Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Mossma, not not sure why Gordon needs to keep an eye on our new CEO as all of the Lekoil loan agreements were signed off before TH joined them? If you read the RNS from Mon, 13th Jan 2020 18:04 it states that:
"The Company notes that Mr Simmonds and Mr Hawkins were appointed to the Board after the signature of the Facility Agreement and did not have any connection with the origination or execution of the Transaction, making them suitable, in the wider Board's opinion, to lead a fully independent review."
Infrastructure comes in all shapes and sizes. We all know that Bonasse is a relatively small operation however it has infrastructure in place to be able to sell oil produced. This is the infrastructure that I believe neon is referring to. If/when Saffron comes good then of course new infrastructure will be needed to bolster the existing tanks and pipelines etc however they will be able to sell the oil straight away with the same agreement they have in place for Bonasse oil. This is where CERP were considered different to UKOG etc. No one has said that the infrastructure is in place for a 11 million bbl development because why would anyone spend that money before it is proven....
Ross, how many Wells has touchstone drilled over the last year at what price and what production increment has been seen?
This also seems applicable for the BB Peter
"Doe maar Normaal, dan doe je al gek genoeg"
As does this:
"Je lult uit je nek"
Last well we have cash in the bank for yes, funding? How do you know what funding options Leo has discussed? The company has multiple fields within Trinidad as well as a new PSC in Suriname all of which have value and promise on their own. The company appears to be almost debt free in terms of loans and has in the past secured funding from worse positions with fewer assets. Do I think Leo is currently at a roulette wheel currently throwing the keys to Columbus on Black, no. He will have assessed all options and his backup plans will have backup plans. This is not his first Rodeo and your constant insinuation of unless Saffron is anything but a massive success will lead to the company being in dire straits is getting irksome.
Cash in the bank is helpful however not the be all and end all of a companies success.
And again, if you are worried about a 45% GCoS in any well let alone exploration wells then you shouldn't be looking at any oil company let along AIM ones.
I will at this point slightly defend Ross. He did initially try and call them development wells to which I corrected him to the fact that Saffron is an exploration well however if you look at the Lahee classification of wells then it may be possible to class Saffron as an updip appraisal (still a type of exploration well). That being said, the company call it exploration and so that is what the well should be referred to as.
WAIT!!!! I HAVE IT SUSSED!!!! Irene has Ross filtered, that's why the posts haven't been seen.
Here is one from the 26th of September trying to justify why he won't call it an exploration well despite that being what the Company call it...
rossannan
Posted in: CERP
Posts: 6,860
Price: 4.40
No Opinion
RE: RNS26 Sep 2019 10:07
Scarface72
Questions about cash burn and placings are entirely appropriate here though. Look at it this way. Just yesterday Disc0verer was querying why I will not describe Saffron as an exploration well and continue describe it as an appraisal well. In a nutshell, you could say that on balance I expect Saffron to discover something in the Lower Cruse, just not something as exciting as folk have been led to believe or, in the time-honoured LGO/CERP tradition, have led themselves to believe.
But let’s say that Disc0verer is correct and that I should really be describing Saffron as an exploration well and the chance of geological (geological!) success is really only the advertised 45%. Now let’s look at cash burn. At the end of 2018 CERP had $2.60M in the bank. At the end of Q1 2019 it had $2.06M in the bank. At the end of Q2 2019 it had approximately $1.30M (£1.053M to be exact) in the bank. Here at the end of Q3 it is unlikely to have much more than $800,000 in the bank. But wait. We have been told that Saffron will cost $800,000. So Leo is going to pretty much empty the bank account into something with a chance of geological (geological!) success of only 45%? What the heck, Leo?
See what I mean?
Seriously....
Click his name and look at the second post down...
Z2Z2
“This is a massive positive for CERP”
Is it? Another way of looking at it is that LK is again having to cut his cloth as a result of poor financial management and adopt a lower cost/lower risk structure that renders CERP’s entry into Suriname largely irrelevant in the short term and certainly not transformational. In the longer term there is obviously something to be said for having this asset in his back pocket, particularly if the oil price improves, but with LK the reality never seems to match up with initial rhetoric. Describing the reality of Saffron and Clove on here not that long ago would have been viewed as ferocious deramping, but here in Q4 2019 the reality of the SWP for CERP is basically two Bonasse appraisal wells, one now with a 45% geological CoS, one maybe later, though the question of what will be left in the bank account looms large.
IK,
Interesting you raise that point. I have not seen Columbus call it an appraisal well. They refer to it as an exploration well however our friend Ross seems to choose to mis-categorise the well despite my best attempts to educate him.
VMAX,
That feels like the end goal however I feel the way which LK is going about things is sensible. Start drilling the lower risk options to get the team back into the drilling swing (and used to the new "Rolls Royce" rig which they won't have used in the Goudron wells). Once we have some nice results from the low risk wells (as well as oil produced in fields where we get greater returns due to no IPSC as well as SPT offset for drilling costs) then we can build the free cash to fund the larger more impressive options!
What annoys me at the moment is some posters (not you I hasten to add) on the one hand moaning that these are only boring "appraisal" wells (appraisal being a classification of exploration well which always seems to be omitted) whilst on the other hand complaining that LK is betting the farm on a high risk drill!
IMO LK has found Goudron more expensive to increase production than expected, thus over the last year has reduced the amount of work and therefore cost he is putting in there which has then seen a drop away from the production peaks he reported last year. Less oil yes but also less cost going out. The team have clearly identified that lower cost, lower risk wells within Bonasse will help to fund development of the wider SWP as well as help add data.
Why is drilling around Bonasse a bad thing? It means that infrastructure for production and sale of oil is already in place and so any discovery of Saffron can be completed, tested, produced and sold straight away. This to me seems like a sensible plan.
Is Saffron going to transform the company? Hard to say, what if we see another GY 670 with >1,000 BOPD initial production. Yes it declined however those rates in SWP would at least prove the concept that there is commercial oil within the SWP. Consider 3 weeks of production at 1,000 bopd with an oil price of $55/bbl... thats $1,155,000. Lets say a more realistic target of an average initial production of 200 bopd... at those rates then the well gets paid off in 3 months. Transformative? by itself no perhaps not, but definitely helps add cash.
I would much rather see sensible steps to increase the companies footprint than LK suddenly saying he was going to drill a $5 million Wildcat exploration well with a 20% GCoS to a completely untested zone in an area which has no infrastructure set up or way of selling any discovery.
LK still has two and a half years to drill the behemoth beneath Cedros!
AIMHO of course
Ross. For the last time, learn about chance of success and its consideration of risk within the petroleum industry because you are oversimplifying statistics to fit your agenda. 37%-50% is considered LOW RISK so stop playing it as if this drill is considered high risk. That is not the opinion of the company and you would know that if you listened to the AGM. It has a higher CoS than any of your beloved TXP wells for the exploration target, if you don't like it then perhaps go post on the TXP board. I also am enjoying the fact you just copied and pasted your comments to ADVFN without my responses this morning when you couldn't think of any responses.
https://www.researchgate.net/figure/Results-of-simulations-for-10-20-30-40-50-COS-using-Excel-Random-Number_fig1_314274552
Decreases Peter. They will drill a larger bore size first and then will run casing when they get to their planned depth. Next they will then decrease the bore size so it fits through the cemented casing and repeat getting smaller for each section.
https://en.wikipedia.org/wiki/Oil_well#/media/File:Well_Diagram.png
Ross, you are posting on the CERP board for a start so why would people here know which TXP well you are referring to? Latest... as in the last well drilled or the well you are about to drill because about to drill would be next since it hasn't spudded as far as I am aware? Perhaps use well names next time to avoid confusion and make your posts as accurate as possible?
Let's look at CAS-1 then. the unrisked best estimate is 6.2 Million bbls (vs Saffron 11.5)... with a well that appears to again be targeting significantly deeper than Saffron with very minimal uphole reserves as backup... so again I still think shareholders have every right to be excited about Saffron.
I explained GCoS to you the other day. 45% is considered low risk so you suggesting the company expect it to have no chance of finding something economic means you clearly have no grasp of resource valuation in the O & G industry. That is purely your opinion and not what the management have said and you should very clearly define that.
Your next point on the up hole prospects again are your opinion. The Bon-2 and UBOT-3 well appear to have produced 57,000 bbls between them in an updip position from the cruse sands with UBOT-3 producing 35,000 bbls... just some quick maths suggests that 35,000 bbls at 56USD/bbl would give just shy of USD 2 million which would more than happily pay back the well, Saffron will be drilling through a thicker portion of the Cruse by the looks of things suggesting more net oil sand would be encountered, the risk being downdip however the downdip Bonasse-3 has also produced oil so that risk appears low. UBOT-3 I imagine was drilled at the same time as UBOT-1 more than 50 years ago so we could possibly expect better drilling and completion technologies leading to better recovery.
Interesting how you say that the CERP NPV10 is an aspirational one however seem quite content with TXP's... Do you have something against the CERP/EPI (the consultancy which helped to define Saffron)? Who are you to say that the companies figures are not valid? Have you seen all of the data that went into the development and economic models?
Finally back to your favourite go to, funding. The CERP board and team work to get the best value and grow the company as they see is best. Leo is experienced and proven in the petroleum industry as are Gordon and Stewart all of whom are also heavily invested in the company. It is in their interest to make the company a success and as such I find it highly laughable that you suggest they will happily risk the company. The team have stated that there is cash available to drill Saffron, you seem to think that means that as soon as we spud all that cash disappears. There are lots of different ways to fund a drill and most don't mean a briefcase full of cash and spud, these methods themselves can help derisk.
Everyone should remember Ross' posts are his OWN OPINION, although he does seem to like speaking for the company.
Just found the NPV10 for both wells so to save my back of the napkin calculations I can use the own companies valuations as comparison..
CERP Saffron: $88 Million (not including the Upper and Middle Cruse) (NPV10)
TXP Coho-1: $36 Million (includes all possible sands) (NPV10)
Still looks like people should be more excited about CERP....
Ok Ross, if you want to compare to TXP let’s have a look.
TXP had a 95% chance on the contingent resources... not on the main prospect which was 30%. The 95% part was for the sands identified by the COR-1 well which by the looks of the company presentation is pretty much a direct twin and then deepening to a prospect 30% (before you get any ideas about saying the Saffron is a twin to UBOT-1 the two appear to be ~1.5km apart).
So by the looks of things we should be congratulating TXP on successfully drilling the well and coming up tops on their 30% predictions! Looks good for our 45% really doesn't it.
TXP is also talking about Chance of Commerciality and I would suggest that 95% is rather bold and they must be predicting a 100% Geological CoS which, is unheard of.
Summary: Nice success on what was probably a 45% Geological CoS so I like the odds for Saffron.
Next Up let’s compare wells. Actually kind of hard since COHO-1 was predominantly targeting gas whereas Saffron is targeting oil however, we can look at predicted value of prospective resources
Saffron has a PMean of 11.5 Million bbls prospective recoverable.. Multiply the latest WTI of 55.91 USD/bbl we have a value of USD 642,965,000 for the Prospective Resources
COHO-1 has a 1.19 Million Prospective Oil equivalent which is 66,532,900 USD however as I said, gas is the main target. Assuming the 6,120,000,000 estiamted cubic feet of gas at the current price of 3.56 USD/thousand cubic feet we get a value of USD 21,787,200. So a Prospective Value of USD 88,320,100. (A slight side note that the oil sands discovered were not actually commercial).
Summary:
CERP Saffron: USD 642.9 Million
TXP COHO-1: USD 88.3 Million
I would also like to add the fact that TXP drilled double the depth of what CERP plan on so cost of that well will be a lot higher….
Tell me more about why TXP should have more retail excitement?
Oh and finally... "And by the Company’s own admission the chances appear to be that nothing commercial will be found" ...... Where did the company ever suggest this? Do I have to explain Geological CoS to you again?
cheers TT :) every day is a school day!
Peter, stretch to the drill pipe is pretty much what is says on the tin. When Drilling, a small amount of stretch is expected as even the metal drill pipe will have some elasticity when you add more sections meaning more weight (downward force). If the drill pipe gets stuck then more force is applied when trying to pull out of hole which leads to greater stretch. My understanding from what TT12 has said is that they got 28ft of stretch at 25,000ft, so they put 25,000ft of pipe in the ground and then managed to pull out 25,028ft after the stuck drill bit. Some would say they're magicians ;)
I hasten to add that I am not an Engineer so TT12 please correct me if I am wrong!
There is no such thing as 100% CoS. No company is ever going to commit to that and statistically it is almost impossible. CoS is a multiplication of 6 aspects (or more depending on which method). CERP show this in their AGM slides and recent summary documents, a 10% change in any one of those aspects can alter the overall CoS by 5-7%. A 45% CoS is very high for exploration wells. and as you can see from the presentations, all aspects are above 70% and most are either 90-100%.
(Slide 6 has full CoS)
https://columbus-erp.com/wp-content/uploads/2019/07/20190729_SWP-Investor-presentation.pdf
In terms of your check list:
• ?Private petroleum licence granted- DONE: these are around Bonasse which has a PPL (See RNS date 13 May 2019)
• Certificate of Environmental Clearance (“CEC”) to be modified to include drilling location
• ?Surface locations selected - DONE: The Proposals were submitted August 1st (See CERP Tweet)
• ?Key documents prepared for submission to Ministry of Energy and Energy Industries - DONE: The Proposals were submitted August 1st (See CERP Tweet)
• Access road and drilling site to be prepared as needed
So it looks to me like we are progressing well!