Member Info for jimtheknow

It chopped me, i'll finish.....

This is therefore a money, time and resource pit in the current climate so to BPC, which is just about funded for its primary objective, it could be a death spiral. If CERP were a supermarket item it would be a loss leader with promise of more inside, but how long will it hemorrhage money in these times? There is therefore no foreseeable near term value for BPC in this merger at 880m dilution. Anything above $10m carry on P1 with plan for CERP may change this merger case.

In true Leo style I will give my take.

The Good
Top of the shop is Leo, he is without doubt something BPC have been lacking and appears to have more get up & go in his little finger than Mr Potter has ever had and probably ever will have. Simon may have technical attributes that are of value but he is not a natural business driver in this sector and maybe the acquisition of Leo alone makes this deal worth it?

CERP have licenses with proven oil, most pretty small but it looks like Saffron in its entirety (upper & lower) has some real tangible value. They also have a free carry on Saffron 2 with a production sharing agreement that will flip in favour of CERP when costs are recovered for driller. For T&T CERP's cost per barrel is low, but there is a catch.

The Bad
CERP's producing assets are often old and tired, some of which are around 50yrs old and the amount they produce is only in the 100's of BoPD, i haven't been able to find an exact figure but i don't think i'm being unfair if i said CERP produce around 600 BoPD (love for a CERP holder to pin point this). To put this in further context, there are around 20 operators in total in the T&T land area where CERP operate and the total BoPD of all operators in this area is around 10,000 BoPD, that is the sort scale this company is operating in. I think CERP are well placed to change this norm and allow breakout from this status quo but it's difficult to see how they will ever get much more than several thousand BoPD in T&T. This is not to be sniffed at but they are far from there now and getting there is time and money.

CERPs ability to sell what they produce in T&T is constrained to certain avenues and to break this status quo would require something like a direct pipeline to sea and this is an idea from CERP but no more. There is obviously a time and cost to such a thing.

There are basically two types of fiscal regimes in operation in T&T, one which heavily involves the government and another more akin to the US land owners mineral rights, CERP have assets that operate under both and in some cases it puts the breaks on making good money.

The Ugly
CERP's model was slow organic growth, incrementally improving each asset to generate free cash to then grow further, this is an honorable approach but it has failed and this model can't be changed quickly or without a money injection. Again, it's not clear what their break even cost per barrel are with the various flavours of what is going on but Leo seems to indicate around $40/bl.

This is therefore a money, time and resource pit in the current climate so to BPC, which is just about funded for its primary objective, it could be a death spiral. If CERP were a supermarket item it would be a loss leader with promise of more inside, but how long will it hemorrhage money in these times? There is therefore no foreseeable near term value for BPC in this merger at 880m dilution. Anything above $10m carry on P1 with plan for CERP ma

Oh my word, what a terrible terrible interview. There is nothing he can sell about CERP and it is blindingly obviously they'd be going under without some outside intervention.

BPC need to come out and tell their side of the story, if there is anything to tell?

Good deal

CERP, because in this current climate, even though they may have ok assets without anything too sexy, they are finding themselves hamstrung, they wouldn’t have agreed to the BPC merger otherwise.

If the oil market was more buoyant, if they weren’t so restricted in the markets to who they can shift the little oil they produce to, if they produced more oil, if they had access to funds and so on they would have laughed at bpc’s proposal.

CERP find themselves in the not unusual position of being an oil company with actual assets, some production, reasonable license prospects but checkmated by the prevailing circumstances. People need to remember it’s not always bad companies that go under. CERP are skating close to this line and it must eat Leo Koots alive.

BPC should be the underdog here but they aren’t.

All I want to know is how all these combined assets will be developed and grown without further punitive dilution? Where is the shareholder value?

o6g, have you seen how many shares the BPC board can issue to themselves in three tranches? This dilution will nibble into some of their abilities to be instantly listed in The Times Rich List on a good strike, but they’ll still come out of it very ok. I don’t believe these people to be greedy and stupid, they’re not, that’s why they’ll make sure they always come out of this ok after 10yrs.

I’ve got to believe there’s still more to be known and come with this deal otherwise I’d sell up now and move on. I’m generally blessed with enormous patience in life, I can wait, but I won’t be getting myself into a situation where I have to wait 10yrs for the fruits of another tree that gets planted. As I’ve said before, hope kills.

All will be forgiven if they come up with the goods and I believe they will because things don’t make sense at the moment. If they don’t come up with the goods I’ll be selling most and maybe leave a million in for results of drill.

You only need to look at this Columbus presentation document to see how light it is on good metrics. People should ask themselves why at the very least can't CERP state their BoPD?

There is simply nothing in CERP that doesn't require money and time to realise, it's another bucket of hope and dreams which to me aren't worth £25m worth of dilution, i'd rather have a P#2 if that were possible.

only6greens, in answer to why they are putting their money into it as you say, because CERP are looking like they are dying anyway so it's moving it from something that will either fail or stagnate for a long time, or, survive and continue at their current status quo with significant dilution from BPC's sugar daddies with a 1 in 3 chance of hitting jackpot. The BPC PI's would appear to lose out in this deal as everything still essentially evolves around P#1 and we can do that on our own.

CERP-84, Thanks for your input and I value it, it's one of the few times someone has given a reason for x & y. With regards this thing about Shroders, how certain are you that this is happening and where is the evidence for that?

I suspect Schroders had quite a large holding did they, possibly larger than 1%? They should have had to declare and interest under market rules now we have entered a merger process and should they be selling/buying, I would expect the appropriate Forms of notification as their position changed. Is this happening, if not why?

100% it doesn't, what makes it look otherwise? The sp is now sat lower than before the announcement and there's been no buying to suggest the company will be stronger after. BPC was on a steady path upwards, awaiting news flow milestones. It is now in a position where it is just about maintaining levels post the Rig Signing contract on 26/5, it is simply at these levels and no more.

I'm not against the merger, I only want to know the reasons why it works for BPC as I am very much under the skin of this company and I don't see where the money is coming from to develop CERP without further significant dilution, we will be well in excess of 4bn shares with this merger with no free cash to develop CERP or progress Bahamas prospects. It still all boils down to success at P#1 and why not wait for that? Or wait 5 months after new flow on P#1 progress and get CERP cheaper?

It doesn't make sense for this deal to happen now unless there's something else we haven't been told.

So, now the market has had time to digest this merger it is becoming pretty clear the market are not liking this, contrary to what BPC and others are publicising. When are both companies going to come out and explain all the good reasons why this is a good idea?

With a bit of news flow license extension, specific rig confirmation and Environmental Authorisation update this would have been around 6p i suspect leading into Q4 and this merger news has completely taken the wind out of the sails. It must be a very detailed and thorough presentation they are pulling together or they are waiting for the corporate sign-off from the major(s).

Oooo this is so exciting.....

I'm starting to think there's at least one user name on here now that went by another infamous alias on this BB.

Filter fast approaching.

Do BPC who want him for this reason? CERP was too small beer to interest them but P#1 is much more their scale?

I'm in exactly the same boat as Laallee.

I want to believe this is the right path but the only way this works for me is some explanation on how CERP's assets will be funded without further punitive dilution to us shareholders. Are we going to be asked to dig deep for another Open Offer where the shareholders are put first or is our Family Office investor going to get 10's of millions at his current 20% discount?

Have the BPC BoD done a good job to date, the answer is a categorical - NO. They've done a bang average job and be under no illusion otherwise.

I know BPC's exact route without CERP, it either brings rewards or closure. Adding CERP is another 10yr promise of hope and dreams without an explanation on how it can all be developed and that translated into real value for shareholders.

I'm still all ears. Waiting.

Toldo, a non binding letter of intent, without penalties, was signed between Seadrill & BPC. Some time later a picture of Seadrills Sevan Louisiana appeared in a BPC presentation but not specifically discussed. Then in a later presentation a picture of the West Saturn was depicted but again not specifically discussed. Various Proactive, VOX, etc podcasts followed with more references to having secured a rig but no RNS and no specific rig ever named. The most insightful comments on rig came from Potter himself going into the specific specification of a rig “dual derrick”, generation and year but again no specific rig named or RNS issued on firm contract.

The suspected rig, the West Saturn, which fitted all descriptions and was in the right geographic location was then chartered by Exxon.

All the comments and interviews were but a matter of weeks before it needed to sail for BPC. Potter and Co are either liars and being very disingenuous or one of the potential farm in partners was Exxon and NDA’s prevent disclosure of details.

Were they 3 weeks away from drilling? You can be the judge of that.

In Leo Koot’s interview he didn’t seem happy with the prospect of treading water for a year, he’ll need to change this mindset or he won’t last long with BPC. Or maybe this is his exit strategy? Hand over the reins to someone else and leave after a year because he feels things weren’t working out for him. He can then eventually cash in his shares at today’s price without needing to notify of insider dealing and crashing the market. He gets to them go find a newer faster paced venture that suits his personality with wealth intact.

toldo, i think we are very much aligned, almost exactly i think. The missing part of the puzzle is cash, free flowing cash. CERP would appear to be struggling for cash, BPC have got everything planned almost down to the last dollar so what is the rationale for the merger?

We've had both Potter and Koot's now do video interviews and not one of them has been able to articulate a coherent logically reason for why this is good for either company. We're all told to support this but why? CERP are in the business of selling a few hundred barrels of oil a day which is clearly not enough to keep them afloat in this new COVID world so they are looking to BPC for cash, who as far we're being told have just enough to meet their objectives.

Can all those who are singing from the roof tops about this please educate in where this deal works and makes sense? As far as i see it everything is still reliant on success at P#1 and we can do that without CERP, or can't we? What haven't our board told us yet, why do we need 4, 5, 600 hundred bopd adding to our portfolio at such punitive cost? Yes, CERP have more assets to develop but that requires money, where is that money coming from, is it coming out the P#1 contingency pot?

Without further information this has all the hall marks of how junior AIM explorers go under and it sounds like CERP have already been there when LGO?

So far this is the classic Emperors New Clothes story.

Findme, understand your point but what i would say with regards a farm-out or take-over. I just don't see take-overs, of this potential magnitude, happening in the foreseeable. A good find at P#1 we're often told would be transformational but because this is a middle east size superstructure it will be of an order of magnitude than even the biggest players would struggle with justifying the cost in this climate. The magnitude of P#1 and the wider licensed basin is truly enormous, this dwarfs anything in T&T or the plays people chase these days on UKCS. I think people often forget this and are often in the mindset of what is typical - this is not typical.

I feel the industry is more leaning to a model where they are willing to put in 10's of millions to take a share in the potential really big outcomes. Maybe someone farms in after a find but i don't see a £1bn+ buy outs on the cards for some time, the world has changed. Better to have the option of 40 £25m punts.

I knew nothing of Mr Koot's until very recently but i get the immediate impression he wants to be at the big boys table, he loves the cut & thrust of business at the sharp end. He want's this deal as much for his own personal ambition/drive/ego. He's convinced by the geology and i suspect he also knows more, it's why he's happy to not have one of the top jobs.

toldo, this is exactly why it doesn't figure at the moment. BPC have no 'spare' money. We have cash in place and essentially an agreed path to raise the remaining (via Convertible Loans) that will get us over the line with P#1 so i don't know where CERP are going to get any money from out of this process as we know it. If there is excess money i think most on here would rather see it go to a P#2, feels a bit like we've sacrificed P#2 for a few hundred bopd. Feels like we've thrown any contingency away, what if we need a side track, etc. I may not be an enormous fan of our board but i do believe them to be competent men of oil so i know they know more, they aren't stupid people. They are just contemptuous with an air of arrogance and an apparent self severing-ness about them.

I'm all ok with BPC's current path, i think it's all very achievable and having a working experience of the oil & gas industry and a bit of a hobby/interest in petroleum geology i think it looks good for them and hence i've put my money in for potentially big rewards.

I also forgot to add... Leo Koot's states in the interview he has aspirations for his CERP shareholders to be part of a "half a billion" company. That's an aspiration so it won't come instantly. Lets look at the post merger math.

Assuming 4bn shares in issue, and that is a conservative estimate without farm-in, that would equate to 12.5p per share. There is your first glass ceiling on any new company and remember this is an aspiration and would also require an oil find at P#1.

So everything relating to a good outcome for shareholders here still requires an oil find at P#1 and if that's the case why not go it alone with ~900m less shares? Ask yourself whether you think BPC would be higher, or lower, than 12.5p as it stands with an oil find at P#1.

All roads lead back to P#1 unfortunately, it is intrinsic to everything.

As i have said i do think there's still more to it than we're being told so we await that transforming news in my opinion. Short of that lets look at this deal another way.

BPC's value at the moment stems from the promise of P#1 and we all pretty much agree that if P#1 is a duster all value in BPC will be lost and it'll have a share price similar to COPL (~0.1p).

A duster at P#1 leaves us with only CERP's assets which are currently valued at around £17m.

Post merger and a duster at P#1 therefore leaves us with £17m of (CERP's) assets divided by (at least) 4bn shares. That will equate to a share price of around 0.425p if we're lucky.

Until i hear more i'd still rather just take my chances on P#1 as it stands. It's still a binary bet with or without CERP.

Come on, tell us more about the 'possible' farm-in please. This is what has got Leo's buzz i suspect.