Member Info for Investeg

Director
Number of Ordinary Shares

As at 31 December 2021
As at 31 December 2020
Clive Carver
2,245,000
2,245,000
Kuat Oraziman*
nil
41,485,330
Edmund Limerick
7,911,583
7,911,583
Aibek Oraziman**
592,857,583
528,476,278
Seokwoo Shin
nil
nil

They both have had this capacity within their term, but Carver became Executive Chairman recently, leaving Limerick as the only independent director. Tim Field also used to be an independent director until he changed his role to that of a consultant. All of them are involved to assist the Management and more specifically the Executive Directors with the AIM reporting responsibilities and give strategic advice.

Aug 23 (Reuters) - Russian and Kazakh oil exports via CPC Black Sea terminal facing at least one months disruption each once repairs begin on two of its three single mooring points, CPC confirmed on Tuesday. Damaged by bad weather. Expected to be able to achieve 60% capacity via its third terminal.

KK, yes they probably have historical links with some of the local oil traders from the past, when cashflows were short and they needed to sell domestcally their early production from S Yelemes and MJF preliminary wells to finance the drilling of the deeps in the past and additional shallow wells. Probably not easy to move away from these contractual relationships, but now the finance constraints have been eliminated, finding more economically favourable trading options must be a priority going forward, as advance selling oil is not ideal and must be on generally unfavourable terms.

The 2021 financials include an impairment reserve of $12m against the carrying value of 3AB, given that there is still uncertainty over the license renewal. Should management be able to renew this license, then this impairment maybe reversed in the future, bringing further book profitability to the company. However, stripping out this reserve, the company would have shown a profit of $7m for the year, based on increased revenues for the year from $14m to $24 million in 2021. This improvement in revenues was based on average production of 2,130 bopd in 2021, increasing from 1,491 bopd production in 2020, in addition to an increase in average price from $26.2 in 2020 to $57.7 in 2021, impacted by the ability to export its crude and enabling the company realise a larger proportion of its sales at international rather than domestic sales prices, as well as the impact of oil prices increasing generally during the period, be it all not to the current high levels. Needless to say the full impact of the increase in production levels from 2,100 bopd in 2021 to approximately 3,700 bopd during 2022, as well as the impact of the increased prices will flow through into the 2022 accounts when prepared and published. These are just looking at historical achievements and what the company has achieved to date, without any further impact of well 141 or 152 (?) or KEBCO. The company has already achieved significant improvements from well 142 which increased production for the period to another 1400 bopd, as well as the further increase in the price of oil generally across the period. Anything further is just adding more to an already good story.

Getting closer to disclosure and update to the market with the interims being published in the next few weeks. No doubt they will push it to the end of September, however, this reporting period will be like no other before, as we will see for the first time a significant company making increase in revenues with production levels somewhere between 3500 to 4000 bopd, at even discounted export prices of approximately $65-70 per barrel and domestic prices of $25, should result in revenues in excess of $35 million during the period and possibly profits in excess of $15-20m, depending on the selling costs and cost of sales. We know their fixed admin costs will not increase proportionally with revenues, so we are now dealing with a new era of super profits and a cash generating vehicle, during this period of high oil prices. How much is it going to be ? Timing could not be better for the company to have production and export licenses in place to take advantage of the elevated oil prices in the past few months. This excludes any possible upside of KEBCO, as we still do not know whether this has been factored into Caspian sales. More upside if it has. The disclosure of the level of revenues, profitability and impact of KEBCO will be news enough for the market to wake up to this company, irrespective of operational updates and disclosures on dividends. The Company has moved to another level and is now a production rather than purely an exploration company, with only now a timing issue as to when they develop the structures and facilities over the coming years. Exciting times ahead and all WILL be revealed in the next few weeks.

Suspect management are feeling very comfortable with their current position, having navigated all of the logistical challenges of successfully exploiting the opportunities under their license arrangement. Taken many years of effort to get here. They only need to complete a couple of deep wells and they are done and dusted. Probably all sat on the beach somewhere enjoying their family holidays, so unlikely we will get any news in the next couple of weeks until the City wakes up again and bothers to catch up with what the operations are doing on the Kazakh flats near the Caspian sea. Must be very hot out there at this time of year, approaching 40 degrees most days, so workers will be moving pretty slowly until weather conditions improve and management get back from their vacations. What they will come back to once they get their brains back into gear, is updating the market on the latest work of the horizontal drilling results on both MJS and S Yelemes, as well as updates on the drilling one of the remaining deeps that they are obliged to drill. Still enjoying regular income from their 3-4K bopd production at still historically high oil prices and still owning 99% of the asset, with production licenses in place to allow export of the large part of their production. No external debt on the balance sheet and no third party interest in their licenses. Where do you get this combination in other sub soil interest companies operating in any sector. Very rare I would say. No wonder management have decided to take a vacation and give themselves a pat on the back. Very frustrating for those investors looking to take a quick buck and who now have to wait until Christmas or maybe if we are lucky the autumn or maybe when they produce their interim results in the last week of September. Either way, still a special place the Company is now in, with everything to look forward to on the back of the success they have had exploring and developing the asset to production and profits. Patience needed though, not much else !!!

WHI View: "Well 142 was a legacy well initially drilled in 2016, we can only be very impressed by material production increase that has been provided by re-drilling the well as a horizontal well. With shallow wells 141 and 151 lined up to be re- drilled next and with additional horizontal drilling planned for South Yelemes, the stage is set for material production increases from Caspian Sunrise. We reiterate out 21p fair value estimate for Caspian Sunrise and expect a positive market reaction to this news. For reference, 7.9p of our fair value estimate is premised on the company’s shallow assets."

These are the fundamentals that are the core of the reason for investing in the medium long term. If you are looking for quick profits then Caspian can be frustrating given the absence of regular communications and updates. Each to their own choice as to why you invest.

There will be different mechanisms for either process, if management are considering a sale to a minority shareholder or an independent purchaser, the BoD and particularly the non executive directors have the responsibility to ensure the price negotiated reflects market value for the asset sold. The Company is not really in a position to value the asset, namely BNG, as it would need a CPR updated from 2009/10 ? when it was last done by Gaffney Cline, when the asset was very much underdeveloped and only encompassed what they had found at South Yelemes and certainly not much recognition for what they have developed on MJS. Alternate valuation methods such as discounted present valuation of future cashflows, based on current production levels would obviously give very different valuations to the current market capitalisation. So the Board would have a difficult task to justify doing anything for low valuations given the current circumstances. The other route of taking the asset private is less likely, difficult to understand what the advantages the family would gain from this approach unless they wanted to sell the asset themselves without all of the scrutiny from being in the public domain. Do they want to buy out the PI's, doubt it, as this would involve finding £20-30m+ cash funding potentially and they would much rather have the flexibility and transpearency of the listed status to protect them from influence from the Kazakh authorities and other interested parties in such a transaction. Either approach would still come back to the big question of getting to a a real valuation for the sale of the asset or purchase of shares, whichever route they decide to go.

Interesting that Clive has signed off this mornings RNS as Executive Chairman, whereas in the past, such as the RNS on 22 December 2021, he signed off as Non Executive Chairman. Maybe he has been promoted due to good performance. Has anyone seen this change being announced anywhere ?

T, firstly he is Non Executive Chairman, he gave up his executive role some time ago and secondly, your vote makes no difference, as does the rest of the private investor shareholder votes, given that we are collectively a minority vote. We won't hear much now until the back end of September, unless they have some news on one of the wells they are currently working on.

Only one certainty, we will get an update within 63 days as management have to publish the interim accounts by then, which will include an operational update.

I assume we still have Tim Field as our independent non executive Director on the Board, as our backstop on the Board's commitment to follow through on past announcements ? Is he still on the Board ? Clive will be only be able to run as fast as he is allowed to and of course sits in a different location to that where the operations are being carried out, which makes his influence and understanding on issues a logistical challenge. The dividend policy I imagine, will be a corporate decision brought about through external tax planning advice the owners will have received and after restructuring the ownership to facilitate monetising their interest in Caspian in a tax efficient way. Ultimately the decision over the timing of when to declare and pay will rest with the family. Clive will just prepare the announcement when he is allowed to do it. The non execs will be there ticking the boxes to make sure it is done but will have little influence over when it is done. So I suspect it is not Clive's incompetence but more his lack of control over such issues, which causes these disparities between what is said and what is done "Clive speak".

Un,

The accounts have taken a very conservative view on 3AB, as they have fully written the book value down, based on the fact that still have not got approval from the Ministry for the renewal of the license, which at the end of the day is a timing issue. Once the license has been extended the farm-out should go ahead. So the results for the year would have shown a $7million profit rather than the loss of $5.5m, without the impairment loss, which is a big improvement to a loss of $3m in 2020.

Very difficult to understand why the going concern basis is applicable when the financial security of the company is secure on a forward looking basis. They have no debt and although the cash balance at the year end is small, any forward looking projections with production at 4,000 bopd and increasing to 5,000 bopd by end of 2022, with all of their license obligations fulfilled by the end of 2022, makes you wonder why both the auditors and Directors think the going concern basis is still necessary. They have made an effective profit in 2021, before the impairment of 3AB and profitability will only increase in 2022 and 2023. There may have been some consideration over the crisis, although this does not appear impact Caspian so far, apart from the discount on Urals, which should be corrected with the introduction of KEBCO anyway.

Not much new information presented in the financials other than that already issued in recent RNS's so they have missed a trick in updating the market with more detail.

Nothing said in the post balance sheet review about the transformation of the operating performance with the increased oil productions after horizontal drilling success on well 142, so missed opportunity there. Only comment about the 4000 bopd 2022 production was in the review of the Caspian assets, in a one liner where it states that MJF is currently producing 3,750 bopd and SY 300 bopd. So you have to dig deep into the narrative to find the real important prospective data that is relevant for the shareholders going forward.

Would like to have seen a commitment to update the CPR report, last done in 2009/10, some 12 years ago. We all know the reserves will be much more than that which were disclosed in 2010, even if it would just be based on a new reserves audit of the MJF success alone. This will have to be undertaken anyway should the company ever need an indepndent valuation of the business going forward.

Looking forward to management delivering much more current rather than historical information in the Investor Presentation and a possible further operational report at or before the AGM.

CC,

This is the real differentiator, anyone that knows anything about exploration companies that start off with 100% of their license, knows that in order to finance the exploration and drilling to discover and find oil, they have to sell down their interest in the field in order to finance the drilling works. Although Roxi did this a few times, they managed to get back the interest from partners such as KNOC and Canamens and at the same time they sold interests they had in other fields they thought less prospective than BNG, such as Munailly and Galaz.

So now we end up with an oil production company, with 25 year productions licenses, where ordinarily at this stage, it should only be holding a 25-30% interest in and probably saddled with a lot of debt that it would have had to borrow to get to this stage with over $100m + of revenue. Yet it has 99% interest and NO external debt financing on its balance sheet. It is an extraordinary position for a company this size to be in, generating significant sums of free cashflow and in a position to pay dividends to its loyal shareholders.

I suspect the Company will be receiving a lot of interest from companies looking to pick up a cash producing entity that owns 99% of its license area, no debt with 25 year production licenses with massive upside potential as they complete their 18 well fill in program with the further opportunity to get one of their deeps into production.

Would need a proper valuation and a new CPR report before they conclude a deal and are probably very happy to monetise their interest in the meantime by paying out dividends from the free cash they have on the balance sheet from the 4000 bopd they currently have, after all what is the point in selling a pile of cash, may as well pay that out as dividends before they sell it.

So many options, patience is all that is needed from here.

COY,

It is not tweets just the recent RNS's which told us that they will hold the AGM on the 30 June 2022 and the final High Court decision will be on 29 June 2022. One of the standard items on the agenda for an AGM is approval of the financial statements, so we know they have to release them before the AGM can take place. Within the financial statements, there will normally be a Chairmans Statement, Strategic Review, Directors report and Post balance sheet review, where the Directors are required to disclose all information about the company's activities. So logically we know that we will get a comprehensive update in one form or another within the next 11 days, possibly more, for the reasons stated below.

Fast approaching 2 possibly 3 announcements in the next 11 days. Normally with Caspian we are left here waiting for dribbles of news feed only when management are required to update us on discloseable events, which are usually sparse on updates on other ongoing operations/activities. These next few required news releases are guaranteed to give a comprehensive update due to the Directors report in the 2021 financial statements and post balance sheet review statement that will be included in the accounts. These two statements alone will give an update on the current state of all activity.

We may get an operational update leading into the release of the financial statements, not uncommon for Caspian to do this as there should be nothing new in the financial statement disclosure, so they will have to get an operational update out first, I would imagine to cover all disclosures they want to make in the financials. Last year the financials came out on 29 June 2021. We should get these ahead of the AGM due on 30 June 2022, but who knows ?. We also have the High Court decision approving the reduction in share premium and capital reserves to allow the payment of the dividends going forward. This is due to happen on 29 June 2022. Imagine this maybe when they release more info on the dividend policy going forward.

Then there will be the usual need to disclose anything that they plan to say at the AGM in some kind of announcement in advance of that meeting, to ensure all shareholders get that information at the same time, rather than just those who are in attendance. There are obviously other feedback that they give to questions at the AGM that can be very informative.

So the next 10 days should be an interesting period, unlike the normal uncertainty we face in waiting for news to be released. This time of year we know it is on its way and suspect there will be a lot they want to say. Not to mention the new Investor Presentation, setting out their future work program and CPR reserves update, that must now be on the horizon.

Updates on the current wells they are working on will be released as and when they reach their milestones, whether this is in the next 10 days or not, but we will at least find out where they are, even if the work is yet to be completed, as part of the disclosure we know they have to make in the financials etc.

Sit tight for an interesting couple of weeks, GLA

"Restrictions on CPC capacity removed, oil delivery fully restored" announced by the the Kazakh Prime Minister, Smailov on 27 May 2022. All storm damage repaired and CPC operating again at full capacity. Oil production in Kazakhstan to be fully restored from key producers, reducing pressure on oil supply generally in the region. Further good news for Caspian export route options.

Think they have a 90 day continuous test rule for getting one of the deeps to flow before they can move it to a production and export license. Trouble is although A5 did flow initially at 3,800 BOPD they had to shut it in due to the significant pressure and other complications, for a short period and then when they tried to get it to flow again, although it was still flowing, it was at a much reduced rate and then experienced problems with extracting all the mud and then subsequent side tracks resulted in bits being dropped down the week and getting stuck, if memory serves me right. So they still need to overcome the heat, pressure issues and produce from anyone of their deep wells for 90 continous days before they can book the reserves and apply for a production license. Not sure if they need multiple producing deep wells to be able to do this, as can't remember this criterion ever being reported in a RNS.

KK,

Suspect that the company is now at that juncture, from being a small exploration company with various discoveries and limited production, to a company that is moving towards the development and production stage of the oil cycle. They have consolidated their ability to develop the fields and increase production, through acquiring drilling equipment to minimise the need to bring in external suppliers and expertise, however, they are still probably structured as an exploration company from a resource and capacity perspective, and have not yet transitioned to increasing personnel in the drilling and operations areas, which would allow them to develop the asset quicker and drill wells concurrently on the SY and MJF structures. The fact that they are supposedly only working on 2 wells at the present could be explained by this dynamic. If they are looking to increase production, cashflows and their reserves, then expanding their operational capacity and personnel should be a priority, unless of course their priority is to find an external investor to take on this mantle.

Lets see what the 2021 financials disclose as this should tell a fuller story of whether they are now scaling up their operational capacity or not.