Member Info for Jiving

Thats my thinking as well, I dont think it does any harm to work out dilution effects we are trying to get an idea whats likely at stake - our hunches are close between 15-20%. But presumably in the project or node rather than OPL226 itself - which would involve ownership agreement change with the Govt?

I also have no problem whatsoever with them absorbing Essar's loss or indeed doing whatever it takes to make them happy & not veto any deals.

Rktech. Yep you are right with the benefit of hindsight the whole debacle makes sense: from Arthur's arrival in London, the podcasts, the mentioning of the legal disputes tacked on the end of the Canadian interims. Not much more to say its all about patience now.

Easy, many thanks for all your pertinent observations as well. A couple of comments on your latest post.

When did Essar Mauritius set the deadline I wonder, recently or months ago?

My hunch which I have expressed before is that this issue with Essar Mauritius has been bought to a head, first, because they have new owners led my Rosneft who may have different views on the portfolio of assets they have acquired than the previous owners. Second, because the deal with the Service Provider will involve a direct equity participation at some level - well, node, field, OPL226 - this will dilute all Essar Nigeria shareholders. Essar Mauritius may not find this acceptable, and I would expect the Shareholders Agreement to have clear clauses making sure approval on these issues required unanimity ie Essar Mauritius has a veto.

Our hope must be they are haggling for advantage (increased stake maybe?) and that a deal can be done by finding a compromise position - that may well cost COPL & Shoreline some of their current stake. This is probably the best we can hope for, although it may/will cost us.

The other alternative, the nuclear option, is that the new owners of Essar Mauritius (Rosneft), want the whole project back. Given that the Nigerians have recognised the change in ownership & Kola Karim is a powerful man in Nigerian business this does not look appealing from their perspective. Instead of 20% of a attractive asset they end up with 100% of an expired licence.

Whatever, the crucial thing is a deal has to be done, the alternative of a court battle would be death by QCs fees & time. I hope Arthur & Kola are realistic about the situation and basically cut a deal that meets Essar Mauritius's concerns.

Sore subject here for a long time, often used to attack those who dared query the official party line as set out by Comrade Arthur. But actually we may well all have been victims of official de-rampers ie those most fortunate to have been invited into the heavily discounted placing, perhaps arranged by Arthur in his London visit some 2 weeks ago, who knew they could get in cheap today & sold off to the rest of us at inflated prices over the last 2 weeks.

Brady12. "..based on rational thought and historical context..".

But hold on this is LSE COPL forum. Like the Nobel Prize Winner once wrote “You’re in the wrong place my friend, You'd better leave”.

The placing price is smelly as is the big 38m sale last week. But placing/financial risk which was overhanging us has now gone.

This is the bottom, once we get back over 0.40 we will be no worse off than we were a couple of months ago Albeit of course more shares but this is still a multi-bagger.

So about 2.4b shares outstanding post-placing if we eventually settle about 0.40p thats roughly £10m mkt cap. But financial insecurity & bankruptcy risk over till next summer, by which time we 'should' be an oil producer. Dont see he had any choice, actually relieved he could find buyers before NNPC.

Our % gains of course will be less but still massive come NNPC, production & expansion. I for one will sleep easier knowing we are not going down the line to September with only 6 weeks money in the bank etc.

Panama. I recognise an old name, been here a long time like me, believe me I want this to succeed after 13 stressful months. Everything I have stated is from documents that are publicly available - the Prospectus & details of Essar Oil's takeover by Rosneft are on Reuters and everywhere else, anyone wants to check them they can & should.

The issue we shareholders face is - is this a real issue - my take now, is yes it is. The whole point of this discussion forum is to discuss 'our' company, that is what I am doing. I want to understand what the hell is going on & anyone with valid info & analysis is welcome IMO, whether it contradicts me or not I don't care, I want truth. A lesson again surely we 'old hands' know is that enlightenment ain't going to come from Arthur unless its forced out of him.

Essar Oil was taken over by the giant Russian oil major Rosneft a year ago. The people who screwed up in Nigeria & who did the deal with Shorecan are not the same people. They may well have a very different take on the situation than the previous management/owners. The Essar Nigeria Shareholder Agreement gives Essar Mauritius certain clear rights that cannot be ignored or overridden.

At first I thought this issue was a straight try-on (see my earliest post today), BUT having gone through the legal agreement terms in the Prospectus I think Essar Mauritius has a potentially genuine case that needs to be dealt with via a compromise. A confrontation would blow the whole thing up. I.E. a legal 'battle' between Rosneft one of the worlds biggest oil companies and COPL one of the worlds smallest. This is a serious issue and needs a deal that will frankly cost COPL dilution somewhere, way of the world I'm afraid.

BigBear2. Stress comes with being a COPL shareholder, I'm afra.id

Just when you think you are on the home run (at long bl***y last), Freddy Krueger jumps out for one last time.

Baserite. Feel free to get some transparency from Arthur directly & good luck: amillholland@canoverseas.com

Dont know how long you have been a shareholder here but I am now in my 13th month, what I & others have found is that Arthur is anything but transparent & we have to try and work out what going on ourselves, which is what we are doing.

Pijoe. I think Essar may have a case re-dilution, if they are being diluted it would be natural to fight that.

Important to note that Essar Oil was bought by a consortium led by Rosneft (Russian) for $12.9b in August last year. Trafigura are part of that group. Presumably Essar Mauritius was part of that Essar Oil takeover, in which case we could be dealing with new owners (Rosneft etc) who have not been involved at all until almost exactly a year ago when they assumed control.
https://www.bloomberg.com/news/articles/2017-08-21/rosneft-trafigura-seal-12-9-billion-deal-for-india-s-essar-oil

As well as their 20% equity take, Essar parent company also will have their complete loan of $64.7m to Essar Nigeria repaid from future production. Prospectus:
"As at 31 December 2015, as per Essar Nigeria’s audited financial statements, Essar Nigeria had total assets of $69.8 million and total liabilities of $69.7 million, including a loan to its parent of $64.7 million. The agreement with Essar Nigeria provides for the repayment of this amount from future production."

I hope Arthur/Kola are going to sort this out in person with Essar Mauritius & not bounce emails back & forth. They may well have to have unanimous shareholder agreement before signing with the service provider. Cannot believe a reputable company would commit to a situation where there is a potential shareholder blowup in court etc.

Again Prospectus:
"Certain board matters are reserved to the shareholders and require unanimous approval before proceeding;"

Dilution of OPL226 is v likely to be an issue requiring unanimous consent & dilution of a field/well/development like Noa1 could also require unanimous consent. Before being able to legally offer a stake in OPL226 or Noa1 to an oil services provider might it be the case that Shorecan actually need the consent of Essar Mauritius in order to go ahead?

Also from Prospectus:
"..ShoreCan’s commitment to invest up to a maximum of USD 80 million in Essar Nigeria in the form of an interest-free shareholder loan to be used for Essar Nigeria operations and in particular, to cover the work programme obligations, including drilling one well under Phase-1 of the PSC. The Company’s share of ShoreCan’s commitment equates to approximately USD 40 million."

So essentially the original concept was that the first well would be drilled using Shorecan funds in a non-dilutive fashion for Essar Nigeria shareholders. Now it seems v likely that the financing is going to be done in a different fashion involving OPL226 or Noa1 dilution & no big injection of cash from Shorecan (COPL responsible for 50%).

Consider a simple example, imagine if the Service Provider wanted 20% of OPL226. This would dilute Shorecan down to 64% and Essar Mauritius down to 16%. What if Essar Mauritius said ALL dilution comes from Shorecan's stake and not ours, maybe not unreasonable given the above. A similar argument applies if a similar deal were done with 20% of the first development say Noa1.

The best deal we might hope for is a trade-off - Shorecan make up Essar Mauritius's stake & secure an agreement to purchase the entire stake later via a pre-agreed formula. (Of course the finance for that has to come from Shorecan's share of the first development (s) - which means it cant be used for other purposes). My hunch is a deal has to be done but it will be dilutive to Shorecan.

PS thanks Easy, the Agamore suit is clearly a non-issue

Arthur mentions the various forms of dilution in his podcasts. It is the central issue of course for all concerned, COPL, Shorecan, Essar Mauritius & the oil service provider. Arthur quite correctly points out you have to accept dilution somewhere in the chain (nothing for nothing, right) - the lower down the chain from COPL shares you get the better for COPL shareholders. The chain would be COPL; Shorecan (holds 80% OPL226 via Essar Nigeria & Mozambique); OPL226 as a whole; individual developments ie the first well hub at Noa.

Now we might expect to give some equity participation to the service provider hopefully at the lowest level of the first well hub at Noa, but they may want a share of OPL226 as a whole. But of course all Essar Nigeria shareholders will be diluted as a result of giving up a stake, including the 20% held by Essar Mauritius - which they may be unhappy about. Its the old story you have got to see it from the other guys perspective - a compromise (which may be dilutive to Shorecan) is clearly needed, and is one of the last minute obstacles that you would expect when a huge deal is finally coming to fruition. As I wrote earlier ironically these 'problems' are a sign of real substantive progress & peripheral parties are trying to grab some 'goodies' while they still can.

Oilberta. Yes I did read them & it struck me they were the type of try-on legal suits/threats you might expect when a long awaited transaction is coming to fruition. Agamore has left it all this time to sue in Nigeria, having had their potential transfer of an interest in OPL226 turned down twice by the authorities years ago. Must be a good chance it will be simply dismissed by the court in September.

Essar Mauritius also looks to be playing brinkmanship over terms of the shareholder agreement, they have not gone to court & they could be haggling over the eventual sale of their remaining 20% stake in Essar Nigeria & OPL226. Whatever happens they have a big interest in not blowing up the development given their 20% stake only has value in the event of success. If they damaged or stopped the transaction going forward they would be back to where they were before, with 100% of nothing & the strong likelihood of the licence being taken away from them.

Ironically the fact these try-on's have crawled out of the woodwork now is a sign that events are moving rapidly forward to a successful conclusion & that reality is becoming widespread in the business community.

Easy. I think, I hope, its all beginning to fit together. Sure looks that way to me.

Greendave. Exactly you look at the kind of mkt cap that explorers like 88e & BPC often trade at - ie well over £100m, it seems crazy that a near producer like COPL is around £8m (plus COPL has 40% of all the rest of OPL226 to explore/prove). When we get the oil services announcement (IMO as important as NNPC) & finally NNPC approval that crazy low mklt cap has to dramatically change - upward!

Jay. I agree its an obvious solution for Shoreline or Kola to buy a % via an equity placing or a convertible share/bond. It even 'ups' the Nigerian % of OPL226 possibly over 51% - if that matters.

The main thing is we are on the very final leg, Arthur has had to tie these oil field deals/financing/regulators together many times, I truly don't see him failing at the last hurdle, he will do what he has to do as far as dilution is concerned....