Member Info for Callasjunkie

Thanks, 36800.

While I'm sure you won't agree with all or any of my views, your politeness is refreshing and somewhat alien to this board.

As you will have gathered, I have a extremely critical view of SLE.
The CEO has a record of not just failure in SLE to date but in his two business ventures in Ireland prior to SLE. However this has not stopped those companies paying him huge emoluments. Independent directors of standing, from outside Nigeria, never stayed long.

Second, doing business in Nigeria is a minefield. Afamefuna has recently posted links to academic studies of Nigeria's endemic corruption. David Cameron publicly called Nigeria 'fantastically corrupt'.

I spent my commercial life in the oil business and had some dealings with the NNPC. They are so corrupt and incompetent that despite being Africa's leading oil producer since the 1970s, they have to import all their finished product, as their 3 oil refineries are all defunct.

I had personal experience of one of the two individuals whose company has won a $900 billion lawsuit against the Nigerian Government (under appeal). No that,s not a misspelling! (If you care to look it up, the company is P&ID). In this case, my sympathy is with the Nigerians, for good reason.

The FSO on the face of it maybe not only be a good project but with NCTL pipeline to Bonny an effective colander, it is the only show in town. However, I don't think ELI/Eroton/SLE are the people to handle it. Look at all the missed deadlines already. MLPL who hold SLE's interest in Eroton have been fined huge amounts of money for deficiencies in filing tax returns three years in a row and the Admission document states clearly that there are significant deficiencies in ELI's corporate governance.

You are now a share holder, so I wish you well. However I do advise doing your own research.

p.s. Wait for the howls of rage which I can assure you will not address any of the points I have raised above.

36800, Shell has an exclusive offtake agreement for Eroton's crude. The contract is described in detail in s10.24.6 of the Admission document. Furthermore, a new similar agreement has been signed for future offtake from the FSO.

Here's extracts from an article from the journal Africa Oil+Gas Report of 31 May.

"Owned by 51 African countries and a clutch of private African and foreign investors, Afreximbank has, in the past few years, played some noteworthy role in the continent’s energy finance.
But in the months prior to the Luanda Memorandum, the Bank has acted in ways that call for a bit of review. Some of the lending and/or proposals to lend that the bank has announced, have been quite intriguing, if not incredulous.

Wait: There’s one more deal we are curious about: Afreximbank signed a non binding term sheet with Eroton, a Nigerian independent producer of crude oil and gas and operator of Oil Mining Lease (OML) 18, for a prospective $750Million senior secured reserve-based lending facility, the purpose of which, in addition to refinancing Eroton’s current senior bank debt (of approximately $196Million ), is to provide funding which will be used by Eroton
to acquire an additional 18% interest in OML 18 from two of the other partners the acreage
!!!, subject to agreeing documentation and relevant consents, thereby taking Eroton’s interest in OML 18 to 45%."

The three exclamation marks are that of the article.

https://africaoilgasreport.com/2022/05/in-the-news/afreximbank-recent-actions-call-for-caution-around-africas-energy-bank/

MLPL which holds SLE's interest in Eroton incurred ,$6.3m fines and penalties over its tax filing in2021. That's in addition to earlier penalties in 2020 and 2019. Total is $21.9m unpaid. Can't pay because it hasn't a sou.

Well Alaric, you were your usual arrogant, overbearing self in deriding my concerns regarding the transactional relationship between Eroton and Notore, extracts of posts 1 and 2 March below:
"well sam - looks like the cat got CJ's tongue and now Afailure answers for him :-) i didn't start the discussion on fertilizer (i don't actually see the relevance of fertilizer to San Leon’s investment case). as CJ did in fact start it, i assumed he might want to finish it? obviously not. am not sure CJ's much cop at this discussion forum thing..." and

"ah there you are CJ - thought you'd done a bunk! we were looking forward to hearing your further comments on Notore and Jite in the light of this article: https://tribuneonlineng.com/notore-revenue-grows-by-43-to-n27bn/
it seemed to paint a slightly different picture to the one you had just described. knowing how fertilizer is your specialist area, i think it's fair to say we're all on tenterhooks. please don't disappoint your newfound 'fertilizer' readership here."

For a subject that you don't deem relevant, there are 64 references to the word 'Notore' in the Admission document.

The most relevant points are neatly summarised in S9.3:
"Eroton is susceptible to periodic downtimes and extended shutdowns at Notore Chemical’s
fertiliser plant. Furthermore, Notore Chemical is currently facing significant operational
challenges that may impact its ability to settle its gas supply receivables going forward.
Notore Chemical is significantly in arrears in relation to payments pursuant to Notore Offtake
Agreement. The gross receivable in relation to gas payments as at 30 Jun 2021 was US$40m."

It would seem to suggest that, unlike yourself, the professionals deem the Eroton/Notore relationship to be very important.

You're right, Rob. I was going by the glossary on p18 of the Ad Doc which described the facility as 'proposed'. Other mentions indicate the facility is in place.

Judging by today's share trading, some investors must have taken the trouble to read the Admission document.
A lot of words but the essential message is that all the players are skint.

The two major logjams to finalising the interlocking and interdependent agreements, such that various funds can be drawn down and revenue generated are:
1. Execution of the Afreximbank $750m loan to Eroton. As the bank's credit committee has approved the loan, Eroton should have already cleared due diligence. No explanation for the delay is given.
2. Commercial barging operations to the FSO are in abeyance until the FSO is permanently moored to the seabed. San Leon provided a $2m loan specifically for this purpose. Again, no explanation is given as to what is holding the mooring up.

Tucked away is a reference to a Supplemental Admission document to be provided to demonstrate planned progress. Interesting.

Hey Sam, can you sell your shares for more than 9p today? If you can find a buyer I'd take it.

I guess what you are trying to say is that you haven't a clue as to why Decklar's shares have dropped by 20% since publishing their reserves estimate.

Lot of positive reaction here to the Reserves Report and the trucking news. However Decklar's shares have fallen over 20% since reserves publication. Any ideas why?

Rudeness is the weak man's imitation of strength.

G1, I hope you don't lose out. My own view is that with Midwestern unable to pay on the Loan Notes and Eroton going through a second debt restructure, OF may have had no alternative option but to go along with this deal. The FSO intrigues me. Conceptually it could be a wise option. The company that converted the VLCC to a FSO have a good track record and remain an interested party. Trouble is there are some really serious unanswered questions. Apart from the never-ending delays, why has SLE had to stump up relatively modest money to help the FSO complete when Eroton should be flush with cash from high oil prices and the re-financing. This despite Jite being the largest shareholder in the FSO. ELI hasn't even filed its 2019 Accounts yet in Malta.

G1, San Leon doesn't get paid for OML18 oil produced. It is a shareholder, via MLPL, in Eroton. The opportunity to get cash from OML18, through dividends, depends on the profits and dividends of Eroton, routed through MLPL. As they are both opaque private companies, you will have no way of knowing what net cash has been generated, if any at all.

Why does Notore matter? Because it owes Eroton 17.8 billion naire for gas feedstock. It hasn't paid a sou for its supplies for a very long time. Both companies controlled by the sainted Jite.

As regards Notore, yes their sales increased by 43% from a very low base. You failed to mention that the current period was 15 months and the comparative 12 months.
In 2021 the after tax loss was 20.4 billion naire as compared to a 6.4 billion loss for 12 months to Sept 2020.
So much for you lauding increased sales.

Pleased to see Narcissus and Echo in such good form.

With Decklar's share price at one third of its 2021 highs, despite oil prices at 7 year highs, is this yet again Fanning's unerring ability to back a loser? (while pocketing a winners remuneration). Please allow responses to Narcissus and Echo priority.

Any truth in the rumour that SLE is going to be renamed Manana, Manana PLC?

2017 Annual Report

The idea for a new export pipeline for OML 18 mentioned in last year’s annual report, has now become a planned development. This pipeline would be dedicated to OML 18 and run to an offshore Floating Storage and Offloading (“FSO”) system. Eroton would then not have to contend with metering issues or theft attributable to third parties, nor NCTL downtime (which is often caused by issues further upstream on that pipeline). It is therefore anticipated to realise significant advantages with respect to pipeline loss allocation and production up-time, coinciding with the expected timing of the production increases from rig-based activity.

2018 Annual Report

In the longer term, the export pipeline and FSO system mentioned above will provide
additional control.

2019 Annual Report

Firstly, the majority of the 24% production downtime in 2019 was caused by problems in the third-party terminal and gathering system. Underlying production (production at the wellhead before pipeline losses) from the assets was approximately 50,000 bopd during 2019 before that downtime. This issue is being addressed by the planned implementation of the new export pipeline and Floating Storage and Offloading (“FSO”) project, which has secured all necessary permissions and much of the equipment for which is now in country. In the longer term, the export pipeline and FSO system mentioned above will provide additional control.

Annual Report 2020

The pipeline will run from within the OML 18 acreage to a dedicated FSO vessel in the open sea, approximately 50 kilometres offshore. Expected timing for the commencement of operations is H2 of 2021.

ELI has received approval from the President of Nigeria (acting in his capacity as Minister for Petroleum Resources) for the FSO, ELI Akaso, to be set up as an oil terminal.
ELI is in advanced negotiations with other third party injectors for use of its pipeline and terminalling facilities. Construction of the pipeline continues to progress and hook up with ELI Akaso is expected to take place in the H2 2021.

Outlook 2021
The commissioning of the ELI pipeline.
Expected close out of Oza transaction.

Interims 2021

The ACOES pipeline will run from within the OML 18 acreage to a dedicated Floating Storage and
Offloading ("FSO") vessel in the open sea, approximately 50 kilometres offshore.
Oil barging operations from OML 18 to the FSO commenced in late September 2021 (while awaiting availability of the pipeline), with the full ACOES including the pipeline expected by Eroton to be operational in early 2022.

RNS 15/02/22

The full ACOES, including the pipeline, is currently expected by Eroton to be fully operational in the third quarter of 2022.

I'm trying to figure out just how god a businessman Jite Okoloko is.

Eroton's production has collapsed; it bought into a system that uses a pipeline that was known beforehand to be under-maintained and the subject of serious and persistent sabotage (Shell did a brilliant offload in flogging it to Aiteo for megabucks) and its long term borrowings have had to be rescheduled. A vaunted drilling program has been put on hold.

Midwestern can't pay its debts to San Leon, leading to reverse takeover which, according to San Leon, will give it near total ownership of Eroton.

Jite's Notore Chemicals, bought a fertiliser producer, from NAFCON in 2005 after plant failure. So far this has proven to be a disastrous investment. Its net loss for 15 months to 31 December 2021 was $53m. Its published borrowings were $340m against total equity of $110m.
The position on both losses and borrowings could be far worse, taking into account two factors:

First an investment property has seen huge fair value write ups (paper adjustments). The property which was values at $49m in 2015 has been written up (in addition to some smaller transfers from PPE) to $180m by 2021. These write ups were all recorded as revenue in the profit and loss account. Without them losses would have looked even uglier.

Second, Notore buys its gas feedstock from Eroton, a related party. For some considerable time now, Notore does not appear to have paid over cash for these supplies (although booked against the P&L). As I've mentioned before, Notore has been using Eroton as a bank.
Notore now owes Eroton $47m, up $18m on 2020.

This company has extremely serious going concern issues.

On the positive side Jite has gleaned the multi-million dollar loan from Afreximbank, although the interest rate and repayment terms do not appear to have been disclosed.

If Fanning gets control of Eroton, he may have fun getting the $47m back. Good time for Jite to get out of Eroton and Midwestern??

(I have used the official fx rate of 380 naire to the US $)

Alaric, crying to mummy. Do please, please let us know how you get on.