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Well as I expected last night, the charts were looking negative. Today a bearish harami cross was created today which is a major bearish reversal pattern, which is even more significant than a regular Bearish Harami.

Had a typo yesterday in my post as many MMs were on 1.3p and not 1.35p - so apologies for that. See what happens this week but the 5 MMs on 1.3p that will reduce and feel 1p will be hit in the short term ahead of the expected placing as BOOM is skint.

Just a little strange how those with bullish views seem to struggle to counteract the bearish views being presented.

Personally I do not agree with averaging down as the exposure of your portfolio gets a little unbalanced. Much prefer to set a stop loss and for whatever reason it is hit, I sell.

Still let me see if my buy in price gets close and I enter here which I feel will probably be next month. But will just be a trade for me though

With regard to your points earlier today, I have discussed what the administrative expenses will be around £400k. I have also identified before ED was being worked on, the administrative expenses were still £300k per month. Hence I feel the current cash balance will be gone this year.

Now let us assume I am in the correct ballpark - the monies that can be generated from the warrants being exercised is relatively insignificant and that was blurd and surprised it was published. Even though we do not fully agree on the monies from ED for the next 6 wells I will assume you are correct and with the administrative expenses I think Highlands are covering, only the first 3 months cover these costs.

I am not acknowledging the fact that there are opportunities but none in my view will look after the longer term exoenditure. Having already looked at the potential of a cash upfront payment for Kansas, I still do not feel that the cost of production or the benefit to Highlands again will cover the expenditure.

If I was currently Invested here, I would like the security that the funds were available for the next 12 months and build upon that cash base from here.

Far from seeing the potential other avenues of funding can provide, the best option would be to put a comfortable amount of funds in the bank. With this in mind, I would then expect a good rise in the SP based on being financially secure in the medium term with the revenues from ED 15/16 for the next 6 wells. This would take some pressure off the BOD to see how the other 2 Well pads hopefully are transformed.

This takes loads of pressure off the Kansas project, DTU, Helios, CO2 to enable a nice stable future revenue stream that can be the medium term. Then hopefully, Highlands can then concentrate and getting good comercial agreement for WD which will create a long term revenue stream

Looking at the daily it looks like the MACD will continue its negative run

So I had a look at the 4 hourly. The RSI is turning more negative from 43, the momentum just went positive for a few sessions and back to negative now with the stochastic turning around from overbought. The 2 hourly and hourly look even more negative.

Although there are several MMs on 1.35p, I can see after the profit warning that the -ve bollinger at 1.15p will be attached this month. This will make it very difficult for the placing that is coming and hence why I see a good trade around 0.5p

zooter - they are rollover trades - not buys

Yes sorry ERV - I was referring to the September 18 Prospectus.

Yes I have reread the IPO prospectus and just tickles you - doesn’t it?

The IPO Prospectus said “The Net Proceeds of the Placing of approximately £1.66 million are expected to be used primarily for the Group’s marketing campaign (approximately £1.05 million). In addition, the Net Proceeds are also expected to be used to repay the Group’s existing HSBC overdraft facility which has a drawn down balance of approximately £0.10 million as at the date of this document and also repay the Short Term Loan of £0.06 million. The balance of the Net Proceeds of approximately £0.46 million will be used for general working capital and overhead costs.”

Misjudged their overhead costs with just £460k 🤣

So let them have yet another go then. But I totally agree with you 1,000 c/m’s per month will be closer to breakeven but still not enough within 2 years. Shame they only have enough money for less than a year to cover the losses during this strategy. So the 300 - 400 c/m’s per month is miles away and as you have pointed out, on the ‘typical’ knowledge used by the BOD, never worked out.

The monies used from the IPO in 2016 was another disaster - so 3rd attempt this time since they floated. And many more failed attempts under their previous names.

I have been talking about this since July & August - so nothing new to some.

My main point back then was a placing coming in my view. All I specified it will be linked to the Kansas Nitrogen Project to at least justify the placing as the shareholders approved the potential placing at the recent AGM.

A little surprised that some think a placing isn’t coming - it has been well advertised in my view by the company. Why else would they ask shareholders for approval to issue 29.5m shares.

If you read my posts from Thursday at 11.07 & 12.00 you may find the answer

The IPO didn’t split it down too much from the net £1.97m raised but £1.57m was for working capital and targeted marketing initiatives. Well with normal cash outflow of £115k per month, they do not have anywhere near that figure for marketing. Just for 10 months current working capital £1.15k (without further market8ng) which only leaves £420k for marketing.

This will generate 4666 new customers in theory - so still way behind breakeven.

Well the IPO said

“The Net Proceeds of the Placing will be used as follows:

fund the working capital requirements of the Company including investing in targeted marketing initiatives which seek to grow revenue and delivery future return on capital – £1.57 million;

enhance the Company’s service offerings – £0.3 million;

fund the identification of potential ‘bolt-on’ acquisitions, which the Company deem to be earnings enhancing and fit with Company’s stated strategy – £0.1 million.”

Looking forward to the bolt on acquisition for £100k - that might bring the administrators in even quicker

Appreciate you posting that HD.

As I have discussed where I get my £400k per month from as written in the last set of results. What sort of figure do you have for administrative expenses?

Looking at the year before any major work on ED, the administrative expenses up to the end of March 2017 was £3.69m which is still £300k per month.

We also have to remember you cannot just cut your costs that quickly in some instances but as RP said, they have cut the administrative expenses by 30%. Yes he could continue to reduce this further.

But that report also said “The Group's share of the direct site costs for the East Denver operation charged directly to the Income Statement amounted to £734,000, although this includes the proportion of staff costs charged to the operation and partially recovered from our partners”

So not as large a saving as people think?

The report also says “Whilst the costs are constrained as far as is possible, the Group has been active in its pursuit of opportunities and in building up its portfolio of projects and complying with all relevant regulations with inevitable expenditure consequences.”

These additional projects will still incur significant legal, professional, regulatory and consultancy costs.

So currently I am happy to stick with my £400k per month administrative expenses. I remember before the date of the finals I did mention what I expected

“Annual report out this month and expect the admin costs to be over GBP5m which the BoD will reduce but will take time.

I suspect the maximum cash held by the end of March will be around GBP4m and extrapolate that out to the end of May will be around GBP7m.

These cash figures are the figures I am looking for. If better good news, if below the overheads are higher than expected and so will look at the admin and consultation costs”

Well I was clearly optimistic as the administrative expenses were £6.878m (my forecast £5m) and the cash balance £602k (my forecast £4m) but not as optimistic as many on here. Most thought I was talking complete rubbish as per the responses to my comments.

So it will be figures up to September 30th which will give us an idea so should hear about this end of November if timing similar to last year.

I have seen a few responses from EB to others which does imply that HD may be right. Hence I will look for the figures when published.

But even so, using $600k which is ~£460k for month 1

Month 2 - £390k, month 3 - £332k and month 4 will be below what I am forecasting for month 1

The discussion came up on twitter between HD and myself due to the finals being issued where the point was it doesn’t cover the administrative expenses on top of other issues with how much money Highlands, the SP would drop into the teens and a placing is required etc etc. Clearly different views here but I am expecting £400k per month administrative expenses. So it will only cover these for the first few months. Hence additional revenue of some scale is required. Since that was written though, ED is delayed and more important that Kansas creates a good revenue.

But with what has happened to ED, it has created a revenue stream but further revenue from Kansas, Helios, DTU and CO2 is required

TOOP is currently running a loss of £1.4m

Let us assume TOOP get 11,200 customers at zero cost (reality it would cost at least £1m)

11,200 at a £125 GP per year would generate £1.4m GP which once the £1.4m of administrative expenses are taken into account, it would then be at breakeven.

So they are generating just over 300 new customers per month but the above proves what is required just to get to breakeven, 11,200 customers at zero cost. Add the marketing costs which is reality, TOOP will be still be loss making.

I can only assume you do not know what the administrative expenses cover then? The wages are a small part of the administrative expenses.

JJAL and myself have identified what we think the revenue Highlands will receive from the next 6 wells in ED.

Looking forward to your calculations to see how you justify the $600k revenue expected in month 1 as per you tweet in August. Clearly you have calculated it so would be nice to see in case I have missed something.

All my figures are purely based on exact production and revenue received by Highlands when they received 57% after costs and royalties between Nov 17 and end of March 18.

Bearing in mind it doesn’t matter what the partners get now, this will make your calculations a bit easier. All we can assume for each well, the costs associated with each well is almost identical and so the best place to start is comparing it to the production from the first 2 wells.

Oh dear. God help you as you will need it

I spouted my views on twitter when the SP was in the 20s near its high. Thought it would be unfair to post on LSE

But next time I will

That some invested seem not to be interested in all views whether mine are correct or not.

I have no problem discussing these figures with those like HD that has a good mathematical brain but we slightly differ on some of our views.

But HOMER, malcadele, Joycopter and several others in the past just goes to show the lack of knowledge you have in your own investment. It would be better to come up with a sensible discussion to explain why you think I am wrong. The only trouble is, you cannot so leave it to those invested that do have the knowledge and can discuss it on your behalf.

These are my views and feel they are more precise than some views that not only baffle me that they are said, but some actually believe it.

Anyway, enjoy your evening. Back tomorrow for my second shift

We were identifying the revenue received from the next 6 wells. I have already identified that the wti change in cost as I said “Admittedly where wti is averaging 10% higher so each month could add another £30k possibly but we are also assuming they produce at a similar rate”

This was based on wti now ~$71 and the average during production when HNR had 57% interest was ~$64

So what happens if they achieve 5-10% less in production over these 6 wells or the fact wti drops by 10% from where it is today before production starts. I have tried to base on known facts without too much guesswork.

The revenue from the first 2 wells is insignificant in my view but was not part of the discussion the way I see it. The next 6 are the main ones as this willl considerably help pay for admin and overhead costs. The last month of production was around 35% of the first months production. Now HNR were expected to receive £850k ($1.1m) in their first month. Based on production being a max of 35%, the maximum revenue £298k for 57% working interest gives just £39k per month.

But you also need to bear this in mind for the future 6 wells - after 8 months, the future 6 wells will only generate approximately £120k revenue to HNR so very critical a new revenue stream is found - so clearly Kansas is the next one by the looks of it or another well pad in ED which HNR have no control over now.

Well basing it on 1984 boepd, RP expected $1.1m from their 57% working interest but this was based on wti at ~$47. But they only achieved 1,771 Boepd so a loss of 10.75% compared to the RPS report but wti was higher. So let us look at the first 2 wells and how they produced in reality.

The finals showed that the first 4,5 months of production achieved £2.9m of revenue (Assumed by the figures Nov 17 production about half)

So with 6 new wells, this will achieve £8.7m of revenue at a working interest of 57% and therefore £1.15m at a working interest of 7.5% for 4 months production. This would give an average of £256k revenue for the first 4,5 months

With this I would base first month around £320k, 2nd month £285k, 3rd month £256k with month 4 ~ £230k

Admittedly where wti is averaging 10% higher so each month could add another £30k possibly but we are also assuming they produce at a similar rate. So I am happy with the figures above as it is based and worked out what was produced and what revenue was created from this. Such a shame the best deal HNR could achieve was by losing nearly 87% of planned revenue.

Oh grow up

With wti at $59 I predicted where I thought the next level it would drop to first on a short term basis - yes I got that wrong.

But funny why you didn’t quote the one when the SP was at 25p on the day the finals were issued on 24th July due to their poor results? This is where I said the SP would be back to the teens on 24th July. See here for reference

https://mobile.twitter.com/D14M0ND55/status/1021720545803595786

Let us see how many more of my predictions about HNR will come true from my comments in both July & August. You might not be so joyful then

“Highlands has divested 49.5% of its 57% working interest in the Wildhorse and Powell wells and will assign 49.5% of its 57% interest in future East Denver wells to True.”

So the other partners pay their costs and True as per the agreement with pay Highlands costs. Once True and the partners have paid all the costs and the state royalty, Highlands will receive the 7.5% working interest as opposed to the original 57% held. So again following costs and royalty

Hope that makes sense