Member Info for Kennymac2610

Evan, You are absolutely correct and it is important to point that out. I have been scratching my head to try and understand why the market has acted like it has since the CPR Report. Funny how I now wish it had never been released!!
Anyway having reread all the documents and re-listened to the presentations, my take is that there are $111m of Proven Paradox Reserves, there are $46m of Proven Williston Reserves giving a total of $157m or £124m.

The current market Cap is £98.3m

I think when looking at future value it may be reasonable to take into account the best estimate of Contingent reserves which was $148m Which would make a total of Proven and contingent of $305m or £242m after applying a 10%NPV Discount rate.

For myself, that is how I am looking at the value of the company, and the only conclusion I can arrive at is that it still represents great value. The exciting bit of course is the High estimate of Contingent reserves of $894m. I have only used $148m in the above calculations, as i did not want to get too excited!

Cliff
Absolutely spot on. They need to get on their bikes and make presentations to institutional investors. Not a pleasant job, from my own experience, but rewarding.
And Micru, the other point to make is that we have known about the gas and water in 16-2 but whilst we have ideas, we do not have the solution yet, as to how we are going to deal with it. That was a major weakness in the Report.

It has been a tough day, no doubt about that. Absolutely certain no shenanigans here pal. However, lots of rose tinted glasses that need to be examined at specsavers....which includes me. I have mentioned on a number of occasions that the Board really need Corporate Investors to drive the value in the SP. When I read the RNS this morning I was underwhelmed, if I am honest, and realised I had called this wrong........but never expected to be 15% down.
Malcy seems to think the CPR was positive. That is why having one of these presentations with CH followed by Q&A is imperative now, as we, and particularly me, are maybe missing something.
For the life of me, having read and reread the report I cannot understand why it was so late in being delivered. Nothing too difficult to produce imho. Again, it is a question that needs to be put to CH.
It would be great to get back to the pattern of communication that we had last year. That keeps everyone informed and excited at what Zephyr could become.
Right, back to crying into my beer now!

C’EST ARRIVE!!! Memories of the Beajolais Nouveau in the 80’s - This should taste better!

Drew
No it is not a loan. Basically BP Energy which like I said is a subsidiary of BP that deals in financial futures like hedging have taken a bet, that in Q2 of this year the average price of oil sold will be greater than $100.80. If it is for example $110 then Zephyr will have to pay them $9.20 for each barrel sold. If however, the price of oil drops to $90, then BP will have to pay Zephyr $10.80 per barrel.\
The benefit for Zephyr is that they will know how much they will get paid for just under 50% of the oil they produce(the percentage hedged according to RNS), for the next two years. For BP Energy it is just a gamble, where they hope the oil price will remain above the hedged value quarter by quarter.

Drew68

No it does not mean that. BPEnergy which is their financial trading subsidiary is providing the financial hedge. They have taken a punt that the oil price will not go below the values you see in the RNS. This subsidiary works independently from the producing arm of BP

It is great to see the feel good factor slowly coming back to the Discussion Board. Even UK Chips and RB1 have not had a spat today!!
Did some back of a fag packet numbers to try and estimate the Contribution to the bottom line from the non operated assets in Williston.
Looking at the next twelve months the value of the hedged production is just shy of $20m for the 205,500 barrels hedged. Assuming that a further 225,000 barrels are not hedged and assuming an average price of $95 then that would result in an additional $21m of revenue.
With a cost per barrel of $16 the total costs will be circa $7m, and the resultant gross margin will be $34m, or £26m at todays exchange rate.
This excludes revenue from natural gas production which lets assume generates £5m gross margin, giving a total gross margin of £31m for the next twelve months.
No idea what the general overheads are, but lets assume they are £15m a year, then the net profit will be £16m

With a market cap of £108m that would produce a p/e ratio of 6.75, just from the non operated assets. Therefore you can conclude that no value has been attributed in the share price to the State 16-21N-CC well that may now be in production, the three wells to be drilled in later part of the year and the rest of the Paradox estate.

In my opinion this shows how undervalued the shares in Zephyr are. However, we can take great comfort that our investment appears safe, as the current share price appears to be more than supported by the Williston assets on a stand alone basis. Also comforting to read that no further capital required in the next twelve months.

The challenge for the Board will be to work hard on their corporate message to get institutional investors on board, to get the SP to a level that represents the true worth of this great company.

The only question from today's RNS I am left with, is whether Wednesday falls into the definition of "early next week"..........what do you think Island Girl???

With the weeks becoming months, and the days becoming weeks, a number of us might need CPR before this damn report is issued! We will be a patient!!

I had a dream last night. Think we could get RNS today!!!!!

RB1 I don’t think it is bonkers to be on guard. When you are used to a management being superb communicators and meeting all their published deadlines, and all of a sudden the behaviour changes, then in the investment world, it should be treated as a red flag. You should try and understand the reason behind the behavioural change.
We should not forget the last time that there was a long period without communication we got hit with a placing that has strangled the SP, but has hopefully benefitted the company and it’s performance.

Personally I struggle with the concept that Sproule have needed an extra three months to produce the CPR. I can only guess that there is something going on corporately that would be negatively impacted if the CPR was released.

I would expect to see when we eventually hear from the company that whatever the reason for radio silence, that it will ultimately be positive.

I am personally disappointed that they have not stayed in touch like they did in 2021. Lots of things that could be reported on including production, revenues achieved, solution re the gas etc etc. It is not just the CPR that we want to know about.

I believe that the management is sound, however the communication is as bad as Darien’s spellchecker and the Chinese Whispers from across the pond!

I invested in Zephyr because I liked the regular upbeat communications from CH and of course the fantastic returns since my first involvement in Dec 2020. Both of these reasons have evaporated in the last six months. I have heard patience talked a lot about recently, but there comes a time when that wears thin. We were promised the CPR report a number of times, with different deadlines, the most recent referring to “the next few weeks”, which is no real guideline, which is a bit annoying.
The last time we had radio silence is when we were landed with the ill thought out placing of the shares with a broker that most us could not deal with. However, credit where it is due, in that the fund raising should have led to value creation, but we have not received any confirmation or report on that front.
In my mind there has been ample opportunity to stay in touch with the shareholders since we last heard from the company, including the CPR, the beneficial financial impact from the most recent investment, the decision on how to handle the gas emanating from the State 16- 2 LNCC well and the well being of the company in general. There are still two days left until the 31st of March and ordinarily I would expect some company feedback by then. Graeme1, I like you have same diary as me!!

My only conclusion is based on the last time when we had radio silence from what was one of the most communicative companies on AIM (now surpassed by Adam on BEN) is that a corporate restructure of sorts is in the offing. The good news is that it tends to benefit the company, though the last one was prima facie detrimental to shareholders, as the SP has not recovered from the placing news. I am sure it would have if we were communicated with.

Also CH it is getting near 5th April, when we need to plan our fiscal results for 2021/22 so please communicate before then.

JayP
How do you think that they are going to fund the development of the coking ovens and the coal production, if they just stockpile the coal and not sell it. I myself, might be missing a fundamental point, which you could enlighten me on. What I do know is that they have headroom in their Authorised Share Capital to issue more shares, although they would have to hold an EGM to get agreement to issue them.
Personally I would prefer them to start selling the coal now, but understand that there are difficulties in the local market to do so now. However, failing that, the best way of funding the ongoing development is through Loan Notes which will be easily repayable once the cash flow starts next year. I believe the share price could double once production starts and the wash plant comes online in Q2, if Carl Esprey could categorically state that there will be no further dilution full stop. To do so, he would have had to line up the financing into 2023.

Reg
The answer to your first point is obvious. They will need cash to develop their plans including the coking ovens. Cash is not generated from stockpiles!!

The point has been made on numerous occasions that unless they borrow money, change their strategy and start selling the unwashed coal, then they will have to go to the market to raise cash. Private investors always lose out when that happens.

The recently released RNS was cleverly worded in that all it confirmed was that it was fully funded to bring the Lubu Coal Project into production by 31 March.

It will be interesting to see if they meet that deadline.

The strategy followed by Bens Creek should have been the one followed. Get cash in at all stages, whilst you continue to build the business.

The question of funding is the most fundamental one with CGO and it would be beneficial for the Sunday Roast guys whose interview started the slide, gets the CEO back to address that one question.

AM, I trust in you and if what you say comes right before 31March I will invite you to a proper City lunch. If not you buy, even though you made me £180k on another met coal stock. Up for it??

I was rather hoping that the RNS would have been released this morning. I think that this is the first time that they have missed their own published deadline. It may be understandable as the report may have had to be rewritten in light of the current situation and the significant increase in the Oil Price. If it is not going to be released this week, then maybe they could issue a note to update the market on when we can expect to see it.

The share price once again shows that more often than not that Share Placings are not good for PI's or the share price performance. Dropping from 8p to 5p is painful especially if you are doing any financial planning or need funds. (Good timing The Bhoys, on the retirement home!)
I have no doubt that we will reach the 8.1p previous high, in the near future, though unlikely to be immediately after the release of the CPR.

Of course the good news for the company is the increase in the oil price to £100. If they have not previously hedged the price at a lower value, the profits will be benefit by an uplift of 50% or slightly more as a result of the increase from the previous $72 oil price used in projections. That should help drive the SP forward as well.

Patience is good but Communication from the company is better!!

Hazeem, If you look up their balance sheet on their website you will see the authorised share capital of 500m in Note 15 to the accounts I think it was, and you can see the issued capital here if you tap on share price and scroll down.

Hazbeen, In answer to your question the Authorised Share Capital is 500million shares of which 309million have been issued to date.

Jay, I agree with you re the £2.5m placing and the £1m CLN, and as the last RNS states that will suffice to bring the Project into production and I assume the wash plant.

Good point about the warrants but the share price will need to be above 8p and 12p respectively for anyone to even remotely consider exercising them early, so that can be discounted.

Why did the RNS say that they had enough funds until the end of the year rather than Q1, if they will not need any cash soon. They can raise additional capital by Changing the Articles with the necessary majority, so I would not bank on that, and why would it not be approved, if they provide a robust business plan to fast track the company’s development. However, as we all know, there will be no gain without pain.

Time will tell.

Sentinel, From what I understood from the podcasts, they are not going to sell any thermal coal, so no cashflow from there. Carl stated that the small battery would be producing coke in Q4, 2022. If they could negotiate an interim off-take agrement for the coking coal, with one of the four coke producers, then they would not be selling it at a loss, but at a smaller margin than if they were selling coke. However, It would help provide the funds to buy and install the small coke oven. Otherwise how are they going to pay for it as they will not be generating any cash flow? The larger oven battery costs $12m, but I don't know how much the smaller one will cost.