Member Info for HopefulDave

Continued......

Other types of income options as per results:

We received, in July a further £200,000 in the 1,666,667 warrant conversion at 12p - that’s post our results.

Outstanding warrants and options:

There are 1,500,000 warrants at 25p held by the advisory board. (£375,000)

These are exercisable by 3 Feb 2019.

Robert has his warrants 26,810,000 at 5p (£1,345,000)

These expire March 2020.

There are another 990,000 founder warrants at 5p (£49,500)

These also expire March 2020.

There are staff options:

250,000 @ 27.75 (£69,375)
200,000 @ 31.5 (£63,000)
1,000,000 @ 32.5 (£325,000)

I don’t expect Robert to convert until closer to us paying dividends, but if Kansas is close to revenue generating and faced with diluting his holding further still by a placing, it’s possible he could inject money converting some warrants (and not selling the shares before we go down that route again)

So things that could happen:

Royalties or other sales income: Could be DTU (royalty) or sales (nitrogen) or partial sale of royalty interest in WD (if we indeed have that with our real property ownership of the initial lease)

Warrants: Not ones to worry about this time as not in hands likes of Primary Bid, but potential source of income.

Placing: IMHO still not on the cards - Think we’d be OK until March/April timeframe with current costs + ED online. Most likely (again imho) we will be in a position with Kansas / WD to raise money.

In summary: I think we are OK going into 2019, but could get interesting around March / April time without an other source of income (Kansas) or Roberts warrant money.

We have a curve ball (and not very likely but may as well float the idea) potential income source if we conclude ED and possibly back out of sections 31,32,33,34 and negate the lease deals for $ back. Or maybe it goes ahead and we sell our interest back for $ up front as more valuable to us now to assist Kansas or WD.

My worst case scenario / thoughts are as follows:

Gas revenue:

$24,000 a month at average of 25,000 MCF a month per well?

Based on spot - $1.1 so saying $2 an MCF received (assuming don’t get a premium for high BTU content as we did with NGL’s but there could be one still. The NGL was getting good $)

25,000 * 8 = 200,000 * .8 * 0.75 = 12,000 * $2 = $24,000.

If we get more $ for the high BTU content all well and good, but let’s stick at standard Henry Hub Spot pricing ($3.15)

Oil Revenue: ( assuming $70 spot price)

Initial month 5,000 bopd expected *.8 *.075 = ~300 bopd.

Oil price received was spot minus $2 at last reported, the refinery was close and that included transport costs I believe (we received a premium on the sweet crude produced)

300 * $68 = $612,000.

Total received = $636,000

Worst case minus operating costs:

Expected operating costs to produce the oil at ~$15 a barrel. (Don’t laugh, the reason I say that is it’s usually quoted at $35+ production costs but those costs include the capital costs of the well & royalties etc) if anything it is purely ongoing operating costs we have taken off - and have already removed royalty oil)

The operating costs (last years accounts) whilst producing the NGL’s would have been higher, whilst revenue lower (or no gas sales in first part) with the pipeline, the gas revenue will be complete and less costs to produce NGL’s.

OPEX costs therefore ~$135,000 (for that month for our share)

Would equal $500,000 in month 1
$500,000 / 1.3 = £384,000.

Now I’m not really fussed in converting back to UK numbers, nearly all our costs are incurred in $’s, and all income in US$

We will have some UK £ costs but they will be minimal.

Most of our costs last year would be East Denver related & Finance raising related, staff related costs would be massively reduced Cully is gone, our Ops Manager went, DM is as far as I’m aware being charged out elsewhere involved in ED completions and so on.

DTU costs should be reduced, and in our last test we actually got money back.

ED - Further sections. - some legal fees there, but feel this is coming to a close (more later)

I’m expecting our ongoing costs to be far far lower than D14’s predictions accordingly...

Joy. Honestly have no idea, not until we see what it is, what the terms are.

As with most my posts, a few different possibilities floated out there.

Depending how much information is released when they give a formal full RNS on it we will know.

Just thinking about the leases we farmed out and all the complications with them, little bits went here there and everywhere.

So it will depend on what the leases are, and what deal we can do.

Is there a royalty and will we keep it - that’s fairly key - that’s taking a true % of the wells production straight off the top prior to WI being dished out.

Who will be the operator be, and how will they drill it, and what working interest will they take?

If as Fadec alludes to there are nearby proven wells that makes a huge difference. Depending how close our wells would go to those (not making any DTU statements) just in terms of likely % of hitting oil and gas.

That would make a nice difference as to proving it, just have to wait and see!

Noodle. Honest post.

ED disappointed financially with the u turn they needed to do, and then the whole Renegade situation also didn’t help.

We will just have to see what they do.

Is it all packed up as one big 48+ development? (most likely imho)

So it will be as you say very capital intensive, $240m+ if $5m a well. Possibly a major?

Will it be something like 20% royalty 16.67 to the state and 3.33% to the leaseholder (us) ?

And then the small carried working interest 5-7.5% still?

And maybe add to that a further small % on reversion (well payback)

So we could end up still with 3.3% of the 100% and then whatever % of the WI after the royalty goes?

Even a initial 5% carried WI could = 3.3% + (100 * .8 *.05) 4

That would still equal 7.3% of the production revenue after ongoing operating costs, and potentially a small
Increase again on well payback?

Robert also mentioned the possibility of a cash injection on the play, possibly foregoing a reversion increase or even the royalty or part of that.

I would hope with a starting point of 100% we could keep at least something like the above.

We got 7.5% from a 57% WI, but that was with producing wells, but don’t forget there was a reversion interest in that original deal also. I forget what it was, something like we went up to 70% WI but Conocophillips was then entitled to 50% of that or something even more complicated.

Either way. You could see from the multiple partners raisa, Renegade, conoco, and us it was a tad confusing as I can’t recall all the individual intricacies of it, and unwinding it, everyone would have wanted their piece of the pie.

It was a mess, and not our finest hour.

But I hope, with fewer parties involved straight from the off, and a cleaner starting point, the whole thing will be easier to setup and move on.

I’d love to think we could have found this and drilled a well ourselves to prove it, but unless we get some serious $ in from somewhere, then that’s out of the question. I hope the above is still not too far-fetched a scenario but we will see soon enough I imagine.

The average price of WTI through November / December and January ie the flowback, first and second month of
Production highest producing months were.

56.64 nov (flowback)
57.88 dec (ip)
63.7 Jan
62.23 feb
62.72 March.

Not sure how above makes an average of $64? And certainly not in the higher producing months)

66.25 - April (our last full month at 57%) - not in accounts.

Shunting all of the gas down the pipeline will add a bit.

If going to put what if the production is 5% less, then let’s have a neutral discussion eh?

What if the correct average price was used to start with and adds a few percent to the numbers?

What if the wells produce 5% more, or even the amount we wanted originally?

If one is possible, so is the other.

Remember. Let’s stop dealing in the absolutes of there will be a placing and look at both options / both sides eh?

“HopefulDave. At least you now acknowledge you do ramp to look after your holding. “

Urm no I don’t!

I own shares. I want them to rise - doesn’t mean I’m admitting to ramping.

Hindsight is a bitch isn’t it.

The extra tunnel costs there hit the company hard. Post ST2 SXX will likely be valued at way more.

ICL who tried to derail the project and stated the product is rubbish and would never sell it, stopped producing MOP, mine Polyhalite, and are looking to increase production themselves from 1-3Mtpa. - products still **** though right, and selling for more than they thought it would...yeah still rubbish, never happen.... they flip flop more than a certain poster here...

So it just goes to show, how long term things change.

I’m not looking at 1 day, week, 1 month investments. Sure if something looks way overvalue I might rebalance, but ultimately I have my long term goals and I’m going for them, that’s my thing.

If I was worried about day trading I’d go and play on the aim oileys and play the Hokey Cokey on them.

I’m not gambling day to day. I’m making my own long term investment decisions.

Constantly swapping from one thing to another and trying to judge market movements can lead to huge rewards or wipe you out in no time.

So I sold some sxx in 30’s and bought more here, but look what happened here. ED was delayed and it dropped further. Had SXX not gone over budget and announced the $3bn in debt was done, they’d be off at the races at 40-50p and I’d be kicking myself. As it is it’s a fairly neutral position, but I now have more shares here than there.

Not that you can read old posts but I always said I was here for 8 producing wells and one of DTU or Helios before looking to begin to unwind my position, things change, we now have more plays, but was still a hold for a good few years for me. I imagine I’ll be holding the majority of the shares I have here for several years to come.

The company has a long way to go (with its multiple plates spinning) and I want to eat from every one of them! I’m greedy.

Of course I’ve made many many bad calls on when to buy and sell, and some very good ones too. I don’t claim to be an equities expert.

I’m a guy who works in IT for a bank, and invest for myself and my long term future. Both my main “plays” have the potential to retire me should I want to in a couple of years if all goes well.

2021 and first production at SXX onwards.
2021-2022 what here eh? Oil & gas in WD. nitrogen / DTU, Water-Helium-Gas?

Those are my goals, and it’s why my posts are long term view based.

... One well is already there, liquify that and sell it and you have 2500MCF a day already. $225,000 a month at $3 clear after costs or $300,000 at $4.... So call me mr ramper all you like, or delusional dave, or hopeful dick (still find d14’s name for me priceless) But looking at a bigger picture, and not focusing purely on one outlook, there are more ways to move this company forward. Of course I’m coming from a positive angle, but there is a lot of reason in my posts as well, I get a bit passionate when parasites move from share to share ramping then flip flop their positions, especially when they profess to knowing everything yet getting so much wrong. We have been hugely set back with what happened with ED with Renegade, and the delay to bringing the others online is frustrating to say the least (but outside of the companies contol) But the chance to get things right with WD and the Kansas prospects are huge, are they not?

1.) if you knew me better you’d know I’m long term invested in both. 2.) sxx has had a huge tumble and recovery also 3.) I have bought more all the way down from 21p and my last buy was 35,000 at 16.1p 4.) You are way off with my holding numbers those that went to the AGM know what I held then. 5.) full mouthed ranper - lol. I remain focused on the long term potential of the companies I’m invested in. I don’t need to have an alternative agenda other than wishing the company I’m invested in to do well, it’s obvious I want it to do well, I’m one of its largest shareholders. I have been critical of the situation with ED, Renegade and how that has impacted the companies growth. I remain bullish on the other prospects of this and sxx. I don’t like people who with agendas push one possible solution, only one possible solution or outcome, when there are other options on the table. I fail to see what part of my posts regarding Kansas most likely being the key to revenue generation are way off the mark? I’m not quoting over inflated figures. If you look at the sales price of nitrogen in the two basins we paid for it delivered, that’s why I’ve said $6-8 sales price (we sell locally at that price maybe) and a $3-4 profit I.e probably over egging massively the cost to liquify it on a production basis. Others are quoting way higher figures - but mine are way more conservative - take note of that please - I’ve already stated ED cannot sustain us continuously and we need another revenue stream, numerous times. I just believe we get more from it than D14 (when it’s online) and I believe he’s still using too high company ongoing costs to fuel his sole agenda. I don’t doubt that without additional revenue in we would ultimately require more funds. But I look at where we are now compared to where we were at the last fundraise, and I see lots of progress, just because it isn’t revenue generating right now doesn’t mean it’s not progress. We may need to place at some point.. I’ve also stated that. But I’ve also stated there are other ways of placing shares (as part of deals) - does that not happen? (Renegade’s lease) was paid part cash part shares. It happens the other way round to. Investment from someone as they want something you have and you may need some cash to develop it quickly, it’s a win win for both parties. With the nitrogen project / DTU it’s possible we could get cash up front investment also. I also fail to see why it’s not possible to get a relatively small amount of debt (if required) to fund a bit of Kansas infrastructure (if required) Do the maths on the well cost. Gas sales and likely cost to liquify it. It’s also a quick play, so you could borrow for that, deliver it, and you have lots of working capital as a result? One well is already there, l

JJAL - I'm saying there is no cost to HNR there. There is no cost to HNR there, we aren't paying out for any of the work there.

There is no revenue from them if shut in. And revenue from the new wells is delayed. It is not a cost to HNR it is income not being received during that period of time. I've never said anything other than that...

With regards to D14...

I repeat - Kansas seems to be the key for additional revenue generation.

I have never stated ED will sustain us indefinitely with the 7.5% deal on the 8 wells. It will provide significant revenue over the initial period and IMHO more than enough to initially cover ongoing costs + put money in the kitty, before covering ongoing costs and finally reducing to provide an income stream, but then one that doesn't cover ongoing costs.

It is your continual dismissal to acknowledge the ability to raise money to develop assets in ANY OTHER WAY which is the point I'm trying to get across.

Kansas is a proven resource. Why could we not have debt agreed to ramp something up there, if required? Why do you 100% discount that as a *possibility*?

Debt to develop a $5m well that takes 14-16months to payback and could be a duster?-> Clearly not.

Already having a well there which is capable of producing 2500 MCF/d and costs $200,000 or less if re-completing something for another well? -> Why not? Simple question? Why discount it?

If they are quick to drill / re-complete and not months and waiting forever for frak crews etc, why is it not something that could be developed quickly, and produce revenue quickly?

For all we know there could be equipment there to commercialise the first well as it is?

LOL. “My raise was an acquisition which was profit enhancing. “ What the hell do you think a raise for Kansas would be if indeed there was one? Tea with Dorothy and the wicked witch? Of course we will go on about Kansas and WD. It’s the future of the company but of course you don’t want to discuss those prospects or what they could deliver as it doesn’t suit what you want. How can you be taken seriously when you say that raise was profit enhancing and a raise (if there was one) to get Kansas into production is just to be brushed under the carpet? Lease - 3 weeks later - flowing well. This isn’t a long term cash tied up investment. Those wells are quick. Cheap and extremely viable. How is that anything other than? A) profit enhancing raise (if a raise) B) not instantly delivering back very big revenue very quickly.

Diamond. If you did better research maybe you would have seen that placing coming or oil going up not crashing down as you predicted on here trying to upset the apple cart and fuel your agenda here before. You aren’t always right. - go on put that in your next “I can only see a placing coming” message. Just admit it once oh perfect always right never wrong mr knower of everything in absolutes. I don’t state in absolute facts. I state my opinion based on what’s available to us. You state as if there is only one option. Yours. As expected you still think we spend £400k a month despite not being the operator in Denver. Despite several members no longer on the payroll, and other members being paid by others or effectively charged out in Denver. You see one absolute outcome as it suits your agenda. An agenda you have nailed to a mast. Kansas. - clearly an incredibly profitable drill per cost V gas produced asset. - you have NO IDEA what sales deal or partnership could come through from there. You fail to acknowledge we could partner with anyone on WD or Kansas and receive a cash injection from it. We may not even need a cash injection to develop Kansas and bring online wells and generate revenue. We may need some cash for Kansas if it’s a big big acreage and development, and we want to be aggressive with deployment and sales, but it’s not $5m Wells with 16-18 month paybacks it is $150-250k Wells with payback on that outlay in possibly months. Yes as I’ve said before, we may spend the same again on modular liqifcation processing etc so if can be liquified and transported, but who isn’t going to lend money on a business case that pays back investment within months and then turns a huge profit? Again *if* we need to borrow or raise. On top of that ED will provide (initially) more than enough to cover our ongoing costs or even cover a well or two at Kansas. Why discount any of those options? Because it doesn’t suit your agenda... The wells are cheap to drill and produce a vast amount of gas, it will be very interesting to see the business case for that. If it’s as good as the numbers we can work with today state then there is absolutely no reason why we couldn’t get debt, or even just ramp up ourselves. All depends on the strategy for the sales and how much land we end up with / scale of it. We placed before as we had no other income option. We have income (albeit a little delayed again) and now seem to have an incredibly viable business case in Kansas. Release details of wells that cost what $200k to drill and produce 2500 * $3-4 **profit** a day on sales at $6-8 once paid back?

..... continued. The wells actual costs make no difference to the carried working interest. They made a difference in getting us to 7.5% but as a carrried working interest we get 7.5% of the ongoing income minus ongoing operational costs of the wells, anything prior to the well coming online is irrelevant. Much like your views as if they are statements of fact. You’ve been wrong multiple times before. You have attempted to get the price lower in your tweets. And the title of this thread alone, just sums up your character.

Wow. Looking forward to red faces, what a title. Coming from the man who just lost a bucket on LVCG by not seeing that placing coming? Coming from the man who’s face is probably even redder because he has to stand on his head to read his oil chart? (You know the upside down one) Really D14 to try and come along as some expert with your track record you really should think twice about spouting off like the man with all the answers. You got lucky with a drought in Denver causing us to be delayed and a further drop in the SP here. ED won’t be continuing to help to keep us going just yet as they were delayed due to the lack of water. Not because they won’t be generating enough revenue to keep us going for a while when they come online. WD is likely to be a joined in with a major partner. With 48+ wells it’s going to be a big play, but large costs (drilling etc) aren’t likely to be until April + timeframe most likely. Plenty of time to partner and fund that, no Renegade 100% owned leases, bigger acreage, multiple formations within reach...we could even get $ up front on this play. Kansas however is already proven. The nitrogen is there. The pressure is there. The flow is there. No reason why a deal on this won’t be forthcoming, and no reason why we can’t be looking to partner up with someone *if* we needed to, depending how large a play that becomes. On the back of a nitrogen deal we could get funding to develop wells quickly by a partner, we could even have a share for cash transaction with said partner. Depending on the commercials of the deal we could even arrange a debt facility. Or we could place, potentially at a premium to the SP, based on the back of a nitrogen deal. It doesn’t have to be a primary shaft type placing, placings or shares in exchange for development cash could happen. It would be irresponsible of the company not to have the approval to place shares sought at the AGM, but it doesn’t mean we will place any, or all of them, and if they are they may not come onto the market at all, and could be at a premium. Anyway these are just some opinions. Not trying to state things as if they are facts and will definitely happen, unlike someone, who’s not always right... Imho. In your calculations you constantly massively over egged our costs, you continually left out items of revenue and were called out numerous times on that, you still probably massively over egg our ongoing costs (we have reduced our staff costs &True now operate the ED Wells.) In your tweets on $ you seemed to be very confused over the difference between carried working interest and working interest and seemed to assume we only get profit from the wells and kept mentioning the wells costs to drill etc when they were no longer relevant. The wells actual costs make no difference to the carried working interest. They made a difference in getting us t

Given the markets drop over the last few days this is probably one of the best performing shares out there! Someone picked up a nice chunk this morning?

We didn’t get a “leaky” bad news RNS.

JJAL. I can’t belive you have failed to deliver a failure to deliver.

And WD in 2020! - At least acknowledging the fact it’s there now!

Not sure why think 2020? Permitting process should not be difficult given there should be no blockers on it as the lease is ours and possibly even the land itself... at least the first blob of acreage... “direct owner of real property interests”

Interesting wording that “ Highlands has a direct 100% working interest in its West Denver assets and can develop the asset as a ******direct owner of real property interests*****”

Lock stock and barrel? - lots of barrels we hope :)

Milo, I never baked in any dilution of any sort based on the original projections - but that was based on the original ST2 numbers. I only bake in 11-16% now based on the fact we went over budget, but still not convinced it won't come in the form of a Royalty deal or completion finance or combination thereof. It's why I'd be happy for a Royalty deal and debt and then potentially completion finance for any shortfall thereafter. Then there would be no extra shares for anyone. If and when the $3bn is committed...Place your bets round 2 comes along for those in the what next camp? And if you don't get any more shares issued with a Royalty deal - or if there is a Royalty deal and the only shares being issued are going to the Royalty holder, so they don't come onto the market in any shape or form...... Be one of the biggest share scrambles going all the way up to a more sensible MCAP! There are still many possibilities for this to pan out well, but as always emotions for fear always outweigh those of hope. Me - Hopeful by name... Hopeful by nature!

"No news imminent" - Forgive me but are we not in Q4? Is Q4 not when the biggest single thing hanging over the company gets sorted, namely $3bn of debt either being declared as debt or not? Me thinks there is significant news coming at some point! 10 days into Q4 already... The $3bn is the big news. $400-600m on top is not that great a thing AS LONG AS the $3bn is committed.. ST 1 - a field, $250m Royalty and the remaining amount raised in convertible bonds + equity. ST2 - a partially built mine, lots more TorP, and a total fund-raise of $3.4bn or $3.6bn. $400m of a total fundraising of $3.4bn is just 11.76% of that total. $600m of a total fundraising of $3.6bn is just 16.66% of that total. ST1 was $400m in convertible bonds, £370m in equity, $250m in Royalty and $50m in equity (Gina) In short, pretty much all of it had an equity effect as look at the bond overhang (roughly 75% of it was either shares, or convertible bonds which could become shares) ST2 - Assuming the $3bn debt comes in, is 11.76% or 16.66% -> Just think about that for a moment and how massively different that is to the ST1 situation. When ST1 was completed. We were a field with ST2 still to come and build commencing. At ST2 we are a mine in progress, still with 2 years to build, but fully funded and risk pushed heavily onto the contractors themselves. The two things are completely chalk and cheese scenarios. So forgive me for being Mr Positive as I'm sure I'll get shot down by some here, but put simply - No news imminent? The $3bn debt agreement is still by far the biggest news this company will have short of saying the shafts have completed, the tunnel is completed, and the mine is completed. It's due this quarter, whilst close of ST2 is pushed to Q1 2019. The biggest single component of that is the debt component of which commitment (then subject to the remaining funds coming in) we hope to be granted this quarter. So significant news and significant positive news is still "drop-able" any day.

Scotman I agree. Would happily take a second 5% / 1% Royalty now with another partner. It would ultimately dent dividends in the longer term in terms of revenue directly from the mine itself, but if it resulted in the same number of shares in issue as we could have today and no more I’d be happy. Lots of people look upon the mine as the only source of revenue for SXX but I don’t, not in the longer term timeframe and when we are looking at dividends being earned on volumes of 20Mtpa. I see a mine which will generate huge amounts of revenue and I see an ambitious CEO. I see us with already a 30% holding in a distribution company... The profits that distribution company go on to make in the future won’t get split to the royalty holders they come back to Sirius Minerals directly and to SXX shareholders directly. I’d be amazed very long term if SXX doesn’t branch out into other things as it grows. Of course it’s upsetting needing to find another $400-600m but it it doesn’t come in shares now, I’ll be extremely happy. It means the investment return on what people hold now (sxx shares) will be worth far more over the next few years than they would if we issue loads of new shares right now. Share buy backs can always happen but why think about that longer term? If and when we get to that point I’d rather see diversification and accumulation of other assets. Why would you want SXX buying back 100m of its own shares for £225m or something in the future when it could just as easily go out and buy further into the distribution chain or even buy another company and diversify into something else? Why just be SXX the Poly4 company when could be a global player in other things too? So I’m 100% in the Royalty me up camp. It would be a further indication as to the validity of the product and the mine itself, and if it got us to ST2 completed with no more equity released, I’d be happy with the short term value that would add to the company and the longer term prospects as well. Just my two cents but I certainly dont see equity release in shares as the only viable option for the extra money as some seem convinced by.