Member Info for Edgein

Interesting as the warrants only account for about 20% dilution yet the company has increased its production and reserves by circa 47%. Plus added to their Fed deeps exposure by 47%. Dilutive no not really, are they counting in warrants that haven't been exercised yet or bonds that may never be converted? Sounds like an interesting report, one I think I'll skip on.

Regards,
Ed.

Dog,

I know what you mean, he's brought in that debt and those placings and all he has to show for it is two transformative acquisitions at circa $2/bbl for 38mmbbls of reserves. Not forgetting one the largest conventional light oil discovery onshore USA for decades. He should have a long hard look at his strategy, then climb back onto his chair and smile.

Not long now woof woof woof:

Ryder Scott Resource Report

Earlier this year, COPL commissioned Ryder Scott to conduct a Canadian NI 51-101 compliant resource assessment of the major discovery the Company announced to the market in January 2022 its assessment of an estimated total reservoir volume of 1.5-1.9 billion barrels of Oil in Place ("OIP"), of which 1.2-1.6 billion barrels of OIP underlays COPL lands. The Company expects Ryder Scott to confirm these findings when it publishes the report next week.

These 1.5-1.9 billion bbls were as a result of said acquisitions, Art what were you thinking! Next week is going to be interesting according to the above latest information from COPL. I hope Art buys a seatbelt for his chair.

Regards,
Ed.

Its been tidily stored away on Sedar where only a few nosy types can find it.

On the bottom of this page:

https://www.thecse.com/en/listings/oil-and-gas/canadian-overseas-petroleum-limited

Right about here (its even titled press release too, I guess very selective press got this one):

https://sedar-filings-backup.thecse.com/00021327/2207271446366145.pdf

Regards,
Ed.

Harold,

Yes there's certain elements here that want to distract from the news of this major hedge fund taking the bonds and warrants from COPL. As others noted Art missed an opportunity here, this Sedar release should have been put out on LSE today. Makes you wonder though did Art have the draft RS report before 6th July. Something made a huge hedge fund give $ms in bonds and want to take millions of warrants. Interesting stuff. RS report going to make interesting reading in the very near term.

Regards,
Ed.

HH it looks that way, it seems that the GS/MS linked hedge fund took the majority of the funding and left the balance of about 33% with another party. So perhaps the largest shareholder brought this large hedge fund with them to the table to deal directly with COPL. As you guys suggest to get a major fund in for investment purposes shows the significance of our assets.

Regards,
Ed.

Harry,

Well at 38mmbbls of 2P light oil reserves onshore US this one should be north of £1 now. I've compared this one to Oilexco in the past, I'm sure Tiburn has too. Oilexco reached a peak of around $4bn cap and had 60mmbbls reserves and 40k bopd from memory. Oil reached as high as $140/bbl back then. It has around $1bn in debt too. So potentially a smaller company than were COPL are heading. We have some way to go on the production front to match the likes of OIL ot SQZ but these dual laterals could soon start to add up, as well as production from BFU and CC too.

These are all new discoveries too as AM says, at the start of an incline production curve. The likes of SQZ and JSE they're all mature assets. SQZ is now relying on exploration for reserve growth. Art isn't he's now planning development wells on CC and BFU and appraisal of oil Fed deeps discovery. If all goes to plan with the delineation of the fed deeps and its at least 600-700mmbbls recoverable, that's huge. that's many times bigger than SQZ, JSE and a lot of the mid caps going. That would be similar to a bolt on acquisition by a major.

Oilexco had the fastest NS development from appraisal to fully developed in about 18 months (North sea average is about 3-4 years). So I'd expect the same very fast operational performance from COPL once the RBL is in place. Cuda just slowed us down. I don't think anyone was expecting them to secure addiational finance about a year ago. So iy now looks like a clear road ahead for Art to build Oilexco Mk II. Hopefully much less debt as its onshore vs Offshore. The scale is definitely with us and likely reaffirmed next week by RS.

So where do I see this one going long term, well over £5 easily, even over £10 is possible. They've a lot of wells to drill but if they get those recoverable numbers in the presentation 649mmbbls recoverable from Fed deeps (frontiers and dakota) we're literally talking x11 bigger than SQZ! Circa $7bn of oil in the ground at $10/bbl. Its why I'm keeping the bulk of my holding in place until I see this field delineated as far as Art can go with it. they'll need a lot of successful wells to get us there but lets see. Early days yet. I would be disappointed if these fields combined don't have at least 100mmbbls, but lets wait and see, a lot of drillnig coming over the next 3 years+.

Regards,
Ed.

Harold,

Don't forget to value in the reserves though its why you cannot value oilers solely on EPS. HUR would look great on a cashflow basis but poor on a reserve basis. According to Art's presentation we're targeting the eqv prospective recoverable oil to about x11 SQZs (Serica).

Regards,
Ed.

Hi,

I suggest you read the financing rns again fella, the amount of the bonds and the interest rates and their duration are given. Also balance and cost of the bonds are also given. They will repay 119% of the bonds plus interest at that time, probably 24 mths for the first bond and 36 mths for the second. Are there additional fees for early repayment, not mentioned in the release but who knows. Given the coming RBL and anticipated production increase over this 24 month period its certainly not my main focus. 2 years from now on a new reserve base or production profile these bonds imo will look like small beer. production targets previously were about 5000bopd from BFU, 2400bopd approx from CC and godness knows what from the Fed deeps. So personally I'm not in the slightest bit concerned about the repayment of these small bonds given the current plans and wti price. I'm expecting the RBL to consolidate the debt anyways. My focus is on how big the production and reserves can get over this period. Even the future as yet unarranged RBL could get replaced at some point in the future with low interest bonds, ezpecially if the fed deeps are as bit as the company suggest. Market not quite getting the growth potential of the current 2P, lets hope they get a much clearer picture before year end.

Regards,
Ed.

Solo,

We've not been given the full commercial terms of the bonds but have been given enough. The two bonds are for 24 and 36 months respectively. I'm planning to hold for at least another 36 months as they delineate the Frontier and Dakota. During that time I expect exponential production growth from BFU, CC and Fed deeps. We've already seen what a vertical well can do in the Dakota. AM in a recent interview said they can repay those bonds in cash, so I'm fully prepared to see just how much free cashflow the company can make from the RBL etc over the next 24-36 months given the current wti prices. Size of the RBL will determine just how fast they hit the ground running, although I'm expecting the BFU production to start off at a nice sprint this year and the Fed deeps next year (or perhaps a bit at the end of this one). That's the beauty of the bonds over straight equity, they can be paid in cash once due.

Regards,
Ed.

Wow, two totally transformative acquisitions and the market cap is still below £50m. At least some are taking advantage of it. Our largest shareholder will make significant gains from those warrants. While the bonds for Cuda certainly weren't the cheapest I've seen at least they got the job done at the time when COPL needed it. The option to pay for these in cash is crucial as it keeps the dilution for Cuda to a minimum. I3E paid for their previous transformative acquisition with full equity (£40m).

Cuda certainly isn't just a 47% increase to reserves and production, the two upcoming fed deep wells are at 85% and the new Cole Creek well at 100%, plus whatever reserves they will add to our current robust 2P of 38mmbbls. Between the RS report imminent and these well results the market will start to realise the implications of yesterday's completion. Its interesting that the market decided that 20% dilution from the future warrants was higher impact that increasing the reserves and production by 47%. Marking the share price down to the future warrant exercise price. But they will learn the value of this transaction in due course, starting from next week. That report will make for interesting reading as its independent to COPL. Lets see what others think of the Fed deeps discovery. Exciting times.

Regards,
Ed.

Bladder,

Too true chap! We're entering into a very exciting period staring from next week! Even the traders wouldn't see that as long term. Currently priced at around/less the acquisition cost of Atomic and Cuda given the current strength of the dollar. Yet oil price is considerably higher, about time market started to price in some of these assets. Exciting times. An intriguing 3 days ahead and a more interesting 3 years+ to follow that.

Regards,
Ed.

Looks like by the 25th we'll own the whole cake. CNOOC cherry not that relevant now. 85% of BFU and 100% of CC, that'll do nicely. Looking forward to the fed deeps drilling plans, who knows what else AM has up his sleeves. Once RBL in place I'd expect growth to be very rapid over the next few years, plenty of well locations to be getting on with.

Regards,
Ed.

Shaa,

Its certainly starting to feel like that. So what are you thinking, CNOOC selling their 15% of BFU or buying 15% of CC? Art has hinted at both over the last 12 months. I'm swaying towards the first theory now as CNOOC seem to be keen on pulling out of both USA and now also North Sea.

Regards,
Ed.

Tiburn,

Yeah excellent to get confirmation that Cuda close and RBL being worked in tandem. Us speculating is one thing, getting it in official black and white is another. Art clearing the decks before his forward plan gets released.

Regards,
Ed.

Shaa,

True. Art also mentioned selling both butane and oil hedge positions during/after the RBL. So lots could happen short term. But also interesting that after Cuda our 2P would on today's cap be around £1.28. Afentra announced today that it paid $4/bbl and that is also cheap for offshore Africa, USA would be at least twice or three times that especially for onshore light oil like ours. Could get all our ducks at once from what we do know publicly let alone what has yet to come. Looking forward to Art's post-Cuda plan in the next RNS. I'm glad I'm fully loaded and not chasing NT today.

Regards,
Ed.

Even some of the traders we have here wouldn't class 4 working days as long term. Looking forward to COPL's launch to real material progress. countdown is now on. Art did previously hint that he was looking to close the RBL around now too. Lets see how it all pans out over the immediate term and the coming few years.

Regards,
Ed.

Regards,
Ed.

Awesome to get confirmation that the RBL is in tandem with the closing of the Cuda deal, I did hint at that possibility in a recent post.

"This extension is made whilst the Company and its financier conclude definitive documents that will fund the cash component of the Cuda Acquisition.

The Cuda Acquisition will conclude one of the Company's publicly stated strategic objectives soon and on closing the Cuda Acquisition, the Company is positioned with an increased interest in its currently operated United States assets. The Company is progressing its strategic objective of senior debt refinancing by way of a Reserve Based Loan in tandem with the Acquisition process."

So we're within 4 working days of closing Cuda and its financing. Awesome, hopefully COPL will start to realise at least some of its inherent reserve value as its showing very little of that at the moment. Busy trading day today as the traders scramble about. Let the NT madness proceed.

Regards,
Ed.

Duster,

Art told us previously that the NPV post Cuda would be $380m or £318m at current exchange rate, that's around £1.31 per share. That's just valuing the oil reserves in the ground at $10/bbl at $100/bbl wti. Looks perfectly reasonable. Of course the recent presentation pointed out that they're targeting around 20x those reserves in the Frontier and Dakota (about 650mmbbls).

Regards,
Ed.

Tiburn,

True. Art is choosing the right spending priorities for the initial stages. As you mention infrastructure upgrades to sort out the production of the BFU. The same infrastructure that would be used for the initial Fed deep wells too. But also secondary comes the drilling of the first two dual lateral wells by delaying the programme of 9 BFU wells. That is also a good use of money early on as the productivity of each Fed deep wells is expected to be much higher than individual BFU wells. If those two wells come in as expected it would transform our monthly free cash at current WTI. So putting BFU development on back burner was another wise choice for initial funds.

Regards,
Ed.

Bob,

Too right! Noone has any excuses now, these have been trading at a fraction of the value of their reserves since the acquisition of Atomic. Once Cuda closes we'd be trading at around £1/bbl of 2P which is madness for US light oil. I did have to average up when they announced they had won the Cuda bid as that increases the 2P here by about 50%. That made the current market cap even more ridiculous. The rerate to fair value could be spectacular here and then we have the massive potential in the Fed deeps.

Regards,
Ed.