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ITD - far too negative. There was a big tightening in the credit markets in Sept/Oct. It's worth seeing if that will unwind a little bearing in mind each 1% off the interest rate of the RBL will save at least $0.5million per annum, assuming $50million RBL. And the RBL may well be bigger than that. Not to mention the need to avoid onerous terms that might lead to a technical default - which happened on the Senior Loan earlier in the year.
As long as it is done by Christmas, nothing significant has been lost. Even if not done by Christmas, it is not the end of the world on condition we can drill the minimum number of wells in the new year and start to make incremental production increases. COPL is close to breaking even as it is, even with poor production and very expensive financing. Frustrating delay I know, but re-rate will come! (IMHO)
I'll repeat what I've said elsewhere. We need the RBL sorted by end of Q1. We should have sufficient cash until then to both keep running and do the drilling, assuming some incremental increases in production from flaring (even a hundred barrels a day average would make a big difference given the marginal cost is negligible - basically transport and taxes).
The downside of going past Christmas - as Steve V pointed out - is the bond conversion price drops, which increases the dilutive effect of the bonds. Not the end of the world if in return for better terms on the RBL/JV, but significant.
Steve, that may be the case - thanks for the date, which I didn't recall - but that wouldn't be terminal, just a pain and another loss of value for shareholders. A loss that could be made up for by a good RBL instead of a bad one. The difference between, say 6% and 14% (which from previous discussions I suggest is best and worse case scenario) is in the region of $3.5million per annum (assuming $50mil RBL).
The RBL remains key - and on what terms. The good news in the results is that we have a bit of time to sort that before s*** hits the fan. However, still has to be sorted by end of Q1 as we will need some of our remaining cash to complete some drilling as per the licence requirements (is it 2 horizontal or 3 vertical min?).
I'm confident the RBL will get sorted, but terms will decide how much that boosts the share price by. Previous finance deals have given most of the current value to the lenders - leaving shareholders with only the speculative future value if and when we get the financing to get oil out of the ground. If the RBL is on poor terms, the future of the company is secure, but we are dependent upon a good JV to get us up to the 50p-£1 that this company should be worth already. A good RBL, on the other hand, and I can genuinely see us at 40-50p within a week or two. All a bit 'finger in the air' and IMHO of course...
Agreed Tiburn - perhaps my misunderstanding.
I should add that I agree with some other posters that I don't think oil is likely to go into the $50-60/bbl range for any length of time for a couple of years yet, particularly given the US has said it will top up the strategic reserve when oil hits $67-72/bbl. The US have 180million barrels to buy back, which should keep oil into the $60s for a bit even if the price was being pushed lower. Add to that limited capacity taking a couple of years to fix, and we're almost safe (as COPL holders) until 2024-5. Unless there's another 'black swan'... but there's not much anyone can do about that.
I mostly agree with Tiburn - although I also agree with Iron that the Simply Wall Street valuation is off. However, that is because it is not accounting for the risks of something going wrong e.g. a big fall in the oil price and no RBL.
That is where I marginally disagree with Tiburn. Somewhere below it was said we don't necessarily need the RBL. My view is that we do. Whilst I suspect 4th quarter will put us around breakeven or better, that is with oil at $80-95/bbl. If oil falls back to $50-60, we're making a loss, and will run out of cash or have to raise by dilution next year.
Further, without the RBL, we won't have the cash to invest in kit to realise the potential value (which is what the Simply Wall St valuation is really about).
So overall, the RBL seems pretty important to me. Without it, at best we push up into the 20s once the small production increases we can afford come through. If and when oil goes down towards $50 (I suspect a long way off, but Ukraine could change things quickly), we are struggling.
It's now mostly about the RBL - and has been for 6 months+. Ryder Scott on its own was always only going to be a short-term bounce. (Sadly wasn't as much as hoped, and then shorters etc. brought it back down and more.) It's a bit about production as well - over once we have over 2,000bpd, we should start making small profit after crippling finance cost. Until then, cash is going out the door, which I think explains the share price - there is a risk premium in there for COPL not getting the RBL, not getting production up beyond 2,000bpd, oil falling back to $50/bbl - in which case more dilution, or bust.
I think we will definitely get over 2,000bpd again, in which case, if oil is still $90/bbl+ then COPL is making money already. Share price should start to climb. If we get RBL on better terms than now, profit instantly goes up, risk of dilution down and door opened to proper expansion - should bring a step-change in price, just a question of how much, which depends on terms.
Sit tight Bolton et al. Will get better! IMHO
The problem here is most investors needs something more solid than Art's comment in a presentation - I think too many aspirations not met in the past mean we need the RBL agreed, or details of the JV terms, or production increases, before share price will drive solidly, and permanently, higher. I believe it will happen, but few investors willing to put big further sums in until that given there are risks. Without RBL or JV, COPL probably won't make a profit for some years, and could run out of money/further dilute in the meantime (i.e. sometime next year).
Question is, do you take the gamble, buy low now, or wait until the risks reduce and hope you can still get in at a reasonable level? I've gone for the former - I think we will get an RBL. The only question is "on what terms?" The terms of the RBL will dictate where the shareprice will settle at from there. In the background, I think we'll get small but steady production increases over the next few months, bringing this back towards where it was 6 months ago in any event.
But all IMHO...
On the other hand, I agree it probably look the wind out of the most recent rise.
As I and many others have said before, it is the RBL that will give the company a sustained lift - it will immediately reduce current costs of capital and allow the expansion that turns this into a valuable (£100s of millions) company. Without it, the company is worth very little. I suspect that is what the market is pricing (and the shorters are betting on). I'm optimistic and believe it will work.
Tiburn, I wonder whether the balance of the bond is held by the previous shareholder. I note today's announcement says Anavio did not hold common shares previously, but Art talked in the interview about the biggest shareholder leading this. It may be there are different entities controlled by the same people, but that would explain the shortfall. The announcement of the funding explained that the bond was sliced up so different people could hold a piece.
Agreed. Lower than most comparable firms, once CUDA is sorted. The company isn't going bust in the next year. The risk is a delay in financing, delaying delineation wells, delaying true profitability (the finance costs currently wiping out most of the profit that we should be making, even with CUDA). That reduces value for shareholders, but not existential for a while.
Agree though, if finance sorted, and if even half the delineation wells are successful, we will be 4-5x price in 12 months. We stay fairly close to where we are until then (perhaps a bounce of RS and any other bits of news).
Not worried, no. I suspect just a bad day on the markets generally, plus a few people impatient as to lack of news. Goes in cycles. I am confident COPL will be moving up a bit once RS comes through, and much more (and more permanently) once the re-finance is sorted.
Hope that is some vague comfort! Stresses me out too...
Don't think that's realistic with respect Opulentia. As a result of focusing on delineation wells, and the fact that only bits of the gas return issue are getting sorted straight away. There won't be lots of further wells in Barron Flats Shannon straight away. The April 2022 presentation is the best guide I think. Just to quote:
Production at the Barron Flats Shannon Unit (BFSU) field is
currently c. 1,900bbl/d (gross)
• 500-800bbl/d of production capacity is restricted due to surface
facility working pressure constraints
So that means 2,400-2,700 bbl/d at Barron Flat, hopefully by the end of the year. The same slide then says:
Optimization will unlock >4,000bbl/d (gross) over the next 1-2yrs - so that mean 4,000 (at Barron Flats alone), but not until 2023-4.
In addition there are the delineation wells:
AFEs are being prepared for drilling of the first five wells in 2022-
2023 for circulation to WI partners
I am no great oil expert, but as I understand it these are exploratory wells and production from them is likely to be limited. The Dakota sands well produces c. 100bbls per day.
So, in short, we don't know when production will hit 4,000 bbls per day. It could be this year, but much more likely next subject to what is prioritised and what actually comes out of the delineation wells.
The key value increase this year is refinance (a biggy to ensure a stable and funded company) and turning that oil in place (OIP) into firm, bankable 2P reserves, which the delineation wells should start to do.
Things is about those risk, COPLH, is that - once the debt is sorted - they are mainly a risk that not quite as many barrels will come out of the ground or be sold for quite as much money. As long as oil stays over $60 a barrel they are not a serious risk to the company remaining a going concern (bearing in mind most of current production is, effectively, sold at less than c.$55 dollars a barrel and we are about break even before getting CUDA.
As such, it seems to me that, once finance is sorted - and subject to a major unforeseen event (accident, further pandemic etc.) - there is little to no risk of the company going under in the next couple of years. Bearing in mind that the raw asset value (equipment & 2P reserves less debt) of the company is well in excess of the market cap, we are really just debating how much the company will rise and when. Some (Gold) think this will be 40p a share by the end of the year once the finance is sorted, others (e.g. me) think 50-80p, others think £1+. We may all be wrong, but the company will still exist and have big potential.
Hence your negativity appears unusually excessive, unless you have (as people suspect) an ulterior motive, i.e. not holding, but shorting, or working for someone who wants the price down. If you're not, see above - don't be so gloomy!
Tiburn, you miss one important further positive on that summary of where we might be at end of 2023 - we will hopefully have added significant 2P reserves. An open question to you and the board - if we manage 16 wells, how much additional 2P reserves would you expect to book (depending on whether they work etc.)?
Seems to me that will be a big part of the value of COPL going forward and is the rationale behind focussing on delineation rather than increasing production. Just trying to work out what those reserves might look like in a year's time - obviously not the 500 million barrels we might get long-term, but millions extra? Tens of millions?