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The good thing is the idiot AIM advisor who decided to add on this additional non AIM rule compliance creep is probably the reason the stock wasn’t relisted last week as they originally intended!

Oils seem to be perkier now so next week is a good time to come back.

You have to put up with a bit of manure if you want to be in the race horse business.

Hurricane, Tullow, Ascent etc etc all have their on manure supplies too. At least the one here is pretty dilution lite keeping our leverage intact.

This slip back from 12p at the time off the last Agm feels more about shareholders than it does the Company.

The relief of finally getting the MJF at full pricing clearly didn’t stick around long even as the extra money poured in.

The oddity is Caspian in June and July was broke, literally gasping for air and being propped up by KO personally.

Six months on and it’s the opposite, steady and growing cash flows as those MJF work overs raise the production and the first of the new series of MJF wells will start to kick in big lifts in the cash flows.

Yes the fact they didn’t push on at A8 for a test of the Cambrian was disappointing but from the last meeting we now that might be back on the agenda? We shall see.

Now with the A5, A6, A8 and 801 saga of “When will they flow” is back centre stage it appears some shareholders have said “Never” and left. In a few months we will find out if that was a decent call.

My guess is not and whilst we may not get “A full glass” for most of us “Half a glass this season” would do quite nicely.

The 3AB acreage and the boat are interesting lottery tickets. Maybe they serve KO and his family interests well but don’t bet against them as his real game is turning this into something big and dud assets don’t deliver that. He is looking to up the multiples on this to be able to use the paper as currency, that demands success.

And so we wait! In my case with a modest amount of optimism, much more so than 12 months ago when it was the same price.

Performance
Upside: Elephant sized.
Past: Donkey with a tendency to fall asleep
Current : Donkey still, but now waking up?

“Elephants’ transformative discoveries that turn 6.5p to £6.50.

Very rare beasts but if you want to find an “Elephant” you need to look in the right locations and Kazakhstan or my other big oil bet Pantheon in Alaska are those types of onshore location.

As to whether there are any “Elephants” you need to get out “The Truth Test” and that’s called a drill and pray just a little!

Indeed CC and the politics get interesting.

Clive and the rest of the Board were very clear they believed Total was looking to sell off the Dunga field which they got as part of the Maersk takeover package. This is further validated because a Total have public ally stated they are interested in selling down some of their massive Tengiz stake which is probably too large for them in terms of future capital needs.

Anyway back to Dunga, it’s a small location that is completely surrounded by 3AB including all the acreage below 2,500m which is where the “Elephants” are based on the rest of the districts geology.

So while Total and Maesk below them would probably wanted to wait out KO and his family regarding buying them out the reality is now that 3AB has been placed inside Caspian who do have the cash flow and permits to drill the ground below Dunga. Their “Wait until the locals come to us” strategy to buy at a 90% discount no longer works.

But with Dunga now up for sale the new owner will have none of the Total/Maersk baggage and as they are buying Dunga for cash a little bit more for 3AB and a small production percentage will probably not be an issue.

And just maybe Caspian might hit some nice free flowing oil without mud issues.

The 3AB acquisition may have got very handy curtesy of Total?

Only relaying what was said.

Ok the boat. They were very clear they see the boat as a cheap deal which they hope will contribute cash flows along the way. They are not necessarily expecting a hire this year due to the time it takes to licence a new well but mentioned that if a deal was done for the 2021 season a substantial deposit would be paid in advance. So maybe cash flow this year but the revenue would be booked next year.

On the boat they said there is $15m of drill and other equipment on top and that the drill was the most modern they had and if necessary could be moved on land rather than at sea.

The real purpose of the boat deal is that with no other drill boat capable to get down to 6,000m that Caspian are likely to be able to negotiate modest carried interests on new licences plus get paid for the boat rental. The alternative to their boat hire is apparently to build your own island which is far far more expensive. Anyway the message was this deal will allow Caspian to get a carried seat on much bigger assets than they could ever afford as an independent.

Clive when asked did not rule out further acquisitions from KO and his family. He said if they were to buy from others they would likely be fleeced along the way. KO is a reliable counterpart in an area where that’s not always the case. Not what I wanted to hear but probably not unexpected.

So the message is “Trust Us. Things are progressing but operating in high pressure Kazakhstan oil fields is not “Cookie Cutter” exploration and difficulties come with these upside opportunities.

Anyway I came away thinking I would buy more when funds permit.

A bit more updating.

On pricing assuming Brent is $60 the per barrel the CONTRIBUTION that Caspian receives is $35 after all petroleum taxes have been paid but before any corporation taxes. I am guessing that is more than many operators in the North Sea receive?

Anyway the point is the gross profit after taxes received by Caspian at $35 is pretty good. The internal pricing of $18-$20 a barrel is also more than it might appear as that is after all costs and the sums received are not taxed effectively.

Ok on to the MJF. They are expecting to produce from wells 150 and 153 in the “next few months.” They are expecting 350 barrels a day with an annual depletion rate of 5% assuming the wells are subject to a standard work over protocol. So that’s potentially an extra 21,000 barrels a month which will give a substantial increase in cash flows per month of $600k.

On the MJF drilling there are two rigs working plus a third rig doing work overs. All from last years drill purchase. There is one more drill from last year and I forgot to ask what it was currently working on.

All the rigs from last year are now apparently working and in “Good Nick.” That acquisition has meant that drilling is now continuous rather than being subject to other customers plans.

On the 18 new MJF wells by Christmas 2020, they say that to get there which they could, they would have to hire additional rigs but for now they were focused on the latest two wells underway. They would decide at a later date as cash flows come in. So they are not committed to that date with the focus being on cash generation not just completing the job. Frankly with three in house drill rigs working it makes sense to complete the 18 wells in a way that maximises those drills.

On 3AB this will be drilled this year at a cost of $2m and is a lease requirement.

Apparently the Total Dunga oilfield which produces 15,000 barrels per day is up for sale because Total have decided to exit “Oil” and focus on green energies. 3AB completely surrounds the Dunga field and is the size of an English county! Caspian expects any buyer of Dunga to also want 3AB as it is the acreage under Dunga and holds the upside potential. Whilst previously drilled it appears not to have been done so using modern 3D seismic. There comment was the Soviets used to drill everywhere. Anyway 3AB is seen as a deal rather than a strategic asset and should they hit oil on the next well the price will just go up.

Ok the boat. They were very clear they see the boat as a cheap deal which they hope will contribute cash flows along the way. They are not necessarily expecting a hire this year due to the time it takes to licence a new well but mentioned that if a deal was done for the 2021 season a substantial deposit would be paid in advance. So maybe cash flow this year but the revenue would be booked next year.

Agm brain dump part 1

The 1,500 barrels produced and reported was full of mud and other undesirables. This “Oil” was taken to a facility who handled this “Waste.” Additionally there was no permit in place at the time for this A5 oil to be sold. The choke at this 1,500 “Bopd” was 12mm, for reference the choke was 19mm when the original 3,500 bopd was produced years ago before it “Glued up.”

The 1,800+ barrels of A5 oil actually sold in January was the post permit approved oil that was produced by the heavily choked back well.

The different API figures are simply the numbers they received from the lab and there was no one technically competent to comment but they were aware that the issue existed but did not know why.

They said they were confident the A5 oil was one body not a series of pools. Also they are expecting the A5 well to produce at 1,500 bopd minimum and clear expect more.

Tubing for A5 will arrive on Tuesday and once put in place traditional hydrochloric acid treatment will then be used to clean the well which they are then expecting to start producing.

The three other wells will not be treated with standard hrdrocholic acid but rather the Baker Hughes Deep penetration acid solution. The acid solution to be used is currently being finalised by a lab in Holland who wanted to charge a premium to speed up the process but Clive said as its winter why would they bother to get it a few weeks quicker in January. Apparently the solution is now available and will be on site post the tubing and not before because of Health and Safety issues. Apparently it really is nasty stuff that cannot be just left about.

A8, I robustly made the case that the failure to drill this to 5,300m as it was designed was seen by the market as failure. Apparently the were happy to go for the 4,300m oil which they thought they could monetise. Clearly that didn’t happen and the reason given was while the Chinese were efficient drillers their cement job was significantly below standard. Anyway subject to A5 starting to flow they may well go back to drilling A8 to 5,300m. This came to me as a surprise as I thought one of the “Oilies” said that this was not possible or not ideal? Perhaps my memory is at fault.

Value of oil produced to Caspian:
Internal oil $18-$19 a barrel
Export oil $35 when Brent is $60.

Why drill A9? It’s a licence requirement.

Perhaps Clive is going to release those numbers for the meeting on the 13th?

He can then talk about other things than sailing boats on the Caspian.

Whilst the acquisition of the boat is not something I was expecting and I don’t like the dilution I think understanding what is really happening is beyond all of us due to the local politics required to operate there.

KO is in the middle of a three dimensional chess game and we here thousands of miles away are trying to understand what is happening by applying the draughty rules!

So an additional cup of “Hope and Faith” is required here for the next couple of months. I am guessing the game will be much clearer come the AGM?

Fingers crossed, again.

Yep can confirm that. Clive was explicit that they would look at nearby offshore licences when they came up for reissue.

So maybe this boat is part of the foreplay ahead of applying for those leases?

That works from a UK perspective but try explaining to the Polish Tax Office you think you have a right to make tax free gains if you are a resident there.

Looks like a recipe for real trouble.

In the middle of this Chinese meltdown which looks like getting much worse once the virus embeds itself beyond China it’s actually very handy to be suspended!

Maybe add another week or two by which time the Charlie 1 well will be discovering their oil. As to how well it flows well that’s another much bigger question! Hopefully it flows nicely as that will validate the old BP Talitha data to a certain extent.

Think of it as a tax on succcess!

“At risk”

Damn auto correct!

Indeed spot on. No Competent Person firm wants to put their Professional Indemnity insurance stars risk! So they tend to be very conservative.

Is the contracts tendering process there as a regulatory notification process primarily or to insure bid access for all the local players?

Hopefully expired tenders can be quickly reimplemented?

On the 1,500 bopd current estimate it struck me that add to that number the current MJF production and Caspian are currently already maxed out on storage facilities. Although January with Its likrly ice hardened roads is probably the best time to have these issues.

Watch for an update re storage or tankerage solutions and only then might we see what A5 can deliver.

Remember last time the storage tanks were not sufficiently secured to contain the pressures! So there is a lot we don’t know.