Member Info for Kennymac2610

Having listened again to the Sunday Roast podcast released on Jan 2, Carl spoke about the strategy of having their own coking ovens because the current margins to be had were so much greater than just selling the washed coal. He did however, (7mins30 sec) say that they had already started the project to bring the mine to production and had £3.5m available to do so. He then went on to say that they would be producing coking coal WHICH THEY WOULD SELL that would fund the acquisition and commissioning of a small modular coke battery which would produce 3000 tons per month of coke which would throw off the cashflow to pay for a larger battery of ovens. That is the strategy which I guess most investors bought into as it made perfect sense.

What appears to have happened is that the Chinese acquirers of the coking coal got wind of the fact that the company was going down the route of ultimately being a competitor by having the goal of producing their own coke, and decided to play hard ball on the amount if any they would pay for any coking coal that the company wanted to sell in the interim period.

It is for that reason, I assume that the company will be stockpiling the coking coal, until the wash plant has been installed and the small coking battery is installed in Q4 2022.

The RNS issued last week stated that it was not contemplating a capital raise and remains fully funded to bring the coking coal project into production by end Q1 2022. The question that has to be asked is what happens after that. How is the acquisition of the small modular battery and it's installation going to be funded, and how is the continuous production during Q2,3 and 4 going to be funded, as no cash flow is planned to come in from sales. I was surprised that the Sunday Roast team, did not latch onto that question, as they are normally fairly sharp. A follow up call to Carl boys????

The other noticeable fact was that in the interview released on Jan 2, Carl came across very confident and was a CEO who had the facts and figures at his fingertips. The midweek podcast last week was the opposite, with him sounding nervous, and could not even answer the simple question on the size of the coking battery they were going to order. It was a very odd and concerning interview in many respects. No wonder there has been a bloodbath on the SP!

V11JAS, Thanks for that. The fact that the sp is down almost 5%, is the clue as you say.

The huge number of Unknowns has been a personal bugbear since I got involved with this share in particular. I queried with LSE and the response was as follows:
"It’s all down to the feed which we get – it’s just how they come through. Seemingly you only get ‘suspected’ buy, suspected sell or ‘unknown’. I guess they can’t tell from the trade and it is set as ‘unknown’. Also sometimes the unknown ones have more info if you hover over the icon ,like delayed or corrections …"

V111JAS, Interesting that it is a sell. For my education, how do you know that? I assumed that since the price was close to the Ask, that it must have been a Buy

What is not nice is the late reported trade of a similar amount (presumably a buy) from Friday, there is something fundamentally wrong with that. Also today's trade is not included in the volume bought, I guess because it is Unknown.

The strategy of producing and stockpiling does not generate any cash flow, that is the issue. Adam at Ben did everything to start the cash flowing asap, and he has been rewarded.

My understanding was that was part of the deal in obtaining the rights to drill in the Paradox. It is not a deal with another oiler.

Aim Mafia, Great shout two days ago that market sentiment about to change. This should now move upwards in anticipation of the news regarding production……….following in footsteps of Ben

I also believe that they will somehow have to go on the road to persuade institutional investors to be shareholders. It is a tough gig ss many investment houses have shied away from oil and the like due to their sustainability policies. However, there must be some still out there who must see what a great wee company that Zephyr is, and that the rewards for investing can be huge.

My summary of the presentation last night was that as always it was slick and very professional. Not a huge amount of new news, but some interesting nuggets, some of which have been mentioned by Investor 110 and others.

Williston has a run rate of 1759 bopped and at $70 that equates to $45m per annum of gross revenues. CH mentioned that the margin for Williston is 75% of revenue which in turn equates to a contribution of $34m to cash flow and profits.

The new acquisition contributes 1105 boepd and this equates to gross and net revenue of $28m and $21m respectively. They are paying $36m for these assets and in football parlance that is good business as the pay back period is circa 21 months. This with all resultant share placings has come at a cost to the shareholders, with the shares dropping from 7.6p to 5p. However, ultimately if you can hang onto the shares you should be handsomely rewarded.

The State 16-2 well has been modelled at 2100 bopped and at $70 this should produce gross revenues of $54m p.a. New information to me was that all the wells other than the “Southern” ones have a 25% partner, with the Southern ones having a 50% partner.
We would therefore have total Gross Revenues run rate of $85m as we currently stand.

Unfortunately CH could not disclose the expenses relating to the State 162LN well and other corporate overheads including tax and the resultant cash flows to get an idea of the net Profit and net cash flow run rate. He instead said that it would be apparent from the CPR report which would be released by the end of the month.

He did make the point that no additional cash needs to be raised to pay for the drilling costs of the three new wells to be drilled in 2H 2022. He confirmed that it was planned that they would be online by Q1, 2023 Each of the three wells will cost circa $8m but because one is in the southern region which contributes 50% and the other two with contributions of 25%, the cost to the company will be $16m.

CH ended by saying that as the largest shareholder, he believes that the raising of funds etc has been the best strategy, even though he and his fellow directors could not participate in the placement, as they were deemed insiders because of the forthcoming CPR. I would have to agree with him, even though the drop in the SP has been painful. The point was made that the Paradox could hold 1billion barrels of oil and the CPR will reflect to some extent that fact. CH did mention that it may be inevitable that the company enters into a joint venture with someone to accelerate the process of realising this incredibly valuable asset that they hold.

On reflection, to be fair to CH and his fellow directors it would be good if the SP hovered around the 5p mark until the CPR was published as they would be no longer insiders, and they could “participate” in the fund raise at these levels!

In conclusion, I still believe in the management of the company and their stewardship of it.

And stated plan is to drill three further wells in second half of 2022

Tom
State 16-2LN was modelled by them to produce 2100 boepd. At $70 that is $53.6m per annum.

I wrote to the company’s brokers and also their investor relation company last week as I wanted to learn why there appears to be so many late reported Unknown Trades. They have yet to reply.

Ironically two tranches of shares I bought yesterday appeared after closing today, both as Unknown Trades.

Graemesme
To be fair I took a leaf out of your friend The Bhoys book and contacted CH. To his credit, on what must be a busy day for him with presentations, he responded.
He truly wanted the PI’s to have access to the shares and warrants and he got a broker at Turner Pope to contact me by phone.

Turner Pope were aware of HL position but not of other brokers, so was disappointed to learn of the difficulties we face in getting shares in the placing. In fairness he was willing to open an account for me but I had already acquired 1m shares at around 5.3p, so I had covered off my 16% dilution, though I missed out on the warrants, which will be worth a few bob in three years time.

Suffice to say, my belief is that they did try and look after us PI’s but it has not worked out as planned.

It is all good news in the RNS other than we have been given just today to apply for shares in the Broker Placing. If it was not for the warrants it would be as well to buy the shares on the market at the current share price. Has anyone been in touch with their broker, especially Hargreaves Landsdown, to get them to register your interest with TPI. In particular I am interested when payment has to be made for the shares applied for and whether HL are agreeable to apply for shares if your investment is held within a SIPP or ISA.
I have emailed TPI on the question of settlement, so hopefully I shall hear back today.

This is the only share that I hold that appears to have at the end of the day a greater volume of “unknownTrades” than the total volume of disclosed normalised trades during the day.

I personally do not understand how that happens, but it does not reflect well on the company or it’s Board.

The Bhoys you appear to have the hot
Line to Colin, so perhaps you could do us all a favour and ask him why this happens as it does not look good to his shareholders.

The next time he gives an investor presentation we should also ask him to explain. It may be nothing to do with him or the company but it ruins its reputation.

Every day as the share price has dropped from 7.6 to 5.9 the volume is not great, the sales match the purchases, and there is a Huge number of “Unknown Trades”. which tend to be more than the disclosed trades. That is no way to run a market in your company’s shares.

Still awaiting the excess cash. Have written to the company this morning. Cash has been out of the market now for almost a month.
The successful share allocation was credited to my account on 23 December.

Has anyone who applied for shares had the cash returned to their accounts for the balance of their application, that was not successful?

Seems to be a long time taken to return the money.

Island Girl

Leithid cheudna, Fiach nach gabh thu an deoch!!

Graemesme and tom111, I can see where you are both coming from regarding the valuation of the
Exploratory well. I was myself confused when I read the RNS about the drilling result. I have extracted the relevant part of that RNS below., and if anyone could explain to me how the 2.65m barrels of oil equates to only a discounted NPV of £12.65million, I would be grateful.

“Initial data from the production test suggests the State 16-2LN-CC has a single well potential Estimated Ultimate Recovery ("EUR") of 2.65 million barrels of oil equivalent ("mmboe"), significantly higher than the Company's pre-drill estimates of up to 0.85 mmboe.



· The test indicates a highly successful appraisal of a substantial new gas condensate resource and one which the Company forecasts will deliver strong single well economics. Using updated production forecasts and realised prices of US$3.00 per thousand cubic feet ("mcf") of gas and US$65 per barrel of oil ("boe"), the Company estimates that the well will pay out in under seven months and have a net present value at a ten per cent. discount rate (NPV-10) of US$12.5 million.”

For what it is worth Graemesme, I think you actually talk a lot of sense and I agree with you on what moves the share price. Just because you point out why the sp has not advanced to the levels we all want does not make you a deramper. I only got involved on this BB when certain people were putting forward absurd calculations showing why the share would be worth £1 on six months time. That was utter tripe.

Theyknowitall, I am the first to admit that I don’t know it all. However, my understanding of cross trades is that there is a matched buy and sell, and what I do not know is whether you bought and sold between separate funds owned by you, but what I do know is that it does not reflect the “true market” and cross trades rarely, if ever affect the Share Price. However, DM me as I am always willing to learn.

I think I do know about this share having bought in a year ago at 0.89p which admittedly is not as good as your initial investment, and the number I hold, without being boastful, is slightly larger than your acquisition last Friday……….quite a meaningful holding, I think you would agree and actually quite important I do have some idea about this share!