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I doubt it will happen this quarter, but if all the recompletions and new horizontals work, plus the flaring etc. we could definitely top 80,000bbls/month by June:
- Say 700bbls/day from the recompletions = 21,000/month
- Say 400bls/day from one horizontal (not sure if we'll do 2) = 12,000/month
- Another 200bbl/day from topside improvements, de-waxing = 6,000/month
And we're over 80k/month
Given it would be proof of concept on the wider field, I would expect the SP to more than double if that were done. My guess is c.50p. And that's without a JV.
Best case scenario on production of course. However, reasonable worst case is still slowly growing - hopefully back up to 50-60k/month. Subject to achieving an RBL on no worse terms than the senior loan, or getting a JV, COPL should still be making a profit even when the hedges return and be in a position to push on. Would just be a growing company, not a multibagger.
Frustration understood, but the idea that Jan was the month to see lift off was optimistic guesswork at best. My view was and is January was never "the month" - although I think the success of the first recompletion deserved much more credit. We've only had the first instalment - the first recompletion - of six or seven that could fall in the first quarter or so (3 recompletions, 1-2 horizontals, JV announcement, RBL). Only one - the first recompletion result - was likely before the end of the month. RBL and/or JV possible, but always more likely in Feb.
My view is Feb is the bigger month:
- second recompletion due, which is what allows 2P reserves to be booked, as you need two drills into the reserve. If it works, there should be a decent uptick for the increase in reserves and production (although the latter limited - don't expect more than c.100bbls/day)
- RBL/JV (which I think must be linked to some extent) could be announced. If not, I suspect there are wrinkles (not that is won't happen, just things to be worked through or targets to be met first, e.g. success of recompletions or first horizontal)
We need these things to go right in Feb. If they don't, we carry on waiting - the company stays where it is for now, which is in profit but expanding only slowly - and still massively undervalued. If they go right, then we're at the races and other investors will start to want a piece of that value. All IMHO
I think there are a few points people have forgotten or misinterpreted on the financing/JV along the way:
JV: The only timeline Art has ever given is as to presentations, not that JV would be completed. The most recent timeline was a presentation in early Jan. With the NDA I would not expect anything to be announced until there was an MoU at least, with some terms to prevent walk-away/being outbid. This week is about the earliest I would have expected an announcement, but frankly anytime in Feb would make perfect sense. Beyond that, one might surmise there are significant wrinkles - or pre-conditions (e.g. successful recompletions).
RBL: There have been timelines on these. However, it couldn't move ahead until CUDA secured, and the autumn deadline that followed was missed because of market conditions - not much point in an RBL on worse terms that the senior loan. Subsequently the JV discussions will plainly make a difference to the RBL, so until there is some certainty on this, signing up to an RBL, with the associated fees and tie-in, would seem risky. Better to wait until you have some certain on what you need.
Tap facility: This flows from the above, i.e. RBL waiting upon JV certainty. The alternative would be to negotiate with both the bond holders and the senior lender to get another small loan - no doubt on poor terms as can't be secured against the asset. If that is even possible. The tap was, in that circumstance, the obvious and easier option.
So all in all, it's far from ideal, but not sure you can lay that at Art's door.
The valuation otherwise largely reflects the limited production and the reserves we have. Not much priced in for the possibility of a JV. I think because no one yet knows what it will look like. Price will go up with production and 2p reserves - one which front the Dec production increase and first recompletion are really good news. One more successful recompletion and good increase in production for Jan, and we'll see a material step-up.
Agreed - good board today (which I have mostly read this evening). Overall my general feeling I get is that we're in a good place but it's going to take time - unless the JV involves a big oiler lending us a dozen rigs next week!
In some cases, 'de-ramping' (or ramping) may also be 'market manipulation' - where it "gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of" the share - and is a criminal offence. Depends if they "knew, or ought to have known, that the information was false or misleading". If it's just genuine opinion, no problem. Quite a lot of the time on this board, however, it is not - and I suspect there are some out there being paid to 'de-ramp' for larger clients - which rumour suggests is an unfortunate common practice amongst small caps. So not all innocent at all.
For the avoidance of doubt, I am not accusing any particular poster of breaking the law, and it's a fine line between pushing the negative view, and being deliberately false or misleading. But I strongly suspect that, if we were to know the full story on some of our posters, there would be criminal offences being committed from time to time.
My view is an announcement on the JV will come in the next month. I have long said it was not going to be before end of Jan/Feb. As to scope, I think we all are guessing! The interest of the JV partner in recompletions could suggest they want a piece of the Frontier 1, or could just mean they are interested in the results which may have wider applicability.
On carbon capture, I think it's a useful possible addition that will make investing in COPL more palatable for a large oiler and the market generally (which doesn't like oil right now). I doubt it is actually worth anything per se - too long-term and too uncertain returns. The carbon credits, for example, will be being claimed in a decade's time, and who knows what the regulatory environment will be.
Doesn't matter, of course, if the oil in the ground (and flowing out) is valued properly. At 3,000bbls/day and 35million bbls 2P reserves (was 31million bbls as at July 2022) and WTI at $80/bbl, we are close to 50p/share in anyone's book, even with the bondholders converting. If the next two recompletions and the first horizontal well go as planned, we'll be there by the end of Q1 this year even without a JV. With a good JV, we should shoot past that on potential alone.
Did the 2021/22 test well not produce 80bbls/day? x6, would that perhaps be conservative scenario? Would be around 14,400/month, assuming they all work. Art reckoned 400bbls/day, so will put that as best case (his usual modus operandi), which would be 72,000bbls/month! I doubt we'll get that, but helps give an idea of range of outputs.
I also believe the JV is coming, but don't expect it tomorrow! If the other party are presenting today, negotiations will still likely follow. Whilst it could be tied up with an MoU in days, more likely it will be weeks.
Looking out for news on the recompletion and Frontier 2 drill - perhaps with an line on JV negotiations progressing at the same time. I think this week for some news, but only my guess.
Please foxtrot oscar. As has been pointed out, the only point is the liquidity covenant, which the company clearly notified the lender of in advance. The rest is a catch-all to make sure there are no nasty surprises down the line. The only new news is the £400k fee for the waivers - which is a pain, but there was always going to be a fee given the renegotiation announced last week.
We shouldn't have expected anything today. Recompletion info could come anytime, but new well spud date was only meant to be yesterday at earliest, and no doubt at least a working day required to get the info and turn it into an RNS, even if all was on time and went to plan. Which with COPL, it rarely does...
Entertaining rant Stas! Good stress buster. Much truth in it - although I think ultimately the blame for failing to meet expectations is 50/50 Art vs all of us not listening carefully. He puts a positive spin, but usually caveats. I also think that he and we have been a bit unlucky on timing - Cuda going bust, COPL were trying to negotiate RBL in midst of credit-tightening last year, waxing issues that reduced cashflow when company needed it etc. Along with the ****-ups (notification of breach of covenants, etc.)
At the end of the day, as you say, we are likely to make some money out of the billion barrels OIP, just a question of whether its a bit, or a lot, less than it should be. Downside risk is now pretty small.
Promise not an intentional deramp! I topped up earlier today. It's merely speculation based upon the lack of an RNS following the recompletion work which was meant to start just before Christmas and potentially see results soon after. Beyond that, and the fact that the rig is apparently still in place, we know nothing!
My point was that, even if the lack of an RNS did signify something had not gone to plan, it might well be just delay, and wouldn't make a huge difference to the company anyway. Now is the time to buy, not sell - next we will probably know something and if the recompletion has worked, there will be a big uptick in the SP.
Not trying to be negative Bob - just put possible negatives in perspective - which I suspect Pilot doesn't care about as he looks like he wants to talk the share down. The big picture is still there - loads of oil, making profit, lots of potential to increase production in the near-term, JV etc.
Also, if Pilot's info is correct (and I haven't checked) the fact that the rig is still on site suggests to me they are just still working on it. Which means a slight delay, not that it is a dud. If it were a clear dud, they would have moved on by now - plenty more to do.
I personally think it could be either a delay or bad news on the first recompletion. However, we just don't know - the weather was terrible around Christmas and they'll want to know for certain what the results of the work are before releasing it. It could be, for example, that oil flow is fluctuating and they want to see what the consistent response is before reporting it. Equally, it could be it hasn't worked so far and they are trying to fix it. Or it's just they want to control the news flow...
Even if there were a problem though, it's not necessarily the end of the world - 5 more re-completions to go, plus the two new horizontals.
I suspect we'll know either way by the end of next week.
All depends on the recompletions, new drills, RBL and JV. Need some good news.
IMHO, news of a couple of hundred bbl/day from either the first recompletion or the new drill will send this back over 20p. If both come off we're into the mid-20s.
A good RBL takes us into the 20s as well.
If the JV comes through, will blow the doors off - 30, 40, 50p+ depending on the terms.
In the meantime, it goes up and down with speculation...