Member Info for HeidHoncho

bartlebottom, regarding your post intimating that only an incremental $7 million had been added to the free cash position in the most recent 3 months.

“ As for paying back the bonds;
The N ET free cash now is $134m, 3 months back it was $127m ...extropolaite those figure and you aren't at $230 ...”

In doing so intimating that if only $7 million had been added to the initial $127 million of free cash in that 3 month period that there would be no way to generate sufficient free cash prior to the bonds becoming due (i.e. $230 million minus the $134 million equalling $96 million still to be generated).

After all, what with circa 4 quarters remaining prior to the bonds requiring repaid, and generating only an incremental $7 million free cash per quarter, that would leave us short by $68 million ($96 million minus 4 quarters at $7 million), the clear intimation is that we would not be able to generate enough additional free cash within the period left to pay off the bonds.

However, that’s not giving the true picture is it ?

I’m sure (cough) that you innocently overlooked the fact that during that 3 month period (it was planned to occur in June I believe) that a sum of circa $15.7 million was moved into restricted funds to top up the renewed level of decommissioning funds set aside at the request of the authorities.

Being that this was a one off request, then this set aside would not be required in the remaining 4 quarters.

Essentially meaning, if there is any intimations to be made about being able to project free cash flow based on the previous quarters cash flow, which you are clearly inferring, then the additional free cash per quarter would be a more credible $22.7 million (the $7 million that you are referencing from the recent quarter PLUS the circa $15.7 million per quarter that wouldn’t require to be restricted going forward) per quarter.

That being the case, with a most recent free cash figure of $134 million, with circa 4 further quarters of revenue generation at $22.7 million per quarter prior to the bonds requiring repaid, then that would culminate in $224.8 million of free cash being available.
And I’m sure that we would have no problem raising the balance, even if a balance was remaining (partial bond buyback prior to then might rectify the balance outstanding on the bonds by then).

Please note, I am not the one making projections of the likely free cash availability at the time the bonds require to be repaid by projections based on the most recent quarter, you were.
I am not suggesting that $22.7 million additional free cash will be generated each quarter, I am merely referencing the core figures that you utilised to project.

All of the above is IMHO you understand, as we wouldn’t want people convinced that future free cash generation is likely to be as low as only $7 million per quarter going forward, now would we ?!

SS cannot purchase any shares in the open offer, as you required to be an existing shareholder on the day of record (7th July if memory serves) to be entitled to participate in the Open Offer.

Given that there is no record of SS holding shares prior to that date then he is not entitled to participate in the Open Offer.

IMHO.

You correctly identified that the leading edge of the bit seemed relatively damage free, hence my assumption is that the formation isn’t overly tortuous.

Ask yourself one thing, when does the trailing edge of the bit become the leading edge ?

You wouldn’t drill out the shoe with a PDC bit, hence the initial use of a tri-cone bit.

Additionally, there are numerous technical reasons to utilise one over the other, such as whether you were attempting to kick off to conduct a sidetrack or for certain steering applications, if you felt there was junk in the hole, whether a mud motor or turbine was in your BHA assembly, ad infinitum.

Not to mention the cost difference, tri-cones are cheaper than PDC’s, so if there wasn’t an ROP benefit from using a PDC, or a longevity benefit (greater bit life, hence less trips out of hole required), then you may wish not to utilise a PDC.

I would focus more on the pic of the PDC bit, and where the area of damage on the bit is significantly greater, and ask yourself what may have caused that, as clearly from the almost pristine condition of the lead cutters the formation doesn’t appear to be overly onerous.

Just a thought, and merely IMHO.

Can anyone confirm the exact time and date that the circa 2.75 billion placing shares were officially admitted ?

The RNS detailing the placement merely stated "Admission is expected to occur on or around 08 July 2021"

The reason for asking revolves around the utilisation of "on or about".

It would be reasonable to assume that the close of business on the 7th of July could credibly be presumed to be on "or about" the 8th July.

Why would it be pertinent if it was latterly identified that the placement shares were admitted prior to 18:00 on the 7th July (on "or about" the 8th July) ?

Well, that would then mean that, rather coincidentally, the owners of the placing shares would then be entitled to apply for shares in the open offer.

Were the SP to remain shy of 0.18p on the 26th July then it would be logical to assume that the PI's would be deterred from taking up their allocation in the open offer (after all, why buy at 0.18p if you can purchase them on the market at a currently cheaper price), thereby opening up the opportunity for placement shareholders to apply for excess allocations now available through all open offer ratios not being taken up by the PI's.

For the sake of extreme explanation, let us assume that the uptake by PI's was zero, that would leave the potential for the following:
A "group" of investors picking up 2,763,888,878 placement shares.
Were the uptake of open offer shares by PI's in the Open Offer to be zero by PI's then there is the potential for the "group" of investors associated with the placement to also secure 2,643,429,529 Open Offer shares.
There is still a further 1,236,111,122 that are authorised for issue in a further placement at a later date.
Culminating in the potential for a "group" of investors to have picked up 6,643,429,529 shares.
Which in effect, is greater than the volume of shares requested for authority to issue without shareholder approval in the original AGM.
One could argue that there are many ways to skin a cat, and achieve a goal, merely by making things "look" above board.

So, there is the "potential", "were" the SP to be "maintained" under 0.18p for a short period of time it would "likely" deter PI's from taking up their allocation under the OO, and these shares then "possibly" being taken up by the placement shareholders by means of excess allocations that they "may" put in for in the OO being filled.

Granted, the possibility for the above would require the placement shares to have been admitted prior to 18:00 on the 7th July, and the OO uptake deterrent associated with the SP being "managed" to below 0.18p just prior to closure of the OO application deadline.

But hey, aren't conspiracy theories fun to consider whilst things are on a downward trend.

IMHO, obviously.

None of the night time posters were apparently able to clarify my existing points of confusion on my post from last evening regarding the repayment of the bond.

It is apparent, from my reading of the RNS regarding the bond when it was initially published, that it appears that it is not as clear cut as merely paying $230 million (the principle) back to the bond holders.

It seems that there are nuances whether we pay them back in shares (identified in my option 1), or by means of a cash alternative (detailed in my option 2), that would indicate to me as someone woefully lacking in the understanding of the bond T&C's that there appears to be a premium attached to the conversion, but that premium is in the shareholder's not the bond holder's benefit.

Can someone significantly more qualified and experienced in convertible bond T&C's please cast an eye over the terms, and both confirm that it is not apparently simplistic as having to cough up the entire $230 million (initial principle) in cash, and what benefits there may be to the shareholders that are associated with the nuances detailed in each option.

Many thanks.

Regarding the conversion of the bond upon maturity I have always had questions regarding the T&C's pertaining to the conversion.

"The Bonds will be issued at par and carry a coupon of 7.50 per cent. per annum payable quarterly in arrear in equal instalments. The Bonds will be convertible into fully paid ordinary shares of the Company (the "Ordinary Shares") with the initial conversion price set at US$0.5200, representing a 25 per cent. premium above the placing price of the Concurrent Equity Placement, being £0.32 (converted into U.S. dollars at a GBP/USD 1.30 rate).

Upon conversion of the Bonds, the Company may elect to settle its obligations by way of delivery of ordinary shares, payment of a cash alternative amount (calculated by reference to the volume weighted average price of an Ordinary Share over of a specified period) or a combination of the two."

One thing that is clear to me is that it is HUR that have the option to elect to pay the principle back as cash, or whether to elect to convert the bond into shares in the Company.

What I am a little less clear in the understanding of is at what rate this conversion would occur at if the bonds were repaid in shares in the company.
1) It makes mention that "the initial conversion price set at US$0.5200, representing a 25 per cent. premium above the placing price of the Concurrent Equity Placement, being £0.32 (converted into U.S. dollars at a GBP/USD 1.30 rate)."
Which begs the questions, if US$0.52 is/was the "initial" conversion price then what might it ultimately be at the "final" conversion price, and will that ultimate "final" conversion price also be at a 25% premium to the share price ?
2) It also states that payment may be made as a "cash alternative amount" which would be "calculated by reference to the volume weighted average price of an Ordinary Share over of a specified period", the question there would be what is the undefined "specified period" duration over which the VWAP of the SP be calculated over ?
3) It further states that it need neither be option 1) or option 2) that requires to be utilised as a sole manner in which to convert the bond but that a mixture of the two may be utilised at the ration and the sole election of the Company, but I am at a loss as to why it would ever be to the Company's benefit to elect to utilise a mixture of the two options rather than just utilise one of the two options.

Interestingly, I cannot identify anywhere where it states the simplistic manner to redeem the $230 million principle amount merely by giving the bond holders $230 million cash, as when it comes to the mention of a "cash alternative" it does not appear to be as simplistic as merely giving them 230 million greenbacks.

Can anyone who is qualified offer any clarity on the above ?

adoubleuk, not all sidetracks are drilled because of a failure in the drilling of the initial well, some of them (granted, a very limited number) are planned sidetracks.

Have you ever considered that ?

Ask yourself, what would be the purpose of the initial parent wellbore being drilled deep, with a planned sidetrack then being drilled into the considered optimum location.

Is that Clare Slightam that you are talking about ?

As she was RT's right hand woman (from a sub surface point of view) from the get go.

ISIN is XS1641462277 I think.

Statement from the BoD regarding the benefits achieved from producing below the bubble point.

"We are currently in a discussion with the OGA on an addendum to the Lancaster Field Development Plan to allow reservoir pressure to go below bubble point, as an emerging gas cap may provide a "piston" like effect where oil in the Lancaster field is driven into the producing wells."

Although at the time the statement was made this was prior to the OGA giving their consent, hence the utilisation at that point in time "We are currently in a discussion with the OGA", this consent has now be given.

Would that volume equate to roughly the size of the short that was opened on the 25th June ?

If so, is what we are witnessing is the short now being closed ?

If not, then the size of the trade, and the size of the short that was taken out, is a hell of a coincidence.

DE, okay then, utilising your $28 per barrel all in production cost for 2020, I could accept that the all in production cost during 2021 may be as high as $35 per barrel (although no direct correlation exists, that would equate to a 25% increase in cost for a circa 25% reduction in production).

On that basis let us make some free cash flow projections based on an arguably credible (based on current actuals, and industry accepted projections) variety of oil prices, and the low/medium/high production rates projected by the company.
8,500 bopd @ $65 per barrel = $77,562,500
9,500 bopd @ $65 per barrel = $104,025,000
10,500 bopd @ $65 per barrel = $114,975,000
8,500 bopd @ $70 per barrel = $108,587,500
9,500 bopd @ $70 per barrel = $121,362,500
10,500 bopd @ $70 per barrel = $134,137,500
8,500 bopd @ $75 per barrel = $124,100,000
9,500 bopd @ $75 per barrel = $138,700,000
10,500 bopd @ $75 per barrel = $153,300,000
8,500 bopd @ $80 per barrel = $139,612,500
9,500 bopd @ $80 per barrel = $156,037,500
10,500 bopd @ $80 per barrel = $172,462,500

Utilising the cash figures in laserdisc’s previous post at 12:40 today, that being currently $168.5 million, of that $61.8 million currently being restricted, but that $61.8 million includes $20.3 million for early termination of the AM and could/should then be released back into the available cash pot to pay off the bondholders.

The bond being $230 million, with current free funds of $127 million ($168.5m - $41.5 million), resulting in $103 million requiring to be generated in the way of unrestricted revenue prior to the bonds requiring repaid in a little over 12 months time.

As you can see from the above projected revenue projections, there is only one option that would preclude the current shortfall of $103 million from being generated.
That being the option with the lowest projected average production rate and the lowest credibly conceived oil price.
The surplus from any of the other options remain for the company/current shareholders benefit, and not be lining the pockets of the bondholders as would be the case had they succeeded in obtaining 95% equity for essentially nothing.

I have excluded any potential benefits from increased production due to being able to produce below bubble point, and excluded benefits from the share price achieving anything in excess of $80 per barrel even though some industry voices are stating that $100 per barrel may be achievable for a period of time as consumption increases as the world starts coming out of Covid lock down issues.
But were these benefits to come to fruition, well ...........................
So, there is sufficient reason to believe that the bond holders noose can be removed, and we the shareholders retaining 100% of the company, all within a period of the next 12 months.

Subject to the BoD not unleashing any further darkly kept secrets from the closet, the above is not inconceivable, IMHO.

DE, my apologies, I had also intended to make a point in my previous post regarding your estimated production cost of $40 per barrel.

During 2020, where production averaged 13,900 bopd, the cash production cost was $17.90 per barrel.
During 2019, where production averaged 12,900 bopd, the cash production cost was still only $21.80 per barrel.

Consequently, I hope you can understand why I feel that a circa 100% increase to the previously witnessed production costs to $40, with a production projection of 8,500-10,500 bopd per day, which may be increased further due to any potential pistoning effect through being permitted to produce below the bubble point, is likewise a bit pesimistic.

IMHO.

DE, why utilise arguably very pessimistic production rates in your calculations.

As recently as the end of May this year the COO stated that the production projection for 2021 was 8,500-10,500 bopd, and that production figure was already based on a 90% up time.

It was noted during 2020 that although they had similarly targeted a 90% up time rate, they had achieved a 98% up time rate, and that was during the most Covid impacting period seen to date.

Additionally, now that the OGA have approved potential production below the bubble point, and prior to receiving that approval the company stated "We are currently in a discussion with the OGA on an addendum to the Lancaster Field Development Plan to allow reservoir pressure to go below bubble point, as an emerging gas cap may provide a "piston" like effect where oil in the Lancaster field is driven into the producing wells.", and the potential benefits achievable from that pistoning effect on production would be incremental to the previously projected production rate for 2021.

So, from the above previously stated projections from the company, which were made barely 30 days ago, I hope why you can see why I feel that the projected production rates utilised in your calculation are perhaps conservative in the extreme.

IMHO.

dougb, thank you for the accolade, ad although I have 30 years experience in the patch, almost entirely associated with drilling ops rather than production ops, but I have never professed to have been an OIM at any point in time.

I appreciate your kind words however, and may latterly post today my view on some of the current cash projections, and production projections, that have been getting opined on some of the other posts made today.

Best of luck to you, and keep turning to the right ;-)

Some would argue that history is a reflection/mirror of the future.

We have all witnessed the potentially underhanded and devious manner that the BoD and bondholders have apparently been working together in a manner that culminates in we the shareholders having their shareholdings effectively wiped out, and as such I do not anticipate this to end until their ultimate goal is achieved, therefore I am extremely cautious to accept any message received outside of the officially recognised regulatory channels until such time as this has all been resolved.

A message to those who may be attempting to usurp the rights of the shareholders of this company ..................... Oh what a tangled web we weave, when first we set out to deceive.

Right, the great outdoors beckons me, so until we receive the courts judgement on Monday I wish all shareholders a great weekend.

Let me begin by detailing that the following is merely IMHO, and should not be perceived to be portrayed fact.

With regards to the revelation that we all need to vote again, let us break the message down for a moment.

With the greatest respect, but being cognisant of the levels that disingenuous parties may have in attempting to subvert the apparent power that us mere PI's may have in the upcoming vote, let us consider for the moment that this revelation and suggestion of the supposed need for all PI's to vote again, and in doing so potentially nullifying their previous legitimately cast votes such that they may now no longer count, that this message was received by someone who has never previously identified themselves as a poster on here before today.

As stated, this does not reflect that the OP is indeed acting in a deviant manner, but you have to admit that the circumstances are sketchy at best.

Let us then attempt to break down the message itself.

1) It was/is apparently a message that up until now only users of ii have received, as I have not seen a similar message being portrayed by individuals that utilise alternative trading platforms.
2) The reference to "MEETING ID 595969" I believe may merely relate to a Zoom meeting ID, and that the reference to "CHANGE IN GPS CODES FOR ALL RESOLUTIONS" may relate to those who may be voting directly through the Zoom meeting to cast their votes.
Who I assume will potentially be a very small minority, as the majority of PI's will have cast their votes through their trading platforms nominee shareholder voting process. (How many people hold their shares in their own names, and outside of a nominee account these days ?).
3) It then goes on to note that IF voting deadline extensions are granted then you will require to vote again, but as far as I am aware none of the general meetings (be they the AGM or EGM) have had voting deadline extensions applied as of yet, at least none that I have seen published in the regulatory manner, which would undoubtedly require an RNS to that effect to be issued.

So, given the above, were it to be an accurate understanding of the message, then the message relayed by the OP may at worst likely only affect those utilising the ii trading platform (nothing witnessed from any of the other trading platforms as yet as far as I am aware), but more likely only affecting the minority who are holding their shares outside of a nominee account and who were planning to cast their votes through the medium of the Zoom meeting.

Cebo, I believe that the judge stated that he would attempt to give his deliberation by 9am on Monday.

However, and alternately, that doesn't prevent him from giving his deliberation tomorrow.

IMHO