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Good to see sentiment on the turn here. There was much hidden in plain sight in Art's interviews and I was pleased to see him provide much more flesh on the bones. The absolute key points were NNPC are dictating a faster pace, we can surmise Sclumberger are by far the most likely preferred $100m service provider, the non-dilutive effect of the financing package at the front and rear end (service provider (Schlumberger) $100m front end and Bank of Mauritius/Trafigura $50m rear end) and last but not least there is a near term schedule for this to happen.

Is Art right that this given the resource here this is now extremely undervalued? I wouldn't argue against that point.

Harry I can only echo marmie's sentiments. I'm certainly no expert and I have never throughout my posting history given a prediction on a share price and for good reason, until it happens it really means nothing.

ATB NE

Your presence at the AGM has been very useful Cd. Its the little bits that make up the whole jigsaw as they say.

ATB NE

Yes the dilution Cd. If the previous burn rate was anything to go by I think we will see a figure around $1.8m left at the end of the second quarter. Given that we are now a month and a half beyond that we could well be down to $1.25m presently. That's still enough for just over three months of expenditure. Art has previously raised up to 6 weeks before lights out so we could have another 6/7 weeks before he hits the button again. Given that he is anticipating significant news within that period I would hope, if accusations of feathering nests is to be avoided, that he gives us that opportunity to get the news first. I do expect him to do that for us.

Part 3

The service provider agreement will finance the majority of getting the oil out the ground such as jack-up rig etc but we also know the financing supporting how we get the oil from the rig to storage and then transport. That is by the recently announced $30m-$50m senior secured facility agreed with The Mauritius Commercial Bank Limited ("MCB") and Trafigura PTE Ltd. (Trafigura"). The Facility would provide funding for all production related expenditures following the drilling and testing of the initial production well.

So things are most definitely moving forward and we have a more definitive timeline. NNPC will also have to approve the contractors and bid prices. i don't know if that will be included as part of the near term FDP submission to the NNPC.

Other points of note: There is a general election on 16th February 2019 and despite his landslide victory in the previous election the current president operating under an anti-corruption policy may not be re-elected.

Burn rate: The question has been asked as to why the burn rate (operating expenses) has not been reduced while we await NNPC/Ministerial approval. Arthur stated that he didn't want to lose his staff. In fact from very early on it is his staff, including him, that seems to have been the leverage for them getting involved with Shoreline and OPL226. He has retained many key members from his time at Oilexco and their combined experience appears to be what is needed to hit the road running. It seems a lot has been going on such all bid doc's are ready to go out for services, the legal work on funding has been ongoing, the geoscience work on the accelerated drilling schedule (now going to be 3/4 wells not one) as prompted by the NNPC has also been ongoing as well as the work around the service provider agreement etc. From the recent interviews I can now see quite clearly why Art hasn't reduced the burn rate.

Production costs per barrel as of 2016: http://graphics.wsj.com/oil-barrel-breakdown/
I don't know if that includes royalties and taxes but it is worth noting that we have a reduced tax status by having a Nigerian partner.

Nigeria is also seeking to lift the number of barrels per day from 1.8m this year to 2.5m in the next few years.

Part 2.

The critical component from the start apart from the oil in place is the partnership between COPL and Shoreline which is an indigenous company. That opens the door to an EPS (Early Production Scheme) and a fast track mining licence. Foreign companies operating on their own have to go through hoops that Essar Nigeria (Shoreline 40%/COPL40%/Essar20%) won't have to. This is to enable funds to be made available quicker to indigenous companies operating in Nigeria and by association those foreign companies engaged with them on the same project).

This absolutely underpins everything in terms of time and money spent in developing the field as well as the likelihood of it getting developed at all.

This joint working also has benefits because Shoreline has excellent contacts within Nigeria and the government.

At present we await the acquisition of Essar Nigeria by Shorecan to be approved by the NNPC (National oil Company) who is the concessionaire under the PSC (Production Sharing Contract) existing at the time. The extension to this ran out on 31st December 2017. If there were any doubts as to whether the acquisition and extension to this would be approved by the NNPC before going to the Minister for ratification then the recent LSE interview puts that to bed. At the time of its expiry the remaining commitment on the first phase of the PSC was the drilling of one well. The interview makes it clear that the NNPC have asked the company to accelerate their plans and now the first commitment on the first phase will be for three to four wells. That request it seems is also behind a FDP (Field Development Plan) being updated by the company before submission as part of its PSC application.

While on the subject of Shoreline but also on the subject of the LSE interview it was interesting to note that Arthur stated they had a 'preferred Service Provider'. The service provider may, please note Arthur stated he was 'hopeful' not that it 'will', be notified this month. I suspect that Shoreline will be having a healthy input to who is the preferred service provider given they hold a 17% stake in Schlumberger Testing & Production and Schlumberger have agreed a $700m service agreement with the NNPC on the block next door. That block has the Anyala-1 discovery well which has 55 metres of net pay in the 7200’ sand which I mentioned in the previous post. Arthur has also mentioned the synergies that could be available with Schlumberger's services. No prizes if it is Schlumberger who are the preferred provider.

This service provider agreement will mean that the majority of services to get to the point of the oil coming out of the ground will be done by the service provider who will then be paid from subsequent oil revenues i.e. the debt is deferred. The agreement being sought is for $100m of services. The service provider will also be given a small stake in the company.

I've got a bit of time off from shopping so thought I would briefly outline the investment case here from my research in case it is of benefit to anyone.

Part 1:

Firstly a word of caution; The CEO is widely regarded as having pulled a fast one last Sept/Oct to get a placing away. He did undoubtedly talk up the likelihood of financing and that caused a spike on the back of which a placing was made. In a nutshell financing didn't materialise but a placing did. Pro's and con's; some caught on a spike but we are where we are now in terms of less dilution than would otherwise have been the case. His standing in terms of reliability amongst some holders (including me) subsequently suffered but the reality is that our balance sheet may be all the better for it in the future.

The acquisition of Essar Nigeria took place in Set 2106 when COPL partnered with Shoreline under a vehicle named Shorecan (the "Company") to obtain 80% of the zone OPL226 offshore Nigeria. The remaining 20% remains with Essar Nigeria.

OPL226 has already had various degrees of seismic, both 2D and 3D, undertaken on the block in addition to five wells being drilled. The last well discovered oil in the 6100' sands of what the company has named the 'Noa complex'.

The company initiated an independent report in accordance with Canadian National Instrument 51-101. This gave contingent recoverable oil as:
Low estimate (1C) - 11.5M barrels (11.5MmBbls)
Best estimate (2C) - 16.1M barrels (16.1MmBbls)
High estimate (3C) - 20.7M barrels (20.7MmBbls)

The company have gone further and carried out work that was previously unavailable to Essar to enhance the 3D seismic interpretation. The company is confident that due to the exact physical data that exists from the large number of other offshore wells drilled in Nigeria and particularly from those surrounding OPL226 that they can see dramatic divergence between water saturated sands and hydrocarbon saturation. Consequently the company has interpreted a combined additional thick pay sequences of over 5 billion barrels from the 7200' and 8000' zones on which they conservatively put a 25% recovery factor (1.4B recoverable) which would give 560MmBbls net to COPL.