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Always going to be risk in any drill, I've never denied that. Oil and gas investments by their nature are high risk high reward. Depends on your appetite and assessment of the risk but my point was there is a very clear investment case in the project, particularly at £3M MCap against 100s of millions of annual revenue.
It's not hard to work out and all the information is in public domain. Take this first phase development plan (to end of 2020): 4 wells, each 2.4k to 4k bpd net to COPL = 9.6k to 16k bpd x $70 = $245M - $409M per year revenue net to COPL. Who to say we aren't inundated with finance offers? Seem to remember 3 service providers very keen on offering not only services but stumping up financing as well.
Sell the asset?! Why? The asset is potentially worth billions of dollars of revenue over life of field, subject to commercial oil being found. Copl are 3 months from the first drill of a huge field development in one of the most prolific oil regions in the world and once developed, the asset is a mid-tier company maker. Lots of work to get there but the potential is there. The SP will do what it does until the uncertainty around funds resolves itself but I find it very hard to believe COPL will be valued at £3M once the project kicks off in earnest. That is less than 3 weeks revenue of one well at the low estimate of 2,400 barrels of oil net. May not see it overnight but in months, this will see returns from here.
Bigbear. Not true. He did interviews in January and the same story was told, same people shouting about a placing. We know he needs operational funds from the finance results, that's it. What form that takes is yet to be announced, but as indicated, there are several options available not necessarily equity. Alex - CLN is still equity financing but in a different form. It dilutes shareholding. Non-equity financing - debt financing, deferred payments, bridging loan, among others.
Agreed, Jiving. Evidence points towards a single preferred Service Provider now. As you quite rightly pointed out, ShoreCan wouldn't be able to go ahead with inspecting the rig without a service provider provisionally in place. Interestingly the MD&A now talks of a single SP. No mention of the 3 service providers that were previously discussed. "ShoreCan is in late stage discussions with the Service Provider"
Sub, they will issue an update regarding funding. It's a material change in the company, therefore obligated to publically disclose that information. Look back through the RNS history. They have updated the market regarding significant changes in company, including all raises. I see your point, that updates have recently only been through quarterly or annual returns. I think funding news is different though. I also reckon we will eventually land in a news rich period leading up to the drill.
Sub, the update on Friday was positive in my view but it didn't address one key aspect: operational funds. It's a massive uncertainty - how much, what form, how dilutive etc. I can understand people waiting for that to clear first. We should find out this month and then, finally, I hope we can push forward in a positive way.
Parslane - A lot of people think a placing is the only option here. I don't think that is the case. I've added today as I believe there is more than a reasonable chance that debt financing will be used to fund operations. Particularly because we're looking at near term progression of the asset, the current depressed price is unattractive for raising, and the fact that several organisations have already accepted or in discussions about accepting debt financing. Oil price has stabilised (and is indeed rising), rig has been sourced and is going through inspection, and posting of the performance bond to be accepted by the regulators in the coming weeks. I was quite pleased with the update on Friday to be honest. We'll have to wait and see but l'm happy enough to see it through from here. I'll see returns from this level in a few months.
This is the full extract from the release Friday. There are a number of options available, not just equity financing. "To mitigate this risk, the Corporation has been in discussions with certain shareholders and other organisations to obtain funding to meet ongoing obligations. In order to fund future capital, general, administrative and other expenditures, the Group will need to obtain additional capital through debt financing, equity financing, a combination thereof or such other means of financing as may be available to the Corporation or through the disposition of assets" I still question why debt financing isn't considered the most attractive option now. Certainly the appetite for it seems. Berta, they can't start drilling without ministerial consent, but if imagine they've been told to progress the preparations. Posting of the performance bond would be one of, if not the last things to do.
Hi NoEasy. It is without a doubt extremely frustrating. It's a very attractive prospect and for the value of the company, it's such a huge disconnect. That's why it's so infuriating for me. The company should not be valued at £3M for the assets they have. We need clarity on finances going forward. I do think Arthur has something up his sleeve other than a placing. I just can't see him waiting for the SP to depreciate this much just to place at the bottom when other avenues are possible. We won't move until that has been cleared up. It's the huge elephant in the room. I remain confident (more fool me) that we will get there and now is not the time to sell up. Each to their own but the project is too big to sell up now IMO.
There is such a toxic sentiment here that the asset, the project is being completely overlooked. The feelings towards Arthur and the company over-ride any optimism whatsoever. £3M! Never thought I'd see that MCap with the asset the company has. It's priced to fail when every indication is that the project is finally gaining significant traction. As I've said before, I don't think we'll raise through the market. At least, not at this level. Debt financing, if available - which news indicates is the case - is absolutely an option. We are in discussions with banks, commodity trading institutions, finance institutions, service providers. Why wouldn't one of these players offer a loan for deferred payments or a slice of the pie?
It doesn't look like that at all. It looks like the project is going ahead. I'm going to stick my neck out and say funding will be through debt financing through deferred payments. It has to be infinitely more attractive than raising through the market. And it has to be an option. Why not? They are in talks with a recognized Nigerian bank for the performance bond, to be paid back through deferred payments. What's stopping Arthur bolting on a couple million. It has to be considerably less dilutive to the company.
Try read it again woods. Near term fund raise... through debt financing, equity financing or a combination. Further, we are in discussions with several financing institutions, including banks. A placing may not be imminent at all.
$1.9M three months ago. So end of April - start of May I'd guess at However I find it interesting they are in talks with a Nigerian bank regarding the performance bind. Surely an option may be to bolt on £1-2M extra for operational funding. Good update though. Things are indeed progressing
NoEasy, that was my suspicion as well. An up to date resources estimate to feed in to a revised detailed cost model to support closing service provider agreement. Just speculating but hopefully news tomorrow will shed some light on it. Jiving, I'm not exactly sure what my expectations are for tomorrow but I want to know we are on track for the summer drill as set out. My biggest frustration is that the schedule keeps slipping and is too vague. If targets are set and they are consistently missed, trust is lost and culminates in hugely negative sentiment, as we've seen. Sentiment is the real driver in penny stocks. I'm hoping, but not expecting, he has a positive forward plan for operational funding. I suspect that's the single biggest aspect holding the SP back currently. Certainly need that addressed before we start moving with real intent. Similar to your opinion Jiving with regards to the big milestones, I'm not expecting news tomorrow to state we have approvals or SPA finalised. I would expect detail in there with regards to aspects of it - letters of intent for drilling, permits progressed or submitted, etc.
"No certainty given that any oil resources will be commercially viable - NOT GOOD!" Why would a company such as NSA guarantee commercial viability? Another ill thought attempt to sow discord. It's a caveat for gods sake. You will find it in all of these types of reports. Commercial oil can only be ascertained by drilling the reservoir and carrying out production testing. Ministerial consent, including consent from NNPC, has not been finalised as of 7th March, as we all know. I'd struggle to understand why NSA would be informed of that milestone for inclusion in a reserves estimate report before public release of that news. No mention of the vast resource potential at OPL226... 300 million barrels - 1 billion barrels of unrisked prospective oil resources.