Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Stas20 / Edgein,
FWIW...Would it surprise you if Art found Atomic through Cuda...the Canadian oilfield is not overly large and neither is Calgary (ask SHouston !)...who knows...he might have been setting this up for a little longer than some think ?....
Coplholer,
You summarise the likely workscope quite well and, yes, there is potential for delays. But, are you saying no 'shut-in' production can be restored until all the upgrades are complete ?
Or, can the system be 'de-bottlenecked piece-meal' i.e well by well to allow maintain/restore shut-in' production incrementally during overall upgrades ?...do recent WOGCC wellhead change-out requests for BFU 34-20 and 44-21 (2 of top 3 producers) suggest anything ?
Not my strong point, but is NPV impact of interest/relevance ? For example, if Ryder-Scott Apr '21 assumptions were rolled over to 2022 i.e defer project 1yr at 2021 forecast levels..do you know how much NPV reduces by ?....if it was, say $MM30 (out of ~$250MM), is that enough to justify current sp or is there something more fundamental to this ?
My earlier post today sought your feedback to Mr. Market's view of a non-oil, blue-chip FTSE 100 company, say BDEV sp....to me, Mr. Market's sp variations over last 2 -3 years don't seem to reflect BDEV's value given consistent revenue, zero debt or profits. Is BDEV just a poor example ?...
Coplholer, (and Ironside and gold001 given your invaluable financial knowledge)
If your O&G engineering experience is in facilities then I defer to you superior technical knowledge...
Lots of discussion on why/where Sp should be...for me, R-Dunc, has summarised it quite well qualitatively.
Coplholer, your comment below seems intuitively reasonable but, unless UK house-builder Barratt Development is a flawed example, it seems Mr. Market does not share your view re- revenue, debt or profits ...is BDEV a credible example ?
"Anyone outside of this board uses measurements for debt maybe even against revenue or profits a ratio even."
Pre-Covid Jan 2020, on the incline curve of Brexit spending, ~880p.
Covid low Mar '2020, ~350p.
Post-Covid 'Jan '21 790p (pre-inflation woes)
Post Covid 'May '22 470p (inflation woes & potential recession)....so, today, ~46% below pre-Covid 'normal operations' ?
NB House prices, like oil price, have continued to rise throughout
So, would you say today's sp is the correct valuation of BDEV (and not pre-Covid) ?
If so, what explains all the earlier sp's ?....did BDEV's real value actually change in line with sp ?...NB BDEV has increasing revenue, zero debt and makes profits.....
What am I missing ?.....
Or, could BDEV (and COPL?) be mis-priced and, in fact, be (very?) good value....remember, Warren Buffet..."price is what you pay BUT value is what you get" ?.....
Finance may not be my 'forte' but setting up and running discounted cash flow model doesn't seem too daunting
For those that monitor Ryder-Scott's 'Apr 21 discounted cash-flow
Bladderman / Tiburn,
While horizontal wells may initially produce 1-3k bopd, what is the expected decline curve ?
BFU has 21-35H, 41-34H (Shannon) and CC 31-17H (Falls Creek/Dakota). Are they typical of the PRB wells ?
Of course, decline curve depends on primary or secondary recovery (MF) mode...what is being assumed here ?
gold001,
Some interesting queries/comments today.
Re- surface upgrades. Proactive interview 1 Sep 2021 about 2mins gave some insight....
"Whether Mr Atomic fcked Art over or he was in on it would be the question for me"
"Not true, he overpaid for Atomic which has ‘plumbing problems’ and will cost double in the end to hopefully fix.
Doubtless, it wont answer all concerns but worth noting MF only started Dec 2019 with 2020/21Covid restricted MF and deal 'done' Mar 2021
It sounds like 'issue' was a known possibility but rather than over-design Phase I, Chesapeake management elected to let actual performance dictate extent of any Phase II modifications....sure, still not clear when COPL CEO found out nor how much cost will be...but, maybe by waiting for Phase II now it might incorporate enhancements to avoid a possible Phase III later....who knows ?....
Re- "We’ve had to further dilute and take on debt to buy Cuda just to become profitable."
Maybe so but if Cuda had not gone 'bust' and paid its bills on time then presumably the surface upgrades could have been initiated mid-late last year and borne its share of the discovery well cost over-run....both contributed to COPL's Lender default and production decline, right ?
Re "Without the billions barrels they found by accident it was the worst deal of the century with an even worse finance deal which Art only now admits."......"found by accident", really ?
Investor Presentation Frontier-Dakota field maps shows numerous offset wells across Cole Creek and BFU area....more particularly, BFU 14-30 appears to be a 'look-a-like' to 1952 Radigan-1 based on COPL data posted on WOGCC website just before confidentiality started...
Also, COPL CEO expedited drilling exploration well within 4 months of take-over....would he do that just to jeopardise entire BFU so soon ?
COPL CEO may be a lot of things and doubtless has made decisions which, with hindsight, he would have done differently...like us all ?
dogefather,
Thank-you for the 'heads-up'.
So, do you think Chesapeake Energy 'conned' Atomic who then 'conned' COPL ?...does that sound like COPL CEO ?...or is he simply continuing the 'con' with long suffering PI's ?
I understood COPL CEO previously ran a North Sea company with a business model which imploded as result of '08 financial crisis involving outsourcing rig(s) for both his company and other Operators. But, he does have a geology degree and used it throughout his career, right ?
gold001,
Maybe I misheard ?
I understood the funds raised were, in part, for long-lead items for drilling (tubulars) and production equipment for top-sides upgrade and presumably preparation costs for the associated operational programs, you know, miscellaneous contractor contracts and their equipment/personnel ? These items typically have the lead times COPL CEO outlined (sometimes longer), but the process required CUDA to be essentially complete before (a) raising the necessary funds (b) placing orders without risk of cancellation or delay payments...
dogefather,
Thank-you for sharing your astonishing prescience....I will keep the back of my sofa 'stash' for such day(s)
Can I ask if your predictions are based on the absence of assets and hence calculated value purported to be present by the independent assessor (Ryder-Scott), or COPL's inability to extract the known reserves without returning repeatedly for more funds ?
HfB,
While 14-30V spud went unannounced on ~8 August (I recall), it was the 3rd bullet in the 17 Aug Operations Update
"- Commencement of drilling operations of an exploratory well to expand the Shannon Unit and to open a potential new field development"
and on 1 Sep Operations Update (before it 'went to custard' on cementing production casing), there was:-
" Oil discovery at the 100% working interest Barron Flats Federal Unit (Deep) exploratory well expected to open new field developments. Six (6) oil bearing sands totalling 246' (net porous sand)/282' (gross sand) intersected. Production casing is currently being set to total depth of 9,220'. "
Seems fairly well reported apart from actual spud itself....
gold001,
If I understand it correctly, the root cause is engineering under-design...weather, birds, Lender, receiver simply compound the problem...not sure if COPL CEO can/could have influenced much of that ?
As, I say, finance not my 'bailiwick' but when financials are published the 'tale should be there to tell', right ?
Coplhdler,
You're welcome and whomever else benefits from the input...but, it's simply data that exists already...
Finance not my 'bailiwick' so comments are moot. But, I wonder how much better COPL CEO could have done given lending both post-Covid and given environmental politics...hopefully selected the least worst assuming all 'sharks' ?
Following your share timeline:-
1. 5% warrants mandated by Lender, right ? (1% extra 'extracted' by Lender over default)...warrants 'normal' practice ?
2. Dec raise as Lender refused CUDA bills paid from loan coupled with BFU deep well cost and overrun...is that strict Lending criteria, variations not tolerated and fees applied ? - how does one foresee/mitigate that ?...OK, could have not drilled 14-30V and forfeited lease(s)/potential...what might that be worth ?
3. Raise this week - presumably Q1/Q2 financials will subsequently show insufficient 'loot'....in part due to reduced production from inability to do engineering 'fix' due to Lender and Receiver restrictions. If so, maybe could have raised less but still needed something, right ? Could price have been higher ?...maybe/maybe not given 'poor' state of finance ?
4. Raise related Warrants - part of raise process. Maybe could have been less generous with number of warrants ?
5. New loan fee - how else to buy CUDA ?...assuming it's worth more than just purchase price to COPL
6. New Lender warrants - as 4 above
My concern with COPL w/o CUDA was Lender finance (16%) was 'unhealthy' especially with unexpected production fix required and delay fixing it. So, maybe COPL had no/little choice but to acquire CUDA ? If so, could this have been done for less ? No idea....but, COPL+ CUDA appears to have synergies...re-finance at better and sustainable rate ?...unhedged production component ?...no 'opportunist' partner and maybe no partners if CNOOC exits leaving COPL CEO 'free' to consider 'clean' JV or somesuch to avoid future raise(s)...or just wishful thinking ????
-
Coplhodler,
Were you looking for a recent debt raise ? Is Zephyr Energy what you are looking for ?
"Details of the US$28 million senior debt facility
"The Company has received credit committee approval from a North Dakota based commercial bank for a US$28 million senior debt facility, consisting of a fully amortising US$18 million term loan for a period of 48 months ("Term Loan") and a $10 million revolving credit facility ("RCF"). Principal and interest payments are to be made monthly on the Term Loan and monthly interest payments are payable on the RCF.
Other key terms of the Term Loan and the RCF are as follows:
· Fixed interest rate of 6.74%
· First lien mortgage, assignment of production, security agreement and financing covering all current and future mineral interests
· Unlimited full recourse corporate guarantee from Zephyr
Bridgedogg1
You are quite right. Maybe, if COPL adopts a similar approach to Impact Energy 'Two Eagles' ~3miles east of BFU then you may find a technical solution to your commercial conundrum ?
While Impact Energy or COPL are not assured of commercial success, it is encouraging that the adjacent Operator may have an analagous opportunity and an interesting inventory of horizontal wells according to WOGCC website.
Art123,
"making it up, or grossly exaggerating the whole find"
There is a wealth of data available publicly and free on the WOGCC database together.
One is also free to do one's own calculations and formulae for OOIP are also readily available on IT.
Of course, it will be interesting to see how COPL, RS, yours and indeed MR. Winnifrith's compare...I'm sure all will be technically defensible without any need to 'make up' or 'grossly exaggerate'....
Art123,
You doubtless have a wealth of O&G experience that most of us don't and that your interpretation of events is more accurate in every regard but, oftentimes, there are credible counter-arguments to consider which R-Dunc has rightly made. Specifically, re- CPR , I would ask you the same as gold001 earlier:-
"Which way around is better ?
- RNS that CPR has been commissioned (to keep PI's happy), which also tells Receiver CUDA is worth potentially multiples more and force bid price up (greater Lender finance) and maybe even an auction making it higher still
or
- RNS an internal OOIP estimate (meaningless to Market and Receiver), which COPL can use to initiate re-financing discussions to include discovery while allowing 'low-ball' bid for CUDA based on BFU only (and performing sub-optimally due to known technical 'problem' further delayed by CUDA arrears)
Then:-
1. Once CUDA outcome known- announce CPR (having alerted potential Lenders already via unofficial OOIP)
2. Re-finance knowing CUDA outcome and to (new?) Lenders terms which may/may not mandate additional funds ?"
You are quite right an independent CPR is far more meaningful to potential investors/Lenders but, in this case, maybe COPL CEO has had to 'finesse his hand' in this game of poker to try and acquire CUDA at the best/lowest value for all shareholders ?....who knows, making COPL appear 'distressed' may cause other potential bidders/Lenders to be concerned that if COPL went bust then their 'whizz bang' investment might just go the same way...a leopard may indeed never change its spots but that 'cunning' may be just what is needed here ?
gold001,
which way around is better ?
- RNS that CPR has been commissioned (to keep PI's happy), which also tells Receiver CUDA is worth potentially multiples more and force bid price up (greater Lender finance) and maybe even an auction making it higher still
or
- RNS an internal OOIP estimate (meaningless to Market and Receiver), which COPL can use to initiate re-financing discussions to include discovery while allowing 'low-ball' bid for CUDA based on BFU only (and performing sub-optimally due to known technical 'problem' further delayed by CUDA arrears)
Then:-
1. Once CUDA outcome known- announce CPR (having alerted potential Lenders already via unofficial OOIP)
2. Re-finance knowing CUDA outcome and to (new?) Lenders terms which may/may not mandate additional funds ?
This way, you would be right about raising funds but the price might well be a little different to current thinking ?
Gold001,
"had to pump the gas injection up too high and broke everything"
- Nothing is broken but we have reached the Chesapeake design limit because it did a poor technical job in 2014. If it knew then what COPL knows now it would have designed accordingly.
- COPL did/is doing what Chesapeake/Atomic were going to do....simply put, fill the reservoir with MF fluids to replace depletion from earlier production and maintain the reservoir pressure within an optimum range to drive future production.
- Miscible flooding provides reservoir pressure support to optimise oil production where there is no aquifer (water) support and where alternate pressure support media are considered less optimal (e.g water injection). PRB is such an area and numerous MF flood examples are testimony to this approach.
- I don't recall anyone saying this was assured of following a pre-set trajectory...but this is the O&G business, "s_it happens" and you deal with it...as COPL are trying to do but, as opposed to a self-funded super-major like BP, is at the mercy of a Lender which has its own agenda and is likely delaying getting BFU back-on-track until CUDA resolved
- We all have plans, right, but change accordingly when required....and, if modelling is correct, the ultimate value will be higher...but only if your investing horizon is long enough
This is no defence of COPL CEO as all the facts aren't known but CEO's are there to make the 'tough calls' at the time and do not have the benefit of hindsight.
So, provided existing Lender sees this as just a chance to profit further from COPL's new wealth potential given the technical/operational history of COPL since Atomic T/O (below), the only real question is if COPL is actually better off in the long-run which, of course, is of little/no interest to those with short-term objectives....
WHO KNEW ORIGINALLY ?
- Mar '21 - Chesapeake/Atomic design surface equipment working pressure limits would be reached by Jul-Aug '21 causing MF oil production ramp-up to stall/plateau (due to inadequate engineering by Chesapeake, which went unchanged by Atomic, as only one (1) core was cut in an unrepresentative part of the field and used as basis for facilities design. Thankfully, as CEO said, they got it wrong in a good way (better permeability/porosity), which means ultimate recovery may be higher but it will still cost COPL to make 'fit-for-purpose'). Dec '21 Report indicates technical review/solution found but waiting on CUDA settlement resulting in Feb '22 production decline presumably due to Lender's spending constraints ?
- Mar '21 - positive impact of MF ramp-up and ensuing production increase would require review of MF propane-butane supply/security and re-contracting but costs escalating.
- Mar '21 - CUDA would not pay JV costs, requiring COPL to obtain Court lien to ensure payment ahead of CUDA Lender forcing it to make interim payment but would default thereafter.
- Mar '21 - BFU (Deep) exploration well commitment due in 2021 or relinquish lease and make no 1-2 billion bbl OOIP potential oil discovery. Atomic permitted but did not drill the well in 2018. Maybe WOGCC refused more extensions to meet the lease commitment i.e. "USE IT OR LOSE IT". If so, what would you do ?
- Mar '21 - CUDA ('happily' espoused exploration potential in RNS/flyers/Detring sale flyer), would not pay JV share, knowing the 2021 well commitment, forcing COPL to pay 100% itself or lose the exploration rights (can COPL claim 'damages' to recoup its Lender's default costs as the CUDA buyer will doubtless 'happily' pay 4x buy-back share of well cost to get 27% share of potential 1-2 billion bbls OOIP, you'd think ?)
- Mar '21 - CUDA would not only fail but then fail to sell itself after 4mths with 'spot' POO $83/bbl end Oct '21 and then enter 5+mth receivership defaulting on OPEX/CAPEX costs.
- Aug '21 Well 14-30V would have major downhole problems which nevertheless enabled wireline logs, Frontier HC samples and Dakota well production although had to risk $3.5mm (100% WI actual) v @$1mm (57% WI pre-drill if JV paid their share).
COPL CEO may be lots of things but 'clairvoyance' is a rare gift and not part of most job descriptions except maybe palmists...and please remember I speak not of financial matters for which this BB is blessed with plenty of