Member Info for MALBRAD

After waiting months for news we get three RNS I almost in a row. A bit like the story of waiting for ever for a bus and then three turning up together. Promising as far as it goes but it is to be hoped we don’t have to wait long for regulatory approval and for dates re the start of production and the revenue that goes with it.

Apologies - ‘aware’ should read ‘are’.

I’m not sure that TXP shares are over sold. Leaving aside an endless trail of mistakes that could (should) be ended by a change of senior management, depletion rates on wells are so high that the company seems to be chasing its tail drilling new wells just to replace lost output.

Arguably TXP needs to either invest in a country with more favourable geology and fiscal regime, or merge with a better run company, if it can do so without too much dilution occurring. Sadly too many drilling mistakes and the botched attempt to raise more equity capital aware now catching up with the company.

Today’s RNS shows a terrible set of results. Given the rapid rate of decline in output from the new wells that drove the share price to silly levels, one has to wonder how low the rate of return on the capital invested in them will prove to be. At a minimum it is critical that our next contract for this output is at World prices and is not set so as to subsidise Trinidad’s petrochemical industry. Buying the Central block has given TXP a breathing space but is it enough to halt the annual decline in output and reverse it? I will wait on the next few drilling results but they need to be good to justify staying invested here. The depth of pay zone on the last result sounds OK, though I seem to remember much larger figures on some wells where output is declining badly. A change of management is needed quickly, hopefully before potential buyers decide that their best bet is to wait until close to when we go bust and then pick up the assets for next to nothing.

After months of falling the share price has thankfully been rising since about 22 December. I would be interested to see comments on the following three possible explanations.

1. Existing shareholders believe that after long delays positive news is not far away so are buying more shares. (a lot of comments here re good news soon).

2. The share has been strongly recommended by one or more well followed tipsters. I havre not seen any such

tips but could easily have missed them.

3. Inside information has leaked from those who know bits about what is going on and has led to share purchases by recipients of that information. Based on what I have often seen on Aim a very likely explanation.

MALBRAD

Good to see that getting production underway at last has not been forgotten.I take the point that the results of the latest well were not known until May but surely regulatory approvals etc could have been initiated earlier.

The very expensive borrowing clearly shows that our key lender is at the limit of what they are prepared to lend. No doubt once production is underway they will want to see accelerated loan repayments so as to reduce their risk, not withstanding what is said about how they calculate our borrowing limit. The other clear implication of the RNS is that unless a partner is found, no new drilling will happen until we have had several months of cash flow from production. We are in a very weak negotiating position re partnership negotiations the moment so I suspect that our share price could be stuck broadly where it is until production gets underway well into next year. Let us hope that no unexpected big bills arrive when it comes to getting production underway. The above said, the share is still a good but high risk investment for those who can afford to wait.

Though not a large shareholder compared to some others on this board, I am certainly down a lot more than I want to be on this dud investment mistake. I am very happy to join you G_G_G in demanding an EGM. The entire Board of Directors need to go not just PB.

Scottsummers - no need for infantile comments like “Cool your knickers fowler” Even if you disagree with what is said,people have a right to put forward their view without being gratuitously insulted. We all know that the usual response to a discounted placing is for the share price to fall to the placing price until news flow determines otherwise. Fowler is absolutely correct to point to country risk as an added factor at the moment.

Yes we all know that what we call democracy does not occur in many African countries and that single party dictatorships are quite common. In such cases change often comes from either new leadership within the party, or a military intervention. If you have been a suffering shareholder in Aminex for long enough you will know that for several years we were the victim of delays by the government and their regulatory agencies. Such country risks nearly resulted in Aminex going under. You may also remember the U.K. owned mining company that was made to suffer huge demands re alleged under payments of tax. Like it or not Aminex operates in a place with a recent record of country risks.

That said, pre election the government was clearly supportive of our project and the dominant Omani rather than British ownership involved may prove helpful. However, regime change or civil unrest are unfortunately a genuine enough country risk in this instance.

The destruction of shareholder value here is mind blowing. We need a change of management quickly before we either become insolvent or get bought out on the cheap. A least four issues stand out.

1. The need to renegotiate our key gas sales contract. The current management lack the political and legal skills needed.

2. If you take away the new production in the Central Block, output from Cascadura and indeed all our recent capital spend is

well below expectations and clearly had more rapid decline rates than anticipated. A new set of geologists need to reconsider

the model on which our capital spending is based. Arguably we may also need more production expertise. Why

for example were compressors not build into the origin building programme?

3. We need a strong finance director who will ensure that capital spending is better controlled and capital raising is done

efficiently. An obvious issue here is that a company that is at risk of becoming insolvent should not be planning anything

like the amount of capital spending currently envisaged for 2026 and should be trying to avoid more borrowing or share

placings until 1 and 2 above have been sorted out.

4. There needs to be more senior management on the spot in Trinidad who can flush out problems quickly and deal with

them. Arguably remote control from Canada is not working as well as hoped.

The “wall of cash” is clearly not going to appear ant time soon. I am certainly prepared to support demands or an urgent EGM.

We are all frustrated at the lack of news about progress towards Zephyr producing and selling some gas and oil from the Paradox Basin. What surprises me in this context is the absence of any evidence of pressure for progress from the investor who funded half the cost of our last well. I suspect that at for all the “drill baby drill” nonsense, now is not a good time for CH and his supporters to sell and that they cannot get the price they want at the moment. All the more reason of course to get what we have into production and generate some more cash flow before we come under pressure from lenders, or have to pause drilling the Paradox Basin.

A bad morning at checking my post for which apologies. “enough” in the second line should be deleted. I also meant to say that it is not unusual for independent reviews of reserves to take longer complete than expected.

Title should be What next - message posted prematurely!

I think the current share price is too low for a bid to work. That said the company is clearly open to considering partnership deals i.e. x % of Cane Creak in return for meeting enough the capital costs of several wells and their related infrastructure.

Given the complexities of the geology a bit of a delay in the independent review of reserves looks likely and is unusual. A final thought is that whilst we are all frustrated by the lack of news I assume the 50% investor in our key well will be putting on pressure to get the pipeline and related infrastructure up and running so that cash flow can be generated by production.

What happened to the “wall of cash”. Though not unexpected the quarterly results are a reality check. We have very little control over gas prices and none over oil prices but we do control output. Why has output fallen? No explanation has been provided by the company. There have been no comments about down time so the most likely explanation is larger than expected natural decline rates at most recently drilled wells coupled with a lack of urgency in linking new wells to our now substantial processing capacity.

My impression is that the market does not believe the “wall of cash” in the near future story. What the market appears to assume is that long term output levels from each well are potentially quite low and that any cash flow will get diverted to repay debt rather than exploration/increasing output. The market is also rightly concerned about potential dilution re future share placings. I think the time has come for management to be honest with shareholders, give clarity about their future output expectation backed up by reasoned explanations that distinguish clearly between natural decline rates at wells and realistic timescales for linking new wells to our processing facilities.

I agree with much of what EbbsandFlows says. Earlier wells probably did not get into production because work was awaited on the third party owned more distant pipe network. However, I think I am right in saying that such work was completed a while ago. I would therefore have expected Zephyr to already have plans for how they are going to link our latest discovery to the pipeline network and a range of cost estimates based on different production scenarios. I would also expect the

Investor who half funded the latest well to want a quick rout to production. That said, I have not idea exactly what regulatory approvals are needed for our linking pipeline (s) and how long they will take to get. Arguably this is something that they could have been getting on with at minimal cost a while ago.

I also suspect that given the expected decline rates in our portfolio of producing assets, Zephyr will be keen to steady the position by making some early purchases using their new loan facility. Given the extensive and complex technical work involved I suspect that news of the outcome of an independent resource estimate is probably some weeks away yet.

As regards future news flow, the other obvious possibility is that having proved up a commercially viable way of extracting oil and gas in the Paradox Basin Zephyr will either sell out or announce a partnership. CH has after all mentioned this possibility.

Lastly, all has been very quiet on the helium side for a long time. I have always assumed that delays here were due to other priorities and funding issues but do wonder how long the other parties involved are willing to wait.

Arguably the company ought to be publishing an RHS about the share price. Possible explanations include the lack of investor confidence in Aim shares (shift to another exchange perhaps), the avoidable silence about the timescale and cost of getting our “commercial” well into production, or despite all CH’s claims to the contrary a managed fall in the share price to facilitate a placing to ease any concerns that creditors might have. I remain convinced by the arguments that persuaded me to invest here but CH needs to be seen to reassure shareholders, or explain why he cannot do so at the moment.

I must admit to being frustrated by the high natural decline in oil and gas recovery rates shown in the quarterly results. One interpretation is that we will need constant new discoveries and that so called wall of cash will get used up trying to maintain output. Hopefully that will not happen and what we are seeing is a once off fall to stable long term outputs from each well. This latter interpretation seems plausible given that both lenders and institutions subscribers to the recent placing must surely have sought technicsl reassurances on this point. I am not a geologist but am also left wondering whether decline rates might be lower in the about be acquired Central Block.

Thank you Sambo 12 for a carefully reasoned and reassuring reply.

Agreed Fowlertheprowler. Given the size of the pipeline project I suspect a few delays are inevitable. That said the the further the whole project gets in the next few months the better. I don’t know the date but I recall reading that elections are due later this year. As I know nothing about local politics I have no idea how likely the current investor friendly government is to win the election. Similarly I don’t know what the current stance of the opposition is re such projects.

We have suffered before from a hostile government and the last thing we need are delays due to policy reviews or attempts to squeeze more out of foreign investors. Hopefully we have nothing to fear but comments here from those who know more about such matters would be useful.

CrustyPete and StockCheque

Thank you got your informative responses to my concerns about the lack of feedback from Aminex re next steps/sequencing and possible timelines.