Member Info for NoEasy

Had a happy hour beer or two so apologies in advance.

Considering the week or so we have had good to see that this board hasn't lost its ability to rationalise the situation. Some good balanced posts,. Just accepting the the true position is for me balanced. Its refreshing that posters can challenge the company and each other without resorting too much to insults, today at least. Definitely much easier to read.

I may be wrong but the potential here is borne of the independent, yes independent, report on resources plus the partnership with an indigenous group, the latter point being the critical component. This is versus other explorers who are just that explorers. We have contingent resources. The point that our resources become reserves is contingent only upon a field development plan being approved by the NNPC (not an issue given the expertise that should be available to Art from his team) and that they can prove the economics of the field. This latter part I am sure has been blown out of the water given the upturn in oil prices. Additionally the regulator (NNPC) want to see this operation start as soon as possible.

Now I'v lost my thread but have a good weekend all.

R-Dunc thanks for the post re Essar not wanting to pay out, "...We have proposed a $175 to $200 million program to EM. This would mean they have to fund $19 to $24 million beyond the first $80. By their own admission in a meeting 3 months ago they do not have the funds. At that time they suggested we make an offer to acquire their interest on July 2nd."

I know I didn't give this enough thought. It certainly doesn't mean Essar are broke just that they don't want to fund $19million, Who would if they can get away with it!

The bit I didn't give enough thought too was the program itself and the proposed cost. The commitment seems to marry the potential.

Fully agree Jiving particularly the length of time for a full blown dispute and how that would impact on future timescales for them as a standalone operator. It is a possibility but good to hear others have the same views that full control is not what Essar want. If that is the case, they don't want total ownership, then there is hope for an earlier rather than a later settlement.

'We are continuing working on the project financing, the completion of which is related to the resolution of the disagreements with Essar.'

Many thanks R-Dunc and MK, given you have both received that from the CEO I hope that puts that issue to bed for people here. The Service Provider Agreement will be resolved only once the dispute is resolved. Its a pity we have this issue as we had one hand on the prize when this blew up. That said Essar are going to have to be realistic whatever their views and if they do have a portion of the blame for things not proceeding promptly to the extent the company have indicated then they are unlikely to get a 'material breach' home in an English court.

"...we are currently in negotiations for the 100 million financing so if we complete this which we believe should be done in september there will be no issues'.

'We' don't believe it will be completed in September, some might have that idea, but I don't not unless the dispute is settled first.

'..although Essar is broke'. I'm not sure how such a definitive position has been reached? Maybe your turn to help me on that one.

iamrich, I probably didn't answer all of your question. the bit about 'innocent parties',' buying stakes for fair value' is on the same page (26) as the other bit of the prospectus I quoted you.

ATB NE

Re the Agamore dispute, yep I will be ignoring that based upon what we have been given by the company.

'Very Complicated or do we just ignore it and hope everything will be ok??'

No I reckon between us on this board we can come up with a pretty good stab at all the likely scenario's for the Essar dispute.

My thoughts:

1. No litigation - agreement is reached - COPL retain all or a sizeable portion of their original holding in OPL226.

2. Essar litigate - 'material breach' confirmed in their favour. Shareholder Agreement terminated. COPL to get 'fair value' for its stake.

3. Essar litigate - 'material breach' is not found in their favour. No money for buyout of Essar's stake unless another partner is found or Shoreline decide to up their holding. Essar therefore stick with the Agreement or sell and are paid out of future oil revenues.

The clear issue for me here is what is 'fair value' if Essar win at litigation or indeed if Shorecan want to buy them out. It works both ways. That could be significant considering the money that has already gone into this from Shorecan plus the best estimates of contingent and prospective resources. Then there is the identified potential, based upon enhanced 3d seismic, of a conservative 1.25 billion barrels potentially recoverable from the 7100' & the 8000' zones combined.

I was pleased that we got the detail on fair value as even if the worst happens here, and I hope it doesn't given the potential here, we will at least walk away with a significant amount of money for other projects.

Hi iamrich, It was from a combination of the MD&A report (that accompanied the quarterly report) and the prospectus.

'Essar Mauritius has replied with a notice asserting that it would have the right to terminate the Essar Nigeria Shareholders Agreement if ShoreCan does not remedy its alleged breaches by on or about October 9, 2018'. (MD&A)

"....although no formal proceedings have been commenced by either party, if the dispute escalated and formal proceedings were commenced, the Essar Nigeria Shareholders Agreement provides that if the other party commits a material breach of the agreement, the innocent party is entitled to terminate the shareholders agreement." (Prospectus)

So notice has been given by Essar that they have the right to terminate the Shareholders Agreement which according to the prospectus can only be if there has been a 'material breach'.

The prospectus has certainly given extra detail than encountered in the last prospectus and that could well be down to greater interest by shareholders and the amount of emails the company is receiving on various issues. If so that's a good result. Will have to go through it in greater detail later as you usually find extra little snippets that were missed first time around.

The placing for $1.927m around April 2019 is a welcome announcement. Firstly it takes away all the hassle of 'will there won't there' be a placing and 'when'. Secondly its not the placing itself that matters. We know we will continue to need money until we make money. What matters is what price that placing will be at. We cannot know that now because we await a number of pieces of news each of which has the potential to significantly effect the share price. So I'm happy to accept we are where we are on that.

On the dispute issue we now know Essar Mauritius are saying there has been a 'material breach' of the agreement and as far as they are concerned as the innocent party they are entitled to terminate the Shareholders Agreement and buy Shorecan's stake in OPL226 for fair market value.

Fair to say that unless this dispute is settled in the next six weeks or so (which could be the case) then we can look forward to Essar's next step being notified to the company after 9th October. Shorecan for their part are taking this seriously as they have already prepared a legal defence strategy to counter the stance taken by Essar. The company recognise there has been a breach but not a material one solely by Shorecan. I am with the other posters on this, seems reasonable that this is an exercise by Essar in getting as much as possible out of the partnership possibly before they exit stage left.

I believe it is very unlikely there will a Service Provider Agreement until the dispute is settled. I think some may be setting themselves up for an unnecessary fall by leaning the other way. Let's get the dispute out the way, hopefully in the best way possible, and then all bets are off as to where this goes on financing and final Ministerial consent.

That about sums it up for me Jiving, thanks.

I was fortunate enough to have a conversation with someone who is no stranger to disputes at this level and their opinion was that neither party would want to enter into any external agreements in such a situation. Similarly a Service Provider will want to see clarity and will not want to get drawn into a dispute. They pointed out that a Service Provider has nothing to lose by waiting which seemed a fair point.

What I did take from this is that it is more than likely that Art did not receive the letter from EM until after his podcast where he gave a timeframe for the Service Provider Agreement.

No need for apologies RDunc, thanks for that clarification. Its the start of all this that has got my interest. The proposal by EM that Shorecan buy them out. If that is the case then some serious managerial thought has to have gone into the making of that offer by EM. Can everything that follows after that then be seen as working towards that agenda? We would have reason to think so.

We seem to have EM making moves to offload OPL226 to Shorecan in July and then apparently sending written correspondence soon after that they could take it all if Shorecan doesn't meet its obligations by mid-october.

I'm lost.

'Also, it was relayed to me that the service provider will NOT be getting any share of OPL 226.'

Trying to get my head around this from Art's LSE interview:

'..we've been in discussion with a service provider to fund up to a hundred million dollars of services that are deferred payments in lieu of cash up front to be paid out of the cost of oil recovery as well as having a small financial interest in the project..'

Any help on how they get a small financial interest in the project without getting any share of OPL 226?

Many thanks for that RDunc, really helpful.

iamrich, I am certainly one of those waiting to buy once the dispute issue is sorted. My first consideration was the dispute was something that could be worked around by the the Service Provider with clauses but now I am convinced that isn't the case.

It's difficult to work out exactly what is going on here but every little bit helps that's why RDunc's post is interesting.

Hi RDunc , some bits on your post that are new to me. It seems I've missed something. Are your figures for full field development and EM's portion of that something that is already out there or have they come from your correspondence with the company? Also the bit about EM not being able to commit to funding their bit and proposing Shorecan purchase it. Was that from the company and was that this summer?

ATB NE

If I had an order in which I would want things sorted it would be Essar dispute, Service Provider agreement and NNPC approval.

The sorting of the dispute will give the other two bits of news a clear runway. Without that resolving I see those events as having an anchor attached.

BigBear, Art did say this project is massively undervalued. Perhaps he's worked out a strategy that if you can't get the share price to go up to the value you get the value to come down to the share price;-)

Jiving, It is all about the Essar dispute at the moment. This is a threat because Essar have issued a threat. I can handle disputes, the bit I'm not keen on is a date for compliance being issued.

The rest of the risk such as financing and NNPC/Ministerial consent has been a known known and quite easy to live with for me. This other business however needs the air of uncertainty lifted and as soon as possible please COPL.

i have corrected you twice on your misleading posts on this matter Rift. Let me do it a third time.

Again let me put down his exact words, not mine, on the Service Agreement at 5.02secs, '...our target is to get that concluded, hopefully, by the end of this month but things do take time.'

I'm not going to ask you to watch the dam (sic)' video Rift but it would be useful if you could at least try to understand it.