Member Info for MALBRAD

On rechecking the 11 February RNS I note that the 780 barrels per day was said to be an initial rate so the lateral may last a bit longer than I implied as the daily rate will presumably decline over time.
Looking back at past RNS also shows just how good the company s at communicating quickly and frequently with shareholders. The steady flow of news is encouraging when I think of shares I have held in companies that stay silent for months at a time.

I have just had a look at the 11 February RNS that set out the investment case for the lateral. It talks about ultimately recovering 550,000 barrels of oil and 1.8 billion cubic feet of gas and expresses this in terms of 780 barrels of oil equivalent per day. Clearly a relatively short lived lateral. Though closer to the upper end of today's estimates it should be recalled that the original investment appraisal was based on a price of $55 per barrel of oil and that prices are now higher. It will be interesting to see CH's next video prentation re today's RNS.

Papaduke
Interested to hear your 45 day estimate for testing. I seem to recall the same figure but could not find it when I looked for it. I am not an expert on oil wells but assume that over time more laterals can be run from the same drill and as pointed out the company has talked about doing a lot of wells in the Paradox.
We have been told already that the investment case in the Paradox is based on the recovery of 7-12.5 per cent of the oil in place. Today's RNS talks about 1.2-4.5 million barrels of oil equivalent in place and hence within reach of the lateral. Consequently, recoverable oil from this lateral presumably ranges between a low estimate of about 84,000- 150,000 and a high estimate of 315,000- 662,500 barrels of oil equivalent. I have no idea of the extraction rate and duration but my initial impression is that we are probably talking about a long term position of a few hundred barrels a day at best. Though not the instant 'wall of money' that you sometimes see talked about re oil companies it is a useful cash positive start. I
I am encouraged by the lack of hype and the straightforward publication of information about the range of possible outcomes based on the information available to date.

I agree with you Sentetal about the free cash route being too slow. I also suspect that at the moment a buy out might not do a lot for the share price and would not be what most long term investors want. If we remain a quoted company and liquidity is to be improved we need institutional investors who will mix keeping a holding and letting the rest be placed on the market over a decent timescale. The danger then is postings telling us that the price is being held down by institutional sellers! Ultimately it all comes down to our faith in what seems to be a good management team to create value for us either by skillful drilling or some very good acquisition deals.

An interesting analysis Setental with which I mostly agree. The lack of response to news also probably reflects what has happened so far as being expected of a well run company and hence being already in the share price. Given the very mixed past history of the Paradox a lot of both investors and potential partners are probably waiting to see whether good management and modern technology are sufficient to avoid past disappointments here. I suspect that the next modest but sustained rise in the share price price will come when the oil is seen to flow. Beyond that such investors will want to see that extraction remains trouble free and that operating with low recovery rates is a viable commercial proposition.
As regards somebody buying the business your argument also suggests that the share price will adjust beforehand to whatever a handfull of large shareholders decide is an acceptable price for the business.
Another way of looking at it is if the status quo re shareholders is to be maintained and partners are not involved then the business can only grow by spending free cash flow directly or indirectly on more wells. A scenario that probably implies a slower share price rise than many long term holders currently hope for. Alternatively, share placings will increase the liquidity of the shares but will only raise the long term share price if, as we hope and expect the management make good use of the money and the price of oil is favourable.
What we do not want is a billion dollar company where the market capitalisation reflects having a lot of shares rather than a high share price.

Scott 22 and Lauders
Thank you for the helpful feedback re Touchstone's use of social media.

David Black
Interesting comment. Which social media channel to they use to give inside information not provided via an RNS?

David Black
The duty to shareholders is to communicate via an RNS and not by social media.

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

Adon 30
Agree entirely'-especially re TXP. and T&T.

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.

Correction- In my message TSX should be TXP I.e. Touchstone. My apologies.

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.