I see that Bamps is now plying his trade on the other forum. He majors on revenue, based on projections in CERP presentations, but has a blind spot when it comes to taking costs into consideration. It's something that is inherent in all rampers. I think he puts too much emphasis on presentation material which even he admits is forward looking and, therefore uncertain.
Operational profit doesn't automatically equate to corporate profitability even in times of high oil prices and normal circumstances. How does the 90-95% water cut at S1 MC affect lifting costs Bamps?
He means well and seems a nice chap so good luck to him. I'm sure he will enjoy debating with 'arry (in4cedros) and his nemesis 12bn.
I can confirm that Irene was a close 3rd and it's highly amusing seeing the rampers squirming with embarrassment and attempting to manipulate the result.
As far as asset valuation goes, the market is at odds with rampers valuations by a large margin. The market uses criteria based on solid financial and operational metrics before factoring in the likely effect of forward looking statements of intent. If the former is either absent or at best sketchy then there is no foundation on which to estimate the latter.
The market doesn't like uncertainty created by a lack of transparency. Nor does it like missed milestones.
I think the market valuation is about right based on what we know. Perhaps that will change, one way or the other, once we know more than how much was in the bank at a specific point in time.
Bamps re Steeldrum acquisition
The consideration for the purchase of Steeldrum is the issuance to the Sellers of 92,743,775 shares in Columbus (the "Base Consideration Shares").
Columbus may also pay deferred consideration to the Sellers, as follows:
1. 16,422,434 shares in Columbus following the re-issuance of the Cory Moruga E&P Licence and 16,422,434 Shares following either a positive final investment decision being made to develop the Cory Moruga field or a sale to a third party (the "Cory Moruga Shares"); and
2. 16,920,083 shares in Columbus in the event the Innis-Trinity field is sold to a third party for no less than US$4,200,000 (the "Innis Trinity Shares") - see option held by Predator Oil & Gas Limited, as referred to below.
Steeldrum has ownership in a number of petroleum assets in onshore Trinidad through subsidiary Companies including the Trinity Inniss Field, the South Erin Field and the Cory Moruga License containing the Snowcap field discovery. The Innis Trinity field is a mature field producing from Herrera turbidite reservoirs, governed by an Incremental Production Service Contract ("IPSC") with Petrotrin. The initial term of the IPSC is due to expire in January 2020. The Company would expect the IPSC to be extended at that time. The field has produced circa 23mmbbl to date with approximately 4.0 mmbbl of remaining recoverable reserves. There are opportunities to optimise the existing well infrastructure to increase daily production. The IPSC is subject to an existing farmout agreement with Predator, who are expected to fulfil at least 2 of the Minimum Work Obligation ("MWO") wells and progress a planned EOR Project. The total MWO is 7 wells. As part of the Predator transaction, Predator has the right until mid-2019 to purchase FRAM Exploration Trinidad Ltd ("FRAM"), the Steeldrum group company that is party to the Innis Trinity IPSC. The purchase price for FRAM would be US$4.2m.
Predator didn't take up the option by the mid-2019 deadline. The deadline was then extended. Will they won't they take up the option this time around or will the deadline be extended ad infinitum? Don't forget the additional shares that Columbus will have to issue to the sellers of Steeldrum in the unlikely (IMHO) event of the transaction completing.
Bully - "asset sale expected by end of June for $4.2million"
I suspect this is a red herring. The deadline keeps being put back and I can't really see Predator seeing this as a prime acquisition. But stranger things have happened so we shall just have to see, but don't be surprised if the deadline is again moved back again. It's a carrot that is good to have in the background to keep investors wondering.
If Predator does take up the option, much to my surprise, then you have to factor in the loss of the asset to CERP and also CERP will have to issue additional shares to the sellers of Steeldrum as per the terms of the sale to CERP.
Good morning CERP-84.
As always, the proof of the pudding is in the eating. Whatever the outcome of S2 it is bound to be interesting.
Pure speculation on my part but it occurred to me that 'perhaps' the difficulty experienced with S1, necessitating a second drill to prove up LC, may in part have been attributed to something that happened during drilling. There's no doubt that the drill took an inordinate amount of time. This leads me to believe, and I stress this is speculation on my part, that the free carry for S2, in return for a share of anticipated spoils, may in part be a form of recompense to CERP and not solely motivated by the future prospectivity of the area.
And lots of it IMHO.
Publication of annual accounts have been put back by 3 months to September. I can't imagine the numbers will be pretty and this is for a period before Covid-19.
There is some cash in the bank but in real terms it's not a lot; not enough for CERP to be able to pay its way in cash.
What will happen if S2 doesn't deliver for some reason or if it's delayed until next year? Would a duster be followed up by another free carry? Risk assessment!
Will a continued low oil price environment force CERP to raise funds?
How long will contractors be happy to receive payment in shares? What's in it for them?
Will Goudron IPSC be renewed? What is current production?
There are more questions than answers at the moment but operational and financial details will have to emerge sooner rather than later as investors are having to trust based on future projections and limited or no information on the health of the company.
The future could be good if S2 delivers but it seems to me to be a throw of the dice that has a 50/50 chance of success at best and maybe I'm being optimistic. S1 has shown that SWP has potential but there's much to be done to prove the commercial value. Dry oil is ideal, if it can be found, or else lifting costs will escalate if there is a high water cut as seen in S1 MC.
Interesting times ahead. Stick or twist? Your choice. atb
Holly - "Will we have to join opec,and contain the flow,or can we just flood the market ,who will take over shell or bp the mind boggles,at such wealth to come"
Unless you are being sarcastic, you will fit in very nicely with the rose tinted specs brigade that has been promising untold wealth since the company was incorporated on 9 August 2006.
Bully - it's good to see you doing some research. I suspect that some (not all) of the long term holders share your positivity. Their optimism, like yours, is based primarily on the presentations which contain forward looking statements and estimates which are by no means guaranteed to be achievable for all sorts of reasons.
When Leo Koot was appointed to take over the reins from his predecessor, Neil Ritson, he changed the name of the company, which was previously known as LGO Energy plc. On April 15th 2015, Neil Ritson gave a presentation at a conference in Madrid on the subject of LGO's recent growth in Trinidad. This presentation contained a provisional Primary and Secondary Production Forecast (P90) for the years 2014 to 2028. I'll share with you the then vision of the company.
Base production (no waterflood)
2014 - 500 bopd
2015 - 2900 bopd
2016 - 3100 bopd (peak production with out the aid of EOR)
2017 - 2800 bopd
Base production plus waterflood EOR
2018 - 5500 bopd
2019 - 7500 bopd (peak production aided by waterflood EOR)
2020 -6500 bopd
2021 -2028 gradual reduction in recoverable oil but still forecasting 2800 bopd in 2028.
The point I am making is that each investor should decide for him or her self how much weight you give to future forecasts as clearly the company failed spectacularly to achieve it's lofty ambitions as set out in that 2015 presentation. The management of the company has changed and there is a new plan with new objectives. It is for you and other holders to make your own mind up as to whether the current plan can be any more successful than the one set out in 2014/15.
I would caution anyone not to take anything for granted in this industry and to be alert for any missed milestones in the plan and to keep management accountable. ATB
Bully - "CERP confirmed in the presentation that will be able to obtain 500BOPD from the saffron middle cruse"
You might like to have another look at the presentation because they didn't claim 500 bopd but 500 bpd, which includes the water content of 90%-95% per barrel. That would put production of oil at somewhere between 25 and 50 bopd.
"New discovery in the Middle Cruse -multiple oil bearing reservoirs in a separate fault block•
Well is producing at high rate approx. 500 bpd @ 90 to 95% water cut from interval 2."
willec - I'm not aware of any broker ratings other than the house broker, VSA, who are paid by CERP to promote the stock.
I'm sure that if CERP can find and extract oil in economic quantities, such that the company makes an annual profit and not a loss as has always been the case to date, then the sp will react accordingly. Not many traders are interested in waiting years for 'jam tomorrow' to materialise but they will take advantage of any opportunities that present themselves from time to time, usually fuelled by hot air.
Saffron 2 hasn't been drilled yet and some people are already talking in terms of potential revenue. I don't give advice but if I was interested in potential then I would wait until the odds of success were more in my favour. What if something happens in the next few months and Saffron 2 doesn't get drilled? Or even worse, it gets drilled but fails to produce economically for some reason. Then what? How do you think the sp will react then and how long will it then take to organise and fund another drill or whatever alternative course of action the BoD chooses to take.
The problem with jam tomorrow is that tomorrow never arrives, it's always in the future. Jam today is what is needed and there's precious little of that, as we shall no doubt discover when we next see accounts and production metrics.
We are in a low oil price environment with modest production to help fund day to day operations. Saffron, on paper at least, shows some potential. Much depends on the next stage of development. The cost control measures are needed to ensure that CERP survives to fight another day. Sadly, these same measure are dilutive of current shareholders and nobody can foresee, at this point, how long these measure will stay in place.
There are material uncertainties, IMHO, in both the short term and medium term prospects that counterbalances any potential. That being the case, I think the sp is a fair reflection of where the company is now.
Vmax - I think that Chesh used to be on here as surprised. The style is uncannily similar. He and his mate were both in the green room gang. I suspect this is him on twitter.
Cheshnut - "All the best (a jest for our Vmax :)"
I'll let you all into a little secret. Chesh admitted when he first started rattling out posts at the speed of light, that he did it to bury out of sight stuff that he didn't want posters to take note of (ie anything factual that is not a blatant ramp). He achieves that by flooding the board with many cryptic, meaningless posts. 'All the best' at the end of every post is probably just a mechanism to take up more space on the page. It's a ploy that works as often Chesh posts are almost all you can see for page after page. He is of course aided and abetted by his fellow rampers who never raise any objection to his posting style but scream and shout if anyone with a critical eye for detail cares to offer an alternative assessment that offends the jam tomorrow gang.
"Businesses will be given an additional 3 months to file accounts with Companies House to help companies avoid penalties as they deal with the impact of COVID-19. From today (25 March 2020), businesses will be able to apply for a 3-month extension for filing their accounts."
According to Companies House records, Columbus has applied for a 3 month extension for filing FY19 accounts which were due by 30 June but are now due by 30 September.
Hedgecutter - Looks like the penny is beginning to drop.
The penny never drops for the long term spiked.
Now why is Leo ramping this stock? 2019 accounts due next month so my guess is they want to raise funds before releasing the good/bad/awful news.
Ross - If the “Well is producing at high rate approx. 500 bpd @ 90 to 95% water cut from interval 2”, does that not mean that it is in fact producing 25-50 bopd?
That's a very high water cut so yes I would say that it's 500bfpd (barrels of fluid).
I wonder if there will be an RNS on Friday, maybe after hours? That would give shareholders the weekend to mull over the detail in advance of the Monday presentation.
Whatever is about to be announced, I wish you all the best of luck.
Oil Meltdown Spreads Beyond Expiring Contracts as WTI Slumps 42%
“I didn’t think we would ever see this,” Ben Luckock, co-head of oil trading at Trafigura said in a Bloomberg TV interview. “We have a distressed market and we are seeing unprecedented price moves and that is what we have to deal with at the moment.” It’s possible WTI for June also moves to negative prices, he said.