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Hi Nige,
You're getting stuck in early! You must live in the tropical lowlands of the UK, a few weeks before grass cutting here. I know what you mean if that keeps up we'll be thinking more about building an ark than gushing oil in Angola!
Absolutely, we've the finance guys and a management looking to aggressively grow, makes it seem that Tobias is only the first step to bigger and better things. Even get the mention of acquiring production. Definitely exciting, CRCL must be very close now to flow rates as they're describing themselves as an Angolan focused exploration and production company.
Regards,
Ed.
Good morning Nige,
I'm good, hope you are too! Yeah interesting info from AET this morning, seems they are getting prices similar to Bonny light for their oil (a premium to Brent). So relevant and interesting, not sure why their share of production is higher than their working interests though, perhaps they get a higher share of cost oil while financing. But at least it shows how much they're getting paid, Important for both CRCL's EPS and FFD plans.
Breq,
Its an interesting idea for sure and CRCL have mentioned consolidation in Angola. Have you looked at Brite's financials? Clearly our APEX deal was mutually beneficial to both, CRCL brings the cash they brought in the pre-drill assets. Would be great if they could consolidate on this field early as we are debt free. But it may just be wishful thinking on our part, but you never know everyone has a price.
As for the Tobias field production I was using page 14 of the recent presentation that suggests ip rates of 17500bopd or thereabouts in Q4. That then declines through to 2039, their 15 year plan for oil production. For a cumulative production of 30mmbbls. Did you see those other numbers elsewhere in the presentation? If we manage to get to those projected start up rates by year end it would be a fantastic result. That EPS would be throwing off significant cash to fund the FFD and seismic elsewhere etc.
Regards,
Ed.
Breq,
While I agree the presentation numbers are likely conservative at this stage after these wells but before FFD with modern drilling (as you suggest they do mention sidetrack and horizontals for Tobias). I just cannot see 36,000bopd by year end as being a possibility at all. I would agree with the margin for the EPS oil and likely trucking that oil to the refinery given what AET are receiving per bbl currently (today's update). Interesting idea too that CRCL may move on consolidating interests in KON-11, that's a possibility and hopefully one they could do early, perhaps soon after the EPS, but long before they go FFD. Be interesting to see if any of the other NOP's would be willing to sell and at what price.
Given the presentation it does suggest an appraisal phase between now and the EPS start up, so it will be interesting to hear what the plans are after the completion of the mini LPT.
Affc21, there sure does look like more opportunity for down dip drilling to the SE in the Tobias field for sure and may establish a new oil down to point. That would be very good for a reserves prospective. But it will be interesting to hear where they believe the new recharge pressure/oil is coming from.
As for Galinda, it certainly looks like a more complicated task than Tobias with some outstanding producers right next to wells with oil shows. Perhaps showing compartmentalisation or at least faulting and therefore suitable to horizontals as you suggest. There could be significant benefits for long horizontals on that field. With Galinda drilling planned for late this year or early next not a really long time to find out.
Lots happening in the next number of months so it will be interesting to see how all this unfolds.
Regards,
Ed.
Nige,
Your list pretty much covers everything we're expecting updates on in the near term. Whether the battery metal focus means more assets or Canegrass we'll find out in due course. Results from Canegrass assays soon according to the presentation. I can't see them making a significant battery metals acquisition until we see first revenues from Tobias. I think they did hint that further oil and gas acquisitions are likely to be after that too for areas beyond Angola. If they hit the level of production they're aiming at from the presentation that could do a lot of BM or oil and gas exploration and indeed acquisitions too. I certainly wouldn't let the BM focus bug me at present, if Canegrass comes in then great what a bonus, but I see it as largely irrelevant at present compared to Tobias and Galinda. If they can run both BM and oil and gas together to our benefit then great.
Regards,
Ed.
Good morning Nige,
LSE, I think that may be a different post you're thinking of as management here do have both warrants and new premium priced options. Extraction, Mr Zhou and the Apex vendors all have warrants from memory, I'd need to check that.
For Extraction to convert more warrants they need the share count to be higher due to the option with Align they're almost at 30% if/when they buy those 99m. Therefore they need someone else to convert their warrants or share options to increase the total shares in issue. They set out their intention imo by offering to buy those shares from Align at a large premium. There is unlikely to be further conversions from them due to their holding until others move first. They could have converted their warrants but instead chose to buy from Align. But ultimately when there's more shares in issue they'll likely exercise more of those warrants to keep them just below 30% imo.
So I guess Nige its what others do first, Extraction can't exercise more warrants or draw and convert those bonds without going over30% presently. I do expect all other warrants beyond Align to be exercised at some point as they're well in the money. That would allow Extraction to do more of the same, will that happen this year? I would imagine so, just can't say for sure. If I still held my warrants here I'd be exercising for sure, but cannot speak for other parties.
Regards,
Ed.
Stas,
Was it not announced though that management were to take bonds in lieu of fees? All their hard effort did they not think they deserved some bonds? Now worthless of course. Did they not receive those bonds? I must have missed that.
Regards,
Ed.
Stas,
Yes for them to veer off the know path to increased production form their in house expert "Art", the GGS upgrade enabled them to pass the previous peak and it was a function of injection volumes. Certainly makes folks wonder why this wasn't the route taken to success. Seems like our new temporary management ignored this advice completely and set on their path of modest gas recycling and mediocre liquids injection to achieve previous production peaks. No wonder it didn't work. The balance of the bonds and interest gone now though, it'll be interesting to see the finding of the FCA during this time as to the activities of those BH, which also included the new temp management Richardson et al as bond holders too.
Regards,
Ed.
Leew,
Exactly, its complex for sure but the trail is all there to be followed. From the acquisitions of Atomic and Cuda, what they had what they paid for them under distressed circumstances. The debt method chosen, right before that they had an oversubscribed book build (easy to raise cash the normal way). The long wait from when the plumbing issue arose, their lack of using said infrastructure when upgraded to anywhere close to its full potential. It wasn't to inject a relatively small amount of NGLs.
Stas well look at it this way, for a company to make a discovery like this of around 40mmbbls and build a GGS from scratch it would cost a lot more than what's owed to the SL ($40-50m). All those 30 plus wells alone would cost around that or more. So someone is getting a gift right now for sure at out expense. There's little we can do to stop this now, just wait and see if another bidder emerges. Otherwise its over to the FCA, CAG et al.
Regards,
Ed.
Stas,
I'm still a holder and read this board most working days. Imo if the CAG make real progress and get a result there will be a flood of claims go in here. The way I still see it is the best way to get anything back from this is stay put and let things unfold. Art was always keen to explain how great he was, how experienced and sophisticated he was, how his use of seating wasn't the best it seems. But led him to dig a great big hole in July '23, likely argument from that will be it was shareholders fault, bond holders fault, anybody else's fault but his. He was just a large piece in what unfolded here as we all know.
Regards,
Ed.
Stas,
It will be buried in a lot of those documents, likely the big long Sedar filings. For sure it was in an early presentation too, the infrastructure and injected gas at that time was apparently worth $100m. If I'm not mistaken they said it was something like 3Bcf of gas injected then. That of course didn't include the 2P reserves of 40mmbbls gross, that's what an acquiring would be buying, not the net reserves after state royalties etc. COPL paid around $2/boe for those, very small for US light oil reserves. That also doesn't get around to what they found in the CCU/BFFDU beyond that, certainly flowing oil was coming from the Frontier 2, falling off chairs etc. Those CCU workovers became pending the JV etc.
Those lawyers engaged by the CAG will have their work cut out with this one. But it looks like from the company statements and the facts from that Wyoming site they're in it up to their necks, be interesting what a high profile legal rep and class action specialiast will do here, he'll have field day imo.
Regards,
Ed.
Good morning Stas,
Well you did a lot of the ground work yourself by comparing the differences between the production peak in 2021 and how that differed to the injectant volumes from July 2023-December 2023. The most obvious difference from that official Wyoming site was the levels of gas injectant into the field. It was around 8mmcfd per month in mid-2021 and about 3-4mmcfd in 2023. This is a miscible flood/gas injection EOR, very peculiar I would say that they chose only NGLs during this time when it clearly wasn't just NGLs at the previous production peak it was a load of dry gas too. When gas injection rates in 2023 where much less why upgrade the plant to handle 10mmcfd? With further upgrades planned to 12mmcfd?
They didn't get anywhere close to that after the GGS upgrade around our best producing wells. The July ops update, the most damming of all RNS to date, suggested how the new upgraded system enabled them not only to get back to previous production peak, but BEYOND! Strange then they didn't follow a similar injection pattern with the new upgraded system and Art's plan from July. Its all there in black and white.
Regards,
Ed.
It looks like some people are still not getting it. To get the same response to the last oil production peak they had to replicate the same model or similar. That involved injecting around 7-5-8mmcfd of nat gas PLUS NGLs, it wasn't an either or they require both to work in a miscible flood. The NGLs mix with the oil and the gas pressure gives the drive. As it was clearly stated in July, oil production was a function of injectant volume. NGLs at this point are pretty much a distraction, the Wyoming figures show it pretty much just gas recycling from July to December. They need to increase nat gas injection as well as NGLs as laid out in July! There is no other way of getting back to 2700bopd without that, why do you think that the GGS was upgraded to handle 10mmcfd? That wasn't for the NGLs, that was for the returning or recycled gas a result of increase gas injection (which never happened).
Regards,
Ed.
Good morning Calder,
I reckon that spend so far from CRCL is around $3m, they may require one or more wells as per presentation. Spend for the EPS will depend on how many wells they need to hit their production target. We'll have a better idea of that once we see the test rates of these two wells, the presentation suggests expected times for both test periods to end. From my understanding most of the FFD will come from the EPS revenues. They may at some point get RBL once they get that CPR done. We'll know a lot more about their plans in the coming weeks, well results, EPS plan and the CPR. If they could complete the sale of the Ni assets during this time it sure would help for the Tobias appraisal costs, but they do have £9m of that convertible loan in place and are currently debt free so have options. Pretty much uniquely funded for a small cap, some might say almost like a unicorn.
Regards,
Ed.
Excuse me Art, When did I say the wells will flow 12,500-20,000bopd? Which post was that? In fact I have been stating all along that the 12500bopd flow rate was exceptional, world class, very unlike a shallow carbonate wells. Even 2500-3000bopd would be a very good result and a very economic well at $83/bbl. So less lies from you thanks. Just because I can refute all of your points today does that make me a know it all? Perhaps its just because I've been here for about 12 months I'm able to easily refute your points today. Seems like you're getting yourself all triggered over very little. But then it takes all sorts on these boards. Just relax wait for the flow rates and for that option to potentially trigger, that's what I'm doing.
Regards,
Ed.
Art,
Not to worry Mr Karam has stepped down from Extraction so he's not making the decision to do this deal. So you can relax now its all good. :) Their nomad and company lawyers seem to disagree with you. But perhaps you should vent your frustration about this deal towards the company rather than on a public BB. You're the only one that it seems to be upsetting. As a shareholder I'm quite happy that this option is in place, I'm sure Mr Jennings at the moment is even happier.
Regards,
Ed.
Art,
You're a little confused I'm afraid. The only way that Extraction benefit from this deal is if the share price is significantly above the price they're paying. i.e. above 1.2p. Mr Jennings does benefit quite a lot from the deal as his 0.21p warrants, now exercised to shares, are being bought at 1.2p, a great deal for him now. Perhaps a nightmare for him a year or two down the track, we'll see. But look a profit is a profit. If you don't think that Extraction will make a profit on these then that's your opinion. Imo they'll likely do quite well on those. I'm not complaining either as if I want to buy shares below 1.2p right now all I have to do is lift the phone.
Regards,
Ed.
Art,
They are not buying warrants, those are unlisted warrants. The option is to buy shares. Yes those warrants exist, the holders of those have every right to exercise those at the exercise price whenever they want. No surprise that a warrant holder will want to exercise their warrants when the share price has mulitbagged, easy money. Nothing dubious about exercising warrants. If Extraction would prefer to buy 99m shares in the market at 1.2p, I must stay I would prefer to see that rather than them convert 99m of their warrants and having Mr Jennings sell 99m shares at 1.2p in the market.
I'm also curious about what upside Extraction see on that 1.2p, clearly they must see good upside on these 99m share to agree to such a deal. Nothing dubious about that, in fact it shows that Extraction are aligned with current shareholders interests, make a refreshing change to the normal discount deals that happen on AIM. Those normally give shareholders something to complain about,
When the operator gives them the go ahead, then CRCL can announce flow rates, not before.
Regards,
Ed.
Art,
No they cannot do that. That release that the largest holder was willing to buy 99m shares at a 37% premium to the share price is price sensitive information, that release had to come to the market. Had they sat on that and not made it public then that would have been an insider deal, now its not its public domain. Noone can complain, should the share price pass 1.5p, that they didn't know about this deal in place. This company has also said since they drilled those two wells that they're planning an EPS etc, now describing themselves as an Angolan focused E&P; if/when these wells flow the result is likely to be as surprising as someone exercising well in the money warrants or options.
Regards,
Ed.