Member Info for CaneToad

In the podcast of the Half Year Results Presentation on 6 August 2021, Stuart Morgan said the following:

https://www.youtube.com/watch?v=mbx2tmTIo2E&t=13m59s

"If you put all of that together, it means we ought to be able to be financially debt-free by the end of 2022. Which would be very pleasing from a managing the challenge perspective. I would it probably be inefficient from a capital structure perspective..."

I contacted him on Tuesday this week and was told that that statement is still true. He also said that they didn't consider the balance sheet to be an issue.

Obviously, it would be good if CPI made a statement to the market reiterating the above, but I guess that will not happen.

P/E has now changed in Stocko (12m Forecast Rolling) -> 147.8.

In my opinion, these P/E figures are erroneous. The EPS estimates are probably too unreliable.

I tried to ask the company and they would not give the figures. I tried to ask here and it seems that people only want totally positive discussions. In that case, I will depart and leave everybody live in a dreamland, where everything is positive.

I would not quibble if the discrepancy was only 10%, but when it is huge, I think it's reasonable to have a reliable idea of current production.

@MWAP: "If you ask the company they will say on course to meet guidance"

Yes. I agree 100%.

But that is FY Guidance: 2100-2300. There are only two possibilities here. The numbers given for H1, Q3 and FY Guidance are wrong OR the below figures are correct. All I am trying to do is ask which of these possibilities it is. Do the calc yourself:

Guidance(Low). Average=(2730+2730+2050+900)/4=2103
Guidance(High). Average=(2730+2730+2050+1700)/4=2303

These numbers say that Q4 is 900-1700. That is important, because it could mean that 2022/Q1 is 900-1700.

FACTS:
H1 average: 2,730
Q3 average: 2050 (I was told 2022, but let's use 2050, to match what @rifteastafrica had)
FY Guidance: 2100-2300

OK, then some of the other numbers are wrong:

Guidance(Low). Average=(2730+2730+2050+900)/4=2103
Guidance(High). Average=(2730+2730+2050+1700)/4=2303

As I have said many times now, I would LOVE to be proven wrong. If UOG confirm, that is great.

@Investor81: I don't want a cheaper entry point. I have a mid-sized position already. I have been trying over the past week to do more due-diligence before investing a large sum here, because it seemed too good to be true.

I was told directly by Investor Relations, yesterday, that they only publish average monthly, quarterly and annual production. I also gave them the video and tried to get an explanation of the excerpt where it says 2000 boepd. My interpretation is that the figure mentioned in that video is also just the published guidance. It's not the current daily production, which is a confidential figure.

As I have said - I am happy to be proven wrong. I just want the current daily production figures OR average Q4 figures. If you run the numbers yourself, you will see that the Q4 numbers which are consistent with guidance are 900-1700 boepd. I am not trying to sensationalise anything. If daily production is as low as 900 boepd, then that will be the Q1 production for next year, unless they can do remedial work to boost it or very quickly bring on new wells, before having to announce the new guidance. I like the company and I'd like to invest more, but I am concerned when I see such a dramatic decline, from 2700, potentially down to as low as 900 within 1 year.

I agree, forward outlook looks great. I have no problem at all with that. I also agree that the current price is very attractive - ridiculously so.

Bottom line: UOG is most likely producing somewhere between 900 and 1700 boepd in Q4.

If it's as low as 900, then this is about 1/3 of what is in Q1 and I'd give a valuation of 1/3 of what it was then. I gave UOG the video and there was no reply other than 'they are on target to hit FY guidance'. No comment whatsoever on whether or not that figure mentioned in the video is the daily volume. I don't like this sought of response.

I still think that UOG is very cheap; and with the new wells coming online and the cash they have from divestments, I hope they might be able to rapidly increase the daily production, but it's no longer something that I'd make a major investment in.

@Investor81. Thanks for the link. I listened to it. I heard exactly what you said.

I wish to knew the correct figure. I asked for the daily figure from UOG and they wouldn't give it to me. I also gave them my calculation and they didn't comment on it. They said "We do not disclose daily figures but an average per quarter, half year and full year inline with other E&P’s."

If it's really 2000 boepd, I'm surprised why they don't say that and confirm to me when asked.

Note: my original estimate of 1300-1400 was to match just the midpoint of FY Guidance.

I am in complete agreement with your figures when matching 2100 and 2300.

"Is there a workover period / facility updgrade traditionally in Q4?"

I have no idea. I'm relatively new to this company. I did increase recently, but still only have a modest position. I'm quite reluctant to increase to a sizable position unless I know real production figures. A 50% drop due to water cut is HUGE and important to valuation, though this is clearly very cheap.

I originally used a slightly different figure for Q3 of 2022, but I get an exact match with your figures when I change that to 2050.

@rifteastafrica: I agree with your figures. I just checked my spreadsheet and I get the same upper/lower bounds: 900-1700 for Q4. The midpoint (to match 2200) is 1300.

I have done my own research into this issue. I asked the company about the daily volume and I received the following response from Investor Relations:

"We do not disclose daily figures but an average per quarter, half year and full year inline with other E&P’s."

That tells me that the average daily production for Q4 is in the 1300-1400 boepd range. That is the value that will give FY Guidance of 2,100 - 2,300 together with the other facts:

H1 Average: 2,730
Q3 Average: 2,022
FY Guidance: 2,100 - 2,300

As stated already, I like the company and I think it is good value, but seeing a daily production of 1300-1400 boepd is very different from 2,730 or 2,100-2,300. It has huge implications for the valuation, unless they promptly bring another well online.

I quoted the 1300-1400 figure for Q4 to UOG and they neither confirmed nor denied that it was correct.

I could be wrong. Do your own research.

@hey_arnold: "This is still a sell by the way. Just in case you were in any doubt and believed a word Claire says."

Here are the FACTS:

Broker Ratings:

Hold: 10
Buy: 9
Strong Buy: 5
Sell: 0
Srtong Sell: 0

Consensus Target Price: 3,787.58p

As mentioned, I have no problem with people who are long OR short.

I have a probelm who admit to LYING and spreading FUD - they are SCUM. Maybe a report to the FCA is in order for you!

@hey_arnold: "Keep buying cane and i'll keep selling. You will make me rich."

You mean. 'Keep buying cane. I'll keep lying and spearding FUD'.

By lying, you are manipulating the market - which is a criminal offence.

I have absolutely no problem with FACTS. I see that you have not denied that you LIED.

@1Bokke: "if you look at the interim results presentation for 2021, they state that the figure of 2100 is a forecast of daily production and not an average."

Are you 100% sure of this? I cannot find anything in the annual report which says that. Perhaps I missed it; if so, kindly refer me to it. This is a very important fact.

The facts that I do have are the following:

H1 Average: 2,730
Q3 Average: 2,022
FY Guidance: 2,100 - 2,300

The water cut issue was discovered in August during Q3. It is an absolutely critical thing to know whether or not the FY Guidance is the average over the year. That is what I expect it is. If that is true, then the current production is closer to 1,400 boepd.

As mentioned before. I have an investment here (two tranches/accounts). I think it's a great company and very cheap, but I would like to thoroughly understand the current production level before investing more funds.

@hey_arnold: Why don't you apologize to Claire while you're at it - if you have any dignity, that is.