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John 117
No I don't need to sell at the moment. I do however have what by my modest standards is a significant holding. The long term prospects are good given the claimed quality of the assets. However, the company does not seem to have grasped that recent failures are undermining the confidence of investors in their ability to deliver promised results in a timely manner.
The last operating update was on 25 May. Even allowing for Covid they must have something to report by now e.g. progress with the 3D survey and revisited timescales for environmental approvals, well tests and Royston. It is time TXP got its act together on PR as well as on progressing exploration and production.
British-Mike
I don't have a problem with having to use hydrolic fracturing. I would much rather have CH making modest claims about the risked percentage of oil/gas that can be recovered than for example the over the top claims that Sound Energy made re Tendura in Morocco. The potential for Zephr is high but it is unrealistic to expect the share price of any company to rise for ever. I think the tone of the RNS was right - big potential but perhaps some bumps along the way.
Papaduke
If you do a web search on Cane Creek you will see why CH put out an RNS with a lot of reservations about how much of the vast oil/gas reserve they realistically hope to extract. The geology is complex and whilst extraction relying on natural fractures is possible in places, my impression is that hydraulic fracturing will be needed quite a lot. I could not find the site last time I looked but do recall seeing a web page that mentioned an oil company that invested several hundred million dollars at Cane Creek some years ago and abandoned it all in due course.
On a more positive note I think it is fair to assume that technology has improved since then, both in terms of what 3D surveys reveal and extraction procedures. History suggests that there will be wells that fail to deliver for geological reasons. The good news is that CH has not over promised and on his record so far might over deliver. CH has also shown plenty of evidence of the energy and skill needed to be a good deal maker.
I would not be invested here if I did not believe that the share price is likely to rise long term. However, realism does suggest that there will be periods when the share price will drift because of expected gaps in news flow and have bad days because of setbacks.
Good post Setanta1. I am sure that Zephr would not want the share price to get so far ahead of events that it undermined the American listing and the fund raising that may go with it. I think the key messages are the very low recovery factor expected (7%) coupled with an estimate that even on that basis a very substantial 145m boe can be recovered from Paradox. The RNS is realistic about how many of the stacked layers are worth drilling and there will clearly be individual drills that will disappoint for one reason or another. That said, given the large number of drills involved this becomes a numbers game where it will be the average result that matters. My other impression is that opening up Paradox on the scale envisaged will be be a major task that will surely limit the number of new ventures that even our very able management will want to get involved with at the moment.
I am grateful to all who have responded to my query about the American listing. The clear message that seems to emerge is that CH has plenty of contacts with American institutional investors who are likely to want to become involved. Growing quickly into a medium sized company will need money more quickly than we can generate it from our current assets hand likely small aquiitions however good they are. Consequently CH's finance contacts are clearly a big plus that distinguishes us ffrom a lot of other small oil companies.
I would be interested to hear from posters with experience of a move to dual listing about how the process works. I presume that an American market maker will be appointed and will then need shares to be able to meet demand from American investors - where do the shares come from?
If th American broker is expected to buy them on Aim then clearly that will push up the share price . Alternatively does the American broker do a bulk buy from a major existing shareholder or does the company in effect raise capital by doing a placing that is taken up by the broker and perhaps American institutional investors? If the later do we get the share price rigged beforehand so that the new American investors can benefit from a subsequent share price rise when the manipulation stops? Comments welcome.u
Thebhoys
I am very much invested here and intend to remain so for a googd while yet. There is no innuendo intended. The issue is why does a busy CH spend time doing a video at this point when an RNS can tell us that contractors are about to start work but have not actually done so yet. I suspect that the important message is that if there were likely to be any delays in the expected news flow CH would have had to tell us. Consequently, rhe silence is significant and I can only assume that CH thought shareholders needed reassurance given the oil and share price retraces earlier this week.
Huff 1908
Thank you for posting the link to the above.
It is perhaps interesting to speculate on why a busy CH spent valuable time doing the video and what it tells us. I assume that CH was concerned about some large holders of share from the 2p placing taking their profits so quickly and perhaps also worried that the trend might accelerate given the pull back in oil prices due to Russian comments about Iran (see Malcy on this). Both good reasons to nip in with a quick comment.
As to what it tells us I think the key message is implied rather than actually said. New flow remains on track in the next few weeks (said) and no delays are eexpected (impliedl). This latter point is important - see for example how the impact of poor drilling results has been magnified by a failure .to warn shareholders about delays to promised timescales at TSX.
British_Mike
I agree with you. What todays RNS does is primarily confirm timely delivery of what we have been promised I.e. first income from the recently purchased wells and that work on the remaining wells is on track and perhaps a little ahead. Given the regularity with which oil companies announce delays to promised developments the RNS may not move the share price but it does add to confidence for long term holders. The key immediate issues are clearly the results of the core analysis and their impact on potential reserves and production from Cane Creak happening on time and In line with expectations.
Whilst I am pleased to see management picking up small deals with a high rate of return I do hope that they will not become a distraction. I cannot get excited about spending the odd $100,000 and picking up 60,000 barrels of potential reserves. We have a very good management team and I hope they keep focused on a small number of bigger deals and keep up their good record of delivering promised outcomes on time.
I had a small holding in CHAR but just about broke even when I lost patience and got out. Gas prices in Morocco are good but it is a lot more expensive and potentially higher risk operating out at sea than on land. What also worried me was the succession of non binding understandings with potentially interested parties. Such understandings are a cheap way of giving the impression that something positive is happening but are easy to get out of. I recall a similar series of such agreements during the Xcite Energy debacle and now tend to see them as a warning sign.
Satanta 1
I cannot comment on the Idea that our share price is damaged because of some shareholders experiences with Rose Petroleum as I never had shares in Rose. A possible explanation is that if you Google Paradox Basin you can track down one previous bad experience by a company called 'Fidelity', who spent a lot of money drilling multiple wells in Cane Creek and had disappointing production results. It is not clear whether they simply damaged the reserves they drilled or found that to get results they had to do more fracking than they wanted to. It may be that this experience is what encouraged the relevant state agency to subsidise our drill and treat it as a research project. Our management team must be well aware of this back history and presumably have good reason to expect that they can do better. In that context the full results of the core analysis, the independent resource estimate and the initial production results are all key confidence thresholds that will either confirm hopes of 10p by the end of the year or set back the share price if they go wrong. A key feature of oil exploration companies is that unfortunately as far as the market is concerned you are as good as your last set of drill results. For confirmation of this look at the experience of Touchstone, a seemingly well run company in which I hold shares. The share price rose for months on the back of good exploration results and then crashed, not withstanding good long term prospects, as soon as a set of well results were delayed and then turned out to be below expectations. I am a long term holder in ZPHR and suspect that the current share price reflects the immediate lack of news, selling from the recent placing, recognition that exploration can be a bumpy rider and the need for reassuring news before the next leg up.
Am I missing something. An all share offer to up our stake in Corallian does not provide them with additional funding if that is what they need. Conversely an all share offer just before RBD shareholders expect their share price to rise implies that we are paying too high a price to up our stake.
Am I missing something. An all share offer to up our stake in Corallian does not provide them with additional funding if that is what they need. Conversely an all share offer just before RBD shareholders expect their share price to rise implies that we are paying too high a price to up our stake.
To really benefit big time from the increase in oil prices a company needs to already be a big producer and have increases in output confidently known to be happening in the near future. Future oil prices are always uncertain, not just because of fundamental supply and demand issues but also given that key role of OPEC + in rigging the price and uncertainty about the key roles of Saudi Arabia and Russia. An inevitable consequence of this situation is that stock markets are very likely to heavily discount 'jam tomorrow' scenarios and focus on short term prospects.
I have what for me is a significant holding in Touchstone. Up until January this year the progress of the share price clearly reflected shareholder acceptance of a very credible 'jam tomorrow' scenario and a strong belief that the company was well managed. The 'jam tomorrow' scenario is in my view still intact even though it may now contain a different mix of gas and oil than originally envisaged.
What has been lost is confidence in the ability of Touchstone to deliver results to their own quoted timescales and some doubts at least about their geological expertise and technical ability when drilling wells. Sadly confidence is a fickle concept and it will take both time and more than one success to rebuild in this instance. Touchstone is right to stress that exploration is a bumpy ride, arguably needs to be more realistic about timescales that are not within its control and focus on getting production increasing so that it remains self financing. In the meantime shareholders need to focus on the potential long term value and stop imagining that each RNS will create instant big profits via huge increases in the share price.