Member Info for Edgein

Big Bench,

Encore and Rockrose did the very same thing too. But that doesn't mean that it has to be accepted by the majority of shareholders. We have a large retail base here and it'll be Art's job over the rest of this year, perhaps over just the rest of this month to convince them to stay. I'm here until fair value no matter how many years it takes. Given the potential scale of CCU and BFFDU that could be quite a while even with a large company jv.

Regards,
Ed.

Stas,

Yeah I agree that a large jv partner will likely want operatorship of the jv asset and probably 50% of the asset. I hope that comes with a very decent carry for COPL on whichever asset they JV. Most likely on the CCU where the RS report is focused on and where COPL has 100%. But lets wait and see what the company says about RBL and JV in the coming weeks and will the market then start to value in some of our assets. Be interesting to see which one first as they're barely factoring in the topside infrastructure at the moment.

Regards,
Ed.

Fish,

Basic supply and demand, once volume of buys overwhelms the supply it'll rerate. I remember all those daily posts on EUA about how it'll not rerate either, from 0.25p-44p it sure gave it a good try! :) Why are punters off chasing much greater risk elsewhere, I can't answer for them. But all I can tell you is I'm still buying, cannot speak for anyone else.

Regards,
Ed.

Big Bench,

Compare the recent bidding war between KIST and SQZ. Compare their reserves to those of COPL, would you still accept £1/share? That's ignoring the giant, elephant, mammoth in the room.

Regards,
Ed.

Big Bench,

Ah but just because COPL is grossly oversold it certainly doesn't mean a bid down here would be accepted. A bid at £43m would be about 1/3 of the $120m cost of developing the field to date. COPL raised $84m debt/equity just to buy Atomic and Cuda, both companies at the time were in financial difficulties and the oil price was circa $39 on Atomic close. Noone in their right mind would accept £43m. In fact I would see £1 as outrageously low. You take the property plant and equipment and you add in current net 2P reserves and you're already somewhere between £1-2 per share.

The we find out that the Shannon is outperforming all expectations by quite a margin, way exceeding their primary production estimate and the field hasn't been pushed hard yet, but will be very soon according to the recent interviews. Art suggested he's going to see what the field can do. They're expecting production increases from this month. With one producer tied into the gas gathering and two more to do then they'll see what the production profile really looks like. Even the gas flaring should release 300-600bopd as well as the well optimizaton. From this month on we're likely to start to see what the BFU can do. Once the gas gathering system has been fully upgraded he can really let it rip, hopefully after that RS will do another audit of BFU reserves to reflect actual results rather than modelled results.

The fact that COPL has been approached by a recognised name for a JV on the monster says it all really, RS has hinted at what's there under Cole Creek for starters. Some companies would be valued at several hundred million on that sort of news, in fact some are valued higher on much lesser news regardless of having production and reserves. I'm certainly looking forward to seeing more of the Frontier turned from contingent to 2P, hopefully as a result of the jv as that's potentially multiples of the value of BFU (an already company making asset to COPL).

Regards,
Ed.

Tiburn,

Agreed. Very comprehensive document with the submission. Great to see how the reservoir is performing to the gas injection. A very important step today to get the production up and pressure down. We can see the potential from the wells in the submission, where they jump from 50bopd to 250bopd+. the last presentation early in the month showed how they respond to dewaxing too. So very positive news today and we'll all look forward to the resulting increases to flowing oil over the near term.

Regards,
Ed.

Bladder,

Its what they can do with those extra millions where it gets interesting. 9 more wells into the BFU, infrastructure upgrades and a target of circa 7000bopd. Let a jv partner get them going on the Fed Deeps. Everyone happy as a pig in ......

Except you know who of course.

Regards,
Ed.

Thomas,

Sure. I think Art said something like that from one of the interviews re $85/bbl.

But here is the proof here:

"In aggregate the Company incurred a net realized hedging loss of $2.6 million as compared to loss of $0.9 million in the first quarter of 2022."

In Q1 the net realized loss for the hedged production for the Quarter was just $900k and oil prices were similar to where they are now before the war in Ukraine. The last month in (war started 2th Feb) Q1 and Q2 oil prices were significantly higher, therefore loss on net hedged position widened, but oil isn't $120/bbl anymore. For Q3 they've been back to pre-war levels. So I'd expect the loss on the hedge to be similar to Q1 in Q3. So they lose about $900k on the hedges roughly per Q but make money on the unhedged production. Of course if we head back to $120/bbl again loss widens on the hedge, offset to some extent by increased butane, but more so if they get their planned 2500bopd.

Regards,
Ed.

Also too to mitigate the current rise in WTI, Art also said in the recent video that Butane typically increases in price over the winter too. Also as Art puts his plan into motion higher wti prices are exactly what we want to see as the unhedged oil goes up month per month. Also if they sign off on the JV none of the Fed deeps oil would currently be hedged.

Regards,
Ed.

Dogg,

"COPL needs to be producing at much higher than the hedge for the loss on the swap to mitigate the increased revenues on production above the hedge amount."

Not true, Art said that the oil and butane hedges cancel each other out at about $85/bbl. COPL also get about $1m/month on the current unhedged oil at $55/bbl netbacks. So currently, let alone after further increased production, they're getting FCF. That would increase to around $2.5m netback cash if they hit 2500bopd. So its little wonder they can buy out the next several years hedge for just $10m. That's not factoring the increased netbacks as they produce more from the same wells, i.e. as production increases netbacks per bbl also goes up. I would imagine that if they conclude the talks with the 3 banks successfully, one of the first things he'll do is buy out the hedge. Giving them the full production unhedged.

Regards,
Ed.

Intothedeep,

Not sure where all the confusion is coming from this morning. I took it from the interview that the company is currently doing 1600-1700bopd. But after the get granted the licence to flare up to 3.5mmcfd plus tie 2-3 wells into the gas gathering system then production will make an easy gain back to 2000-2500bopd after that. A pretty much straight forward jump once they have this pressure sorted. I certainly didn't take it to mean they were already there. But 2500bopd would be back almost to the previous peak production and back very much onto the incline curve. That should then allow them to get on with sorting out the topside as more new wells hit that miscible front. i.e. the pressure and waxing problems will be taken care of as they arise. Hopefully then a clear road ahead after we get updates on RBL and JV.

Regards,
Ed.

Ezay,

If he hits those production targets and gets the hedge bought out from $10m of the possible RBL then that is a significant impact to the FCF. He certainly seemed quite relaxed and confident on that in the recent LSE interview. Hopefully soon they can focus on the infrastructure and BFU drilling after the possible RBL and fingers crossed let the JV get on with the Deeps.

Regards,
Ed.

Shaa,

Absolutely, I guess the 1.6bn-1.9bn oil in place may come into play eventually. Also any wells drilled below the BFU should be relatively easy to connect to the gas gathering/mf over time. We could be off to the drilling races from January as you suggest, especially if they get the jv signed off later this month. Agreed that should give them enough time to sort all out for full steam ahead in 23. Should make good progress on BFU in the mean time too.

Regards,
Ed.

Shaa,

I reckon you could well be right. When you look at the RS mapped area vs COPL's mapped area there's quite a bit of room for growth yet. It'll be fascinating to see just how big it turns out to be. Art seems very confident when he talked about the drilling, its mechanical risk not geological risk, that's a pretty confident statement before they drill the horizontals.

Regards,
Ed.

Shaa,

Wouldn't totally agree with that. In Nigeria they had around 16mmbbls of contingent resources from memory and perhaps as much as 1bn in prospective across all of their targets. So far in Wyoming its 45mmbbls gross 2P (31mmbbls net), way better than contingent. Also in the USA they now have large volumes of contingent too. Then we have the prospective and that's 993mmbbls in place for the RS report area and goodness knows what from the rest of the fed deeps. So even the prospective is now looking potentially much larger than all of those exploration targets in Nigeria combined.

All that is before looking at the working interest position. Even if all goes well in Nigeria COPL only ends up with 15% working interest on heavily taxed oil. So far its looking like we'll end up with 100% of CC, 85% of BFU and ??Fed Deeps. All that makes Nigeria pretty irrelevant these days. It was different when they were 80% holders, now its peanuts compared to the US assets.

Regards,
Ed.

I have to disagree on that statement. RBL before the JV would put them in a much stronger position. As Intothedeep put it, current debt is on the BFU and CC reserves and some at the company level not on the reserves. But the RBL would allow them to consolidate the debt, give them high liquidity to drill the BFU and upgrade the surface facilities. Upgrades would not only be useful for BFU but also for the wells to the Fed deeps below BFU. MF and gas gathering of the deep wells etc. So RBL is very positive to enhance BFU and convert BFU PUD to PDP making COPL a much more robust company going into 2023/24. So strengthening their hand, even more so if they buy out of the hedges.

At around $85/bbl wti the oil and butane hedges cancel either other out according to the current presentation. Do all that and they're in a better negotiating position.

As been covered by other posters a jv is a mixed bag. It'll reduce the max upside by the jv % but like others pointed out and art said again they bring big resources. Huge tech team and lots and lots of pipe and equipment. As he previously hinted at, some of the large companies stockpiling casing. Speed of development would be like night and day too, they culd be another PRB producer and know how to drill then Frontiers and Dakotas from previous multiple wells (we'll likely see who the jv partner is in due course). Again approached by them, not went seeking them, so they're interested.

Regards,
Ed.

Stas,

Well spotted. Interesting and very large/detailed presentation. Looks like the new RBL junior facility will be key for the development of BFU with new wells targeting proven undeveloped reserves into proven producing reserves. Also even more interesting for the BFU production is that the new permits if/when received could boost gas flaring by over x3 from current and the new well tie ins to current infrastructure could divert another 2mmcfd back into the gas gathering. That should sort out a lot of the pressure restraints with at total of 5.5mmcfd either flared or diverted. Interesting stuff and I've just read about 1/2 of it so far.

Regards,
Ed.

Yeah great to see the upgraded reserves value to $492m! What a handy time to have that too as the company looks to complete its reserve based lending. Onward and upwards.

Regards,
Ed.

Should read now rather than "not"

Regards,
Ed.

Brel,

Interesting just how quiet it is, just goes to show just how many accounts he was using. It was clear when they all were appearing around the same time, all day every day. The board is likely to get really busy again soon for different reasons as Art puts his plan into action and gets those Fed deep wells drilled. Production numbers from August onwards should start picking up. Not that Cuda is sorted nothing holding them back now.

Regards,
Ed.