Member Info for Edgein

Planned production with the new higher gas injection rate for the BFU is 7000bopd gross during the duration of that hedge, CCU last we heard was 2-3000bopd. That makes the hedged production to cover the $45m debt seem rather modest. I hope you've been doing your research on the Frontier wells, a good place to start is with the analysts notes on the Cuda site. They're quite an eye opener regarding the large producers that get significant production from the Frontier formation in Wyoming.

Regards,
Ed.

Goudron wells are more of an irrelevant issue than a moot issue. Perhaps when you find your undergraduate room you could show them the Koot interview from 27 April 2020 where he gives a detailed breakdown of the Saff-1 operation.

Regards,
Ed.

Because there is no relevance in comparing Bonasse or Goudron to Saffron. Goudron for example is the other side of Trinidad for starters. Both Goudron and Bonasse are Moruga/Forest/Upper Cruse all shallow fields. Of the hundreds of wells drilled into Goudron less than 20 drilled to the LC. Goudron has bee in production for decades and at its peak did around 3,500bopd for Texaco. Lithology and reservoir quality can change over several metres let alone from one side of T&T to the other. Take Saff-1 as an example. MC produces 20 API oil, LC recovered 40 API oil so these are two closed systems or else they would be producing a blend somewhere in between. They're also separated by a thick over pressured shale zone.

You have potentially two field targets on Saff, both the MC and LC. Goudron there's only really the LC, the others have some infill but look what happened to LGO and CERP with the infill and EOR, very little. Saff has the potential to do 11mmbbls recoverable which is much higher than the 1.5mmbbls left at Goudron. Saff has the potential to be a new development for CEG if they can successfully complete and test the wells. It may come in below or perhaps even succeed pre-drill estimates. According to CERP there's 300ft of net sands in the LC that produced dry oil of very high quality. Why randomly drill hit or miss wells on a field as complec as Goudron rather than, if they get the well design right, up to 30 bog standard wells on a new field with potential of 4,000bopd. Saff is clearly under high pressure, did you see the oil raining out of Saff-1 in that vid from a well that should be balanced, i.e. no fluid movements. As LK said the well wanted to produce. Its got high tech risks due to the swelling shales etc at 3500ft. But if they get past those and back into the normal well conditions it could be game on for the LC. But any amount of speculation at this stage won't change the outcome. Still not for widows or orphans but there will be close attention to the flow rates, flowing pressure, net pay etc if they get the well to TD without obliterating it with heavy mud. But that'll be all about getting that troublesome section behind pipe. I bet all former LGO holders would prefer the well to be going into Saff LC than Goudron LC. Had they been drilling Goudron LC I wouldn't be holding these right now.

Regards,
Ed.

In4C,

Good post fella, well done on exposing 12bn on the nutter's thread, good work there. I don't think many will be suckered in by what he posts these days anyway.

These SWP wells are challenging for sure but the video from LK from April 2020 on youtube is worth a look again. There's no doubt from what he says he believed that both the LC and MC will produce. The difficulty is getting there. There's only been one well drilled to the Herrera in the SWP for good reason, not because there's no oil there, that well also encountered oil, but due to drilling conditions.

There is significant pressure and over pressure around and below 3500ft. did you see the oil spurt out in that video, as LK said the well wanted to produce, they had a hard time stopping it! But that in itself brings its own challenges whether or not they can get a well cased to depth and completed. Hopefully the CEG team there with the experience of the Ex-BP chap will get the job done. Its certainly higher risk than my other O&G holdings but they could be on the cusp of a new field development and their first new field development. Not for the risk adverse for sure, but an interesting few weeks ahead at CEG.

Regards,
Ed.

deltalo,

I reckon you've gotten that the wrong way around. you'll most likely find that the development if successful for this well would more likely be the LC not the MC.

Regards,
Ed.

lol. So after all these years he's none the wiser then! I thought I'd seen it all after he bought ROSE, a US shale oil company at the time in the middle of an oil crisis. :) From what you're saying sounds like he didn't learn from his mistakes. Ah well some can handle investments and some can't. I can remember when he was in LGO all those years ago he said the SWP was one massive oilfield that ran the whole way to Venezuela even though the SWP is relatively unexplored yet. I think there's still only one well that has been drilled to the Herrera in the SWP, I think it hit oil but couldn't be tested due to technical issues, likely pressure related. I think it was a Canadian outfit drilled that one.

It'll be interesting to see what Saff-2 results look like when at TD and tested. Could be a turning point for CEG's production profile. Still not for widows and orphans. But two successful Saff wells and Suriname if those come as expected could put CEG at 1000bopd+ given the legacy production. Of course at 2-300bopd the netbacks on the new wells would be much btter and they're not under a PSC either. Interesting, but not risk free couple of weeks/months ahead.

Regards,
Ed.

Goodness I didn't realise 12bn was still around, I thought he'd lost all his money on ROSE and XTR and had been financially wiped out years ago.

Regards,
Ed.

Good to see them reaching the primary casing point on time and on budget and matching the oil shows of Saff-1. The casing should be set over the weekend and they've just 1200ft to drill through the Middle Cruse to get to the intermediate casing point, so if all goes well we may get the next RNS late next week if they remain on schedule for TD around the 18th-25th (potential production leg will be the slowest rate of progress).

But good to hear that they're getting the same oil shows as Saff-1. No exactly unexpected when they're drilling right next to the discovery well. Lets hope, fingers crossed, that the intermediate casing point RNS and the TD RNS go as smoothly. CERP never had a new field development before, they were poking around on legacy assets that were decades old, so it'll be interesting to see what this well may flow if all goes to plan. Goudron at its peak did hit around 3500bopd many decades ago.

Regards,
Ed.

I'll tell you a very good reason old Kooty sold off CERP to BPC, Saff-1 over ran on schedule by a considerable amount of time and CERP weren't a cash rich company. He did fail on his objective to acquire a material asset, that remains quite puzzling when you look at others like RRE, COPL, I3E or KIST that have all acquired significant assets recently. So he was in a position where he couldn't go it alone on Saff-2. As we know Saff-2 covers one off developmental costs such as separator and sales lines to new storage/sales tanks (if successful). CERP hadn't got the cash for that whereas BPC did.

The reason I sold CERP during the Saff-1 well was because it was taking too long, Kooty had failed to acquire a material producing asset as hinted at and I wanted to topup EUA at the time. However I bought back in as this could be a turnaround in terms of production and reserves. To quote Kooty the SWP is like drilling offshore from an onshore location, and this location couldn't be much closer to the country with the world's largest oil reserves. SWP is about 4kms from Vene. So no wonder they've multiple Saff lookalike locations as well as the large deep targets (Kooty's 200mmbbls etc).

Hopefully get some results within he next two weeks or so and fingers crossed they get good flowing pressures etc. Kooty did suggest that if they'd perforated more than 16ft of the LC they would have likely flowed dry oil. Net sands in the LC totalled 300ft in Saff-1. Hopefully less swelling when now using the synthetic oil based mud and therefore more accurate open hole logs this time around.

Regards,
Ed.

Nigerians including the DPR and NNPC care very much about the oil price, its down to that reason that the supermajors pulled out of the deep water developments that cost over $1bn per field development.

Regards,
Ed.

It was open to international companies as technical partners to indigenous companies, Zenith Energy for example pre-qualified, so I'd expect them to be on the list if successful with their indigenous partner(s).

"International oil and gas production company Zenith Energy Ltd. has successfully pre-qualified for Nigeria’s 2020 marginal field bid round, organized by the Nigerian Department of Petroleum Resources (DPR).

Zenith is participating in the 2020 bid round in its capacity as technical and financial partner to a Nigerian registered oil and gas company. The DPR invited companies to apply for the 57 marginal field bid round in June.

“We are very pleased to have successfully pre-qualified for the 2020 bid round with our Nigerian partner. This bid round is an exceptionally rare opportunity for Zenith to acquire at highly advantageous terms, an underdeveloped, near-term production asset in the current low oil price environment,” says Andrea Cattaneo, Chief Executive Officer of Zenith Energy.

Zenith’s participation is in line with its strategy of identifying opportunities in Africa. The company recently acquired assets in Tunisia."

Regards,
Ed.

Shaa,

With all these Nigerian marginal bonus payments that have to be made by as yet unnamed companies it sure was good forward planning for Art to go into the suspension with a full war chest of cash (including the Atomic free cash flow). All we know so far is that Art has been eyeing up a West African EOR project for some time and is actively looking for Sub-Saharan assets in cooperation with Shoreline. So it will be interesting to see if COPL are on the list of companies that have qualified for a marginal, they sure are in a much stronger position now to develop a West African field for sure.

Nigeria will be desperate to get their oil production back above 2mmbbls/d now that oil is back above $60/bbl again.

Regards,
Ed.

I wouldn't exactly put it like that Shaa. They saw the same upside as we currently do. Articles on the internet highlights the potential of these fields so this isn't something new for COPL. What happened to Atomic, the NOP and well not CNOOC as they're an entirely different beast is the following. Atomic and their other small partner did all the heavy lifting, acquiring the asset, drilling the asset and getting it to where it is now. Their took on lots of debt to do it and it crippled them when oil prices where low. In steps COPL with $50m and sorts it all out. Approx $8m to get the gas injection rate up and $41m to clear the Atomic debt. NOP is in worse shape from what I can see. They owe Atomic $ms in default payments. So Atomic/Art will have them over a barrel (oil barrel if you wish) come 15th March. As Art suggested they're practically bust. CNOOC being forced to sell all its onshore assets thanks to Donald. However 15% of these two fields would be small beer to CNOOC. So from 15th March Art will be in the driving seat and targeting these two holdings. The unfortunate timing and oil price for Atomic and NOP has been Art and COPL's good fortune.

Regards,
Ed.

Charlie you are absolutely correct. The company presentation highlighted the assets being acquired to be circa 28mmbbls of light oil, 1.5mmbbls of NGLs a little gas associated. Acquiring the NOP interest and that of CNOOC would greatly add to liquids 2P from these fields. Also these are stacked reservoirs and there is significant increased potential from deeper drilling under the developed formations as highlighted by previous articles. So yeah while the 31mmbbls is transformative, its just the beginning. Like you I'm expecting this to increase to mid cap, not counting the west African potential too.

Regards,
Ed.

Yes indeed, they can increase injection rates up to max capacity of the infrastructure and convert more injector wells. Also there is likely to be more potential to develop more of the formations as these are stacked reservoirs with multiple layers of pay. But that aside the $m per month of free cash flow from the effective date of the acquisition will make it much much easier to pay any entry costs to the WA EOR field that Art mentioned and also much easier to pay the $6m option for 226 should that progress.

Regards,
Ed.

Great stuff $65m term sheet signed with a US institution, expected to close middle of next month. NOP and CNOOC will be the next things on the menu. Well done Art many of us knew you'd get there in the end! Thousands of bopd now lie ahead and that's just from the USA. A great time for WTI to be above $50/bbl too. Gonna be a busy day today.

Regards,
Ed.

You've never heard of proof of liquidity etc when arranging large debt financing either. This was a £9m company arranging $54m funding package. As I said earlier a company without production or reserves. Perhaps if Art had a rich uncle, or a magic money tree or LB28's calculator it wouldn't have been an issue. But back in the real world when borrowing large scale debt requires equity. Perhaps on this post it will finally sink in, not holding my breath though.

Regards,
Ed.

Jving,

You're welcome chap. It took some time to sink in but you've gotten there in the end. I'm not the one worked up by this deal. As I said earlier, great that he got his hands on this level of funding at this stage, won't have been as easy as it appeared on the surface. Although the quality of the Atomic assets speak for themselves. Next hopefully the completion and the consolidation of the asset from the distressed sellers. I don't care if you believe Art or not, not really sure why you are here if you don't follow the guidance from the company, but each to their own I guess. Just don't be bed wetting again on the next placing and I can get away with posting less.

Regards,
Ed.

Jiving,

I guess you missed the videos at the time the acquisition was announced when Art said he was planning on consolidating the asset to 100%. Yes or no? Some are clued up in the investment game and some aren't. Oh Don't worry I know what the placements mean and why they were done. On the day of the release one of the derampers whinged about dilution too. My answer was straight forward based on the facts at the time. The deal brought with it a minimum of $4m dilution. Could there be more dilution still to come, probably, depends on how big the term sheet under negotiation is. Will that remove the upside of the assets, hell no. Cry about the spilled milk as much as you like but it isn't gonna change.

Regards,
Ed.

lol

most little small cap non-producing companies are struggling to get £1-2m raised at the moment. If you think that companies can easily raise $12m, even from a bucket shop you're deluded. When you keep saying that these placings were at a 50% discount to the share price it just shows me you can't count. The share price hasn't been 0.4p since the Atomic deal let alone the two placings that have went with it. :)

Regards,
Ed.