Member Info for Edgein

He's got both RBS and HSBC onboard. HSBC only reduced a marginal amount according to the TR1's. He must be whispering enough sweet things in their ears at present. Or perhaps they're just happy with operational progress to date, can't speak for them though. Their PR could do with some upgrading and I do hope that improves a lot once we get Cuda sorted, BFU worked on and drilling on FD's. News flow is key to preventing a hostile bid, more so than share options. I wouldn't accept an unreasonable low bid for this company, but again I cannot speak for everyone. Fingers crossed for regular news flow and not just Q reports!

Regards,
Ed.

Tiburn,

I agree and the market apathy at present makes some folks, that won't bother looking, think that nothing has changed the deal with Atomic probably didn't complete etc etc. Had it gained the traction it deserved after Jan 10th then these same folks would have probably been price chasing it. Then we also have a mix of short term traders in the mix too, some doing 50k+ trades etc. On a fairly tightly held company now , that also doesn't help, but that's short term.

Now that oil is around $90/bbl for WTI there's no more getting light oil at $2.18/bbl. Today's acquisition from Zephyr was at 13.3/boe and could be a gas mix not just oil. HfB commonly uses $10/bbl which looks about right too at the moment. Also the Zephyr acquisition may also be mature assets too.

Yes with the MF outperforming on the BFU, I too am expecting a reserve upgrade from that too, gas is clearly passing through the reservoir at an unexpected higher rate, must be good porosity and permeability. Will be interesting to see if Art tries a different methane/butane mix I think he might have hinted at that in an interview.

The exciting part and the real scale comes from the BFFD and the CC fields that have been pretty much left untapped. CC and its small BOPD has significant oil in place. These are brand spanking new assets with long life, so therefore should fetch a premium if COPL were open to offers. I reckon there are oil investors waiting in the wings (not necessarily bidders), to see just how the upcoming wells perform before coming in as investors.

A company with around 300mmbls of 2P I would imagine north of $4bn, depending on debt levels, production, netback and dividend. My long term target still remains at £10-40 depending on Cuda, lease acquisition, and performance of upcoming FD wells. If all goes to plan we could be several steps closer. The thing that remains is how much bopd or 2P do we need to break 40p, lets see.

Regards,
Ed.

I cannot see him doing that unless he wins Cuda. Cuda would put us on 85-100% in the massive discovery. He could then, as others on this board have suggested, plausibly farmout part of that for a large $ carry on future deve wells. But lets see the outcome of the Cuda sales process. If unsuccessful bid by COPL we have the recent placing and cash mountain to drill future wells. They hopefully will add incremental production increases as well as the BFU. So currently I'd like to see COPL retain its current interests and operator status in these assets.

Regards,
Ed.

Shaa,

Well it all depends on if you want to add or sell. Its just in a transitional period as it moves towards fair value, just like EUA was below 1p. I'm as relaxed here as I was there. Even if COPL were to only add 30mmbbls recoverable let alone 500mmbbls plus of reserves its got tremendous upside. As with all oil and gas companies there are certain risks and uncertainties to overcome. But there's certainly news in the near term and mid term that I'm looking forward to seeing resolved. As an investment I'm not currently buying or selling, I don't trade around the sides as others do as that is too risky to get locked out. Like Harry and London has said its sit on hands time and watch it unfold and its grossly undervalued on current US reserves.

Regards,
Ed.

Mr Exec,

Very true, either way, successfully bid or otherwise they should then be able to unleash the BFU production. Imo Cuda has been as much a restraint as the over pressure. COPL will no longer need to carry them from the near future, it'll either be a part of COPL as you suggest or owned by a new NOP having to pay Cuda's share. Looks like a win win to me. If like you say they add Cuda's 2P reserves on the cheap then good stuff, those numbers on the value of 2P just take another jump up. Exciting times ahead for sure. Be interesting to see what they get from the Fed Deep wells around mid year after Cuda is resolved.

Regards,
Ed.

Harry you're welcome. Certainly worth keeping an eye on these transactions as it shows the current going rate of reserves. It suggests an acquisition value of Atomic at current oil and gas prices to be in the range of $360-400m without any value assigned to the Fed Deeps or Dakota etc (i.e. mot of the upside). Its gonna pop and when it does its gonna pop hard imo. How much Frontier and Dakota 2P can they squeeze in before it does? :)

Regards,
Ed.

If you want to know just how good he Atomic deal was and the current rate of US 2P and production here it is:

The company in question paid $36m for this asset less than 1/10th the size of Atomic/COPL 2P

"The Acquisition consists of working interests in 163 currently producing wells with an average working interest of approximately 4%. In addition, a further 18 drilled but uncompleted wells are scheduled to come online by the end of June 2022, with 47 other locations to be drilled in the future. Proved reserves acquired were estimated, by third party consultant Sproule Incorporated, to be 2.7 million barrels of oil equivalent, with an estimated post-tax net present value of US$57.1 million at a ten per cent discount rate and a total estimated undiscounted future cash flow of US$82.0 million at current commodity prices. "

So multiply the above by x10 and add in an oil in place discovery of around 1.5bn bbls (feel free to add in your own recovery factors for COPL's net interests). The above demonstrates just how much value there currently is in COPL's assets let alone future assets.

Regards,
ED.

Really? It didn't stop RBC nor HSBC taking around 5% each long before the new massive conventional discovery. They didn't seem to need a CPR to realize the value here.

Regards,
Ed.

Bob,

Lets wait and see what the share price does when the Cuda situation is resolved and they can get to work on the BFU production levels. Yes undervalued on the current 2P reserves, but these companies can re-rate at the drop of a hat, just needs the right news.

Regards,
Ed.

True, we may not get the next set of Results until April. But there should be other updates before that, if a deal is done on Cuda by the end of this month (to close by end of March) its of significance to us. Especially if COPL are the winning bidder. If someone else has outbid us it would also be nice to know who it was. That may also be positive to our share price especially if it were a global producer. Once we get the constraints lifted off the BFU I would like to see more regular production updates and presentations rather than just rely on Q results. They should I would imagine get to grips with the BFU before August if Cuda closes on time by end of March. Still exciting times though as we just don't know which news will send us towards fair value for current reserves let alone what else they may add this year.

Regards,
Ed.

That's the thing though, the market doesn't have to make sense and often doesn't. If this investment game was easy everyone would be at it. Look at all those companies that trade on hype and hype alone, oil companies should trade on the value of two things the amount they produce and the their 2P reserves. But not many do, especially among the non or barely producing companies. HUR investors for example walked blindly into a disaster even though most volcanic basement developments go the same way HUR did etc. What a CPR is likely to do is just confirm what we already know.

AM has been around the block, he and his team didn't have a 75-80% North Sea drilling success rate in a traditionally risky offshore area without good reason. The guy and some of his team (now at COPL from Oilexco), turned it from a small cap to a $4bn company. Circa 40k bopd and around 60mmbbls 2P. He knows what he's doing. The new discovery was based on the vertical well, the historic wells and seismic, plus likely the current wells (cole creek). So its not a case of lets just think of a big number. The closure will have been mapped to the best of their ability given the information on hand from a very experienced team. Once the CPR comes out whether it soothes the doubting Thomas' or not is up to them.

The CPR is certainly not the be all and end all at this stage. I'd rather see them establish 2P and EUR per well and then do a CPR. How to do that is quite simply, drill multiple producers, tie them in and monitor them over time to see how the reservoir performs, production and pressure wise. If able to trial MF and see how that performs (easily done given the frontier wells at CC). Yes COPL should be higher on the current oil price and the 2P already in place, would a CPR reverse that who knows.

From where I'm sitting the CPR plays no part in the reason that COPL remain my biggest holding, I'm much more interested in the 150+ wells the company hopes to drill into the Frontier and Dakota formations.

Regards,
Ed.

Yes check the prospectus, he bought a large wodge during the Atomic purchase.

Tiburn,

Yeah I have mixed feelings over Cuda too, while it would be nice to take our interests in the new discovery from 55-85% up to 85-100% over the various licences it will put more pressure on costs, i.e. COPL would then be funding pretty much all deve costs. So if a large E&P or major would take Cuda they would bring more to the table than just $$$$. Especially if they already had experience in the PRB. We should know either way next month so not long now.

Regards,
Ed.

Shaa,

Not sure where you have been reading or seeing that, I recently saw the CEO of shell talk about supply constraints in the industry and today watched the CFO of Total talk about the aviation industry eventually getting back to pre-pandemic levels and how well their polymer business is doing. Imo we're going to see higher oil prices than this during 2022 especially when all covid restrictions are lifted globally.

Regards,
Ed.

Bob,

Once these start moving above 40p I'd expect FOMO to start kicking in, Cuda will get resolved one way or the other in the near term. Its not some frontier opening play either that COPL have discovered, its a massive CONVENTIONAL find in a prolific oil basin which has lots of other large discoveries. Yes it does looks as if COPL is in a sweet spot too, and don't forget that Art mentioned in an interview, before we made the discovery, that a lease owner from the North approached us to do a deal on their acreage. So who knows what Art has up his sleeve at the moment. COPL is an exciting hold, but one that would be nervous to trade, we all know how quick they go NT on any kind of buying pressure. Tsunami of trades, just a matter of time imo.

Regards,
Ed.

I hope your Elliott Wave Tool has a Tsunami warning built into it.

Regards,
Ed.

Its a fairly tricky exercise at the moment to estimate cash flow without knowing the outcome of Cuda, or what will happen to BFU production levels once COPL isn't carrying their share of CAPEX. It may turn out to be COPL paying it as part of our assets or a new jv partner if COPL isn't successful. Then what happens to BFU production profile after this event.

Also will we be sticking to the BFU drilling plans or just Fed Deeps, how much might the first horizontal production well produce and how fast can it be tied into existing infrastructure. This incremental new production won't be hedged under the current set up but will COPL replace their senior debt, due to possibly Cuda or a new RBL package based on existing and new reserves. Really too many unanswered questions at this stage to even accurately answer how they fund forward ops without knowing the levels of production at that time. By August production may be unrecognizable compared to current as may the senior debt levels. One thing we may be able to reply on is the booming oil prices as that looks set to continue for the forseeable future. Interesting times ahead even over the next 6-8 weeks let alone as far away as August.

Regards,
Ed.

"many feel that they haven’t achieved anything yet" Well apart from preventing the company going bust, acquiring 31mmbbls out of the blue at rock bottom prices. Transforming those assets into an outperforming production base and then going on to discover up to 1.9bn bbls in place. Apart from all that the short term traders that came in post Atomic hoping to get rich quick might have a point, or perhaps not depending on your reading of the situation. :) Some people will always be a glass half empty no matter how much oil they put in it.

Regards,
Ed.

You think these options are unaffiliated to performance? The management here have turned this from a high risk speculative punt with an option for a possible licence extension in Nigeria into a growing onshore USA producer. They've went from virtually bust 18 months ago to one of the highest potential small cap oil and gas companies listed anywhere. That recent discovery is a once in a lifetime asset to a small cap and as rare as hen's teeth. So personally I don't mind if they reward themselves with C$6m for turning this around. As the largest shareholding in my porty I'm perhaps a little bias though.

Regards,
Ed.

The bidding process closes for Cuda's Wyoming asset today and if we are the only bidder we may hear something later today or Monday, but no guarantees. If the big guys or mid caps were interested they could easily have taken Cuda before they entered receivership. Its only 500bopd and abut $5m free cash flow for the coming year, most of that will be owed to SWP/Atomic/COPL. There would be less troublesome net acreage available to the big companies in the PRB, COPL's massive discovery isn't exactly isolated in this prolific oil producing basin. Financial completion of the Wyoming asset is anticipated to be end of March. So we could hear something between today and then, we could also get an ops update at any time and a possible lease acquisition as the company has been hunting more acreage for some time. No guarantees for Monday but there is news looming, Art set out his intention to bid in the last fund raise.

Regards,
Ed.

If they do exercise all those options at some point in the future it brings in approx C$5.9m into the company coffers. If the management make an outrageous profit on that by turning COPL into a $multi bn company as a result of the new discovery will anyone complain? Somehow investors can still buy around this level in the UK at the moment.

Regards,
Ed.