh and we'll pay that over 3 years. We don't actually have any money or make any profits at the moment but we'll definitely get an elusive farm in to be able to drill some more wells and that will see you right."

Or the contractor can take them to court, or ultimately liquidation, in order to pursue the full $400k (I think we can all accept the assets could be liquidated and cover $10m of claims). There's no way I would preemptively accept a haircut to my billing, of course.

It feels a lot like history repeating itself here. After the P1 disappointment the share price managed a sharp recovery from 4p to 6p as the bulls looked forward to the next strategy that would save the company, even though the financials had an obvious hole in them. And we know how that ended up.

And I think we're there again. SC's statements about the cash situation on and since 31/5 look, I'm afraid, like guesses to me. The company didn't give an update on resolving the P1 bills so we are going to have to wait for the results for that: not long now. But again it seems obvious to me there is another hole. Going back to the 23/4 open offer, we were told the LOWER END of the 2021 funding requirement was $22.5m, with the main elements being:
i) Saffron-2 $3m (approx, based on 25-30days)
ii) Suriname $0.7m
iii) Lombard Odier $4m
iv) G&A $4m
v) P1 costs $9.8-11.2m ($14m reduced by 20-30%)

The funding to meet this was:
i) $7.3m in the bank
ii) $2.7m from the CCNs
iii) $9.6m from the OO/placing
iv) $3m production netbacks (including the expected S2 production!)
Which totals $22.6m.

Well it looks like Suriname isn't happening any time soon, but CEG have told us they "don't need" the $2.7m from Bizzell apparently. That's at least a $2m hole. S2 took longer than expected and is producing less income than planned. And there is no reported, material development in getting haircuts to the P1 bills.

No-one should be "less nervous" about the financials.

Some "interesting" numbers in there. The new 2.3 million shares are 0.29% of the total, not by a long way "less than 0.025%".

And apparently "BPC" (really!) now has 796.5m shares outstanding. Which doesn't fit with the last number of 789.2m shares. In fact the new number, allowing for today's 2.3m, is exactly 5m shares too high so either they've neglected to tell us where 5m shares have gone or it's another typo.

And is this now the end of the CCN saga, quietly burying Bizzell's non performance. Apparently the £2m promised was available in June, and the company told everyone that it was part of their 2021 funding requirement/solution, but today we learn the BoD simply decided it didn't need to take that terrible dilution at 8p. Even though they are trying to sign Arena debt at 4.2p. £2m - about the cost of another Middle Cruse Saffron well: no, it's in shareholders' interests to turn that down apparently.

LLL, I noted Eytan’s comment about S1 now producing from the UC. It could be a mistake, however you’ll see here that CERP (CEBL) had their workover rig back in action in June 2020. Doing what? Possibly recompleting S1 for UC production.
https://www.energy.gov.tt/wp-content/uploads/2021/02/MEEI-Consolidated-Monthly-Bulletins_January-December-2020-15-2-2021-2.pdf

If they did that, why? It’s unlikely the MC went dry is two months but it is possible the water cut went beyond 99% and became uneconomic. If that’s the case the present S2 MC production rate is of even more debatable worth because, as you say, if the water cut is similar that could some be problematic.

You’ve quoted virtually every line about the LC in that S1 release except the one I quoted, which contradicts you and Eytan.

“We achieved light, high quality oil flow to surface (circa 40° API) from two test intervals in the Lower Cruse.”

According to CERP’s April 2020 release: “We achieved light, high quality oil flow to surface (circa 40° API) from two test intervals in the Lower Cruse.”

So somebody misrepresenting their achievements - either CERP or CEG. To me the problem still remains that S2 encountered the same mobile shale problems as S1. CEG knew what they had to deal with, had months to come up with solutions, yet couldn’t. I’m not inclined to trust management that this is still a live prospect, or in particular that they can deliver any fruit from it before their financial problems come to a head.

However if another player does look at the data and thinks they have the answer, I would accept they may show some interest. 200bopd from a $3m well, or 11mb at Saffron, doesn’t seem all that exciting though. They would have to believe the whole SWP analysis and be buying into that (taking out CEG cheaply?) - but where is the promised reanalysis of the SWP 3D seismic?

As for manipulation, sorry I don’t really see it. In particular you talk about synthetic shorting. If I want to short 10m shares synthetically, the provider doesn’t simply take that bet from me - otherwise they are taking an opposite upward bet at their client’s whim. IG or whoever will go out and sell the 10m shares, so the sell still hits the market. And for me to close the bet, they have to buy back the 10m shares. So my big bet is still the elephant in the room, far outweighing any small manipulative trades I might make. Really a dodgy shorter needs high volume not low volume to make their play work: rumours that make someone else panic and let them close their short cheaply. Otherwise no low-liquidity company on AIM could survive.

My preferred explanation remains that the placing shares went to loose hands who are selling them wherever they can, and the share price is not especially far from reality when the company is still loss making, in a financial hole and now appears to no longer have a “mega-upside” story to spin.

TXP have 8 development wells to drill, they don’t need to find work for the rig. They don’t really have a lot of free cash either.

willec really doesn’t understand his specialist subject. The 48 API oil was from the LC, and is not producing. The MC oil is much lower grade. And they have 5 other fields not 5 other wells: it’s actually about 70 wells dripping oil at about 5b/d each. And despite the apparently great margins, they are still losing money - $1m this year now according to Auctus, before all the millions blown on failed exploration.

No one is going to fund further MC wells on an assumption they’ll produce a flat 80b/d for four years. Oil wells simply don’t run like that; certainly they’d want to see how S2 flows for six months and it has to do a lot better than S1. TXP and TRIN don’t have money to invest for a 4yr ROI - TRIN’s shares are trading at <3x earnings! It would be like admitting their own growth options are weaker than CEG’s.

1500 was indeed the year end target but given the 81b seems to achieve little more than offsetting declines elsewhere (current total inc S2 400-500), they’ll be lucky to hold on to 2020’s target of 500.

A massive failure. The middle Cruse is nothing special: will probably be 50b by year end and 30 average next year. Plus it has none of the follow on prospectivity of the lower cruse.

They knew the mobile shales were the problem so would have had all the mechanical ideas to deal with it ready to go. They idea they can come back later with the answer is laughable. And they’ll definitely be no S3. No one is going to spend another $3m trying to get a different answer to the same question.

Sorry to all that got sucked in. I tried to open as many eyes as possible. Nowhere to go now.

Auctus aren’t connected to Investec as far as I know - where do you get that from?

And they are still forecasting 916bopd average for 2021. Since we’ve had nearly 8 months at less than 450bopd, that would require 1,800 bopd for the rest of the year. Sounds out of date to me.

Arbitration? CEG can only drag the government into arbitration if the licence agreement specifically provided for this. You have no idea that this is the case, and frankly why would the government include such a term - giving a third party the decision on its fees.

If (and only if) it’s not in the government’s sole discretion to allow the renewal or not (even though BPC’s original listing doc says it is the minister’s discretion), all CEG can do is wait until the renewal is denied on grounds of unpaid fees and take the gov to court or the privy council. They can’t push an alternative fee calculation.

Licence renewal: back in May Eytan waffled that “it’s not really an application, it’s our right to extend the licences.”

Today in RNS black and white, CEG have “the right to SEEK a renewal”. So unlike the previous description, this is very much inline with every legal description of the process: that for the third term the licence holder can apply but (unlike the second term) the minister decides if they get it.

Really why would they give CEG the renewal given the bad blood, political unpopularity and - if they even want more drilling - CEG’s total lack of financial wherewithal.

And then all the other technical analysis and data room would be moot.

Whatever they've said about testing all zones in the short term, you simply don't do that if the primary target of the Lower Cruse works. We know the MC at S1 produced about 30b/d with 90%+ water. If the LC delivers 100+ and it's the future of the company, you don't risk that to test the second prize. You put the LC on immediate long term production, of course.

IMO, the line about testing all the zones gives them cover to stay quiet if the LC fails and hope to have some reasonable MC news to soften the blow. i.e. when they wrote that plan, they hoped the LC would give them cause to stop after one test.

And so that could be what's happening now, but not a safe situation to be making predictions.

The other problem is ... what if it wasn't a 1 in 3 chance. Sure they got an independent assessment of the 1 in 3, but no potential partner took a look at it and decided to buy in.

So what if all the potential partners looked at it and thought it was to risky? Maybe they had particular concerns when they looked at the seismic, old logs and regional data. Or they just told it was 1 in 5, 1 in 10 or 1 in 20.

As the management do you:
i) Give up, let the licences expire and wind-up the company.
ii) Keep telling PIs it's 1 in 3 and push on with the well, ultimately drip feeding almost all the new shares required out PIs. And what would help fill the gap left by a specialist partner: how about telling PIs your specialist mates in Australia were going to put in $20m ... no matter if they ultimately didn't.

Option (ii) is a no brainer for a ruthless management team. A few more years of the gravy train and a massively skewed risk reward if the well happens to succeed. One better, use your shares to buy the CERP lifeboat and keep the train rolling.

Not much to celebrate is it. If there were party speeches, it would be hard to skip over the progress report.

Six months and no detailed review of P1. Positive indications apparently but no-one can be bothered share the analysis.

Production targets were 500 barrels a day end-2020 and 2,500 end-2021. They gave themselves a pat on the back for reaching 500/d for a few days in December but now we know 2021 production has drifted back to less than 450. And 2,500? The chances of even S3 completing by year end are ebbing away so 700 barrels seems the best case.

But also there was the promise of seismic reprocessing for Saffron in Jan20 and the whole SWP reviewed by April, to provide at least the next 2 targets from the promising 9. Nada, and they don’t even talk about this anymore (nor Uruguay).

I suppose they’ll be the AGM to look forward to once the accounts are eventually laid bare.

"CERP assets were bought as a lifeboat if no Bahamas success, Potter et al would have looked it over from all angles to ensure it was seaworthy before buying it - after all it was in their vested personal interests to do so, no better incentive."

It shouldn't necessarily give you confidence though. Arguably buying CERP could have been for other reasons: looking back could BPC have got the funding it did without buying CERP?

If they didn't have CERP, the company would now be bust with $10m of P1 cost overruns and no real assets. Shareholders would be wiped out any so would the CCNs: their £3m advance would have no useful security. LO would also be wiped out: if the post-P1 share price was 0.1p instead of 0.5p they'd be owed >$5m instead of $4m by a bust company. Stena too would be owed $10m by a bust company, so if they had any foresight they ought to have been thinking about whether their customer could endure a cost overrun.

So arguably what BPC needed to buy something (anything!) with shares that would have some perceived market value if P1 failed. CERP fitted the bill whether they really liked Saffron or not. And it worked, whether Saffron works or not: they got their funding from Bizzell and LO, and after P1 raised the OO money to repay LO.

Yes the CERP acquisition diluted the upside for management's own shares, but their priority was getting P1 drilled. After all, if they couldn't give Bizzell and LO enough security to unlock their funding, P1 wouldn't have got drilled and the licences would have expired worthless: game over. So no need for CERP to actually be assets they liked.

As well as some of the $14m, CEG also owed $4m to Lombard Odier. That was owed in June so presumably also had to come out of the end-May $10m balance - along with S2 costs.