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I disagree that COPL would be better off without bidding for the CUDA WI. If they intend to go down a JV route for Fed Deep, acquiring CUDA's WI for pennies on the pound to later sell at a premium to a major in a JV, whilst consolidating and maintaining increased WI in BFU / CC, would make very good business sense. Why let another company in Fed Deep and existing BFU/CC fields for $10M-$20M when Fed Deep WI alone could be sold for ten times that in a JV later down the line.
There is logic in it, but I think a few here are wide of the mark trying to find meaning in it. Using that same logic, explain the following movement - 12th January it topped out at 36p, only to drop to 28.5p a couple days later. A circa 20% fall.
Nothing malicious in there that I can see other than opportunistic traders making the most out of the volatility. It's how a share price moves and how some ply their trade. There are many many examples of this.
N.O.N there was clearly a requirement to have cash to bid for CUDA, to put off other bidders. Albeit, I certainly didn't expect it at the time. What reason can there be for another fundraise?
Nothing has changed from the RNS a week ago other than a sell off following a big rise. That is very normal. We can't sustain 10-30% days, a sell off was inevitable.
Now the board is inundated with placing speculation and fear mongering, as it is perceived as the easiest explanation for a sell off. I completely disagree with that theory. It is normal market mechanics
Bob, I'm surprised to see you along with many others get caught up in this speculation which has no basis other than emotional fear. The company have circa $25m available cash and there is no indication they need more.
The share is volatile. Plain and simple. It's risen a lot the past week. There was always going to be a dip and consolidation. It's how the market moves. The sell off will run out of steam, like the upward spike, and flip. Ride the wave if you have conviction in your investment.
I've been wondering about the timing of the release of news on the discovery coming before the CUDA bid deadline. As discussed here, CUDA don't have a WI in the Federal Deep prospect - at least not in the BFU-14-30VF well. For me, it is still to be confirmed whether CUDA could retain interest in the Fed Deep prospect over the whole of the leasehold.
However, if it is Arts plan to include some equity in the bid, it would work in his favour (and ours) to have a higher share price.
He has waited until the marketing on CUDAs assets has been circulated, therefore excluding the extent of this discovery but also allowing sufficient time following news for a rerate to occur on the share price prior to the deadline.
If that turns out to be the case, cudos to Art. He's played it extremely well.
I agree longfell. I highly doubt they could fill a 1M sell at 37p that early in the trading day. I suspect that has been filled from last week, hence the issues many had trying to get a quote to buy from the bell this morning.
Regardless of that, volume continues to be high. A lot of shares changing hands at ever higher levels, providing a platform for moving up. All very positive. Momentum is upwards and much to look forward to in terms of newsflow.
Ideal scenario in my opinion.
COPL are successful in the bid for CUDA's 27% WI in Wyoming. Art has approx. $25M available for the bid, which should be more than sufficient. COPL maintain existing production WI interest in the BFU/CC going forward, ramping up production to 5000bpd. They can acquire this relatively cheap.
Federal Deep prospect is farmed out 51/49 or similarly apportioned, COPL remain as Operator. COPL renegotiate secured credit facility, extending it to include prospective CAPEX commitments for Federal Deep field development. However, with a farm-out, that may not be necessary.
FTI Consulting have uploaded a new report on CUDA, dated 22nd December which provides additional information on the receivership process: http://cfcanada.fticonsulting.com/cuda/docs/First%20Report%20of%20the%20Receiver.pdf
Key points:
CUDA US Assets:
- 27% WI in the Powder River Basin
- A large, contiguous ~16,500 net acre land position and 56 proved developed wells currently producing approximately ~500 BOE/day of oil
- A third-party reserve report completed as at June 30, 2021 estimates the net present value (using a discount rate of 10%) of the proved reserves at US$66.4 million.
Liabilities
- Approximately $13.7 million first lien secured debt owing to Tallinn
- Approximately $56.6 million second lien debt facility (“BFI Debt”) owing to Bridging Finance Inc.
- Approximately $2.0 million owing to Southwestern Production Corporation (“Southwestern”) pursuant to a lien filed for failure to pay operating expenses associated with the US Assets [subject to court case on 30th December. Outcome yet to be confirmed formally]
Key Dates
- January 5 to February 3, 2022 – work with interested parties towards submitting bids, complete management presentations, field questions from interested parties;
- February 4, 2022 – non-binding bid deadline;
- February 4 to March 4, 2022 – negotiate formal binding purchase and sale agreement or restructuring proposal with interested parties, assist with final due diligence;
- March 15, 2022 – binding purchase agreement signed, with deposit
- April 2022 – seek Canadian Court and US Court approval and close transaction.
It appears many can't see the bigger picture at play here and the magnitude of todays news, rather focussing on a half day trading. This will play out over the months and year ahead.
Wait on the Ryder Scott report to verify reservoir value but I'd hazard a guess that 150M-200M of the 1.2 - 1.6B barrels of oil in place will be converted to 2P reserves, with a value of $7 per barrel in the ground. Current Shannon field has 31M of 2P reserves from 196M barrels OIP. This new discovery is easily valued at over a billion dollars but won't be reflected in the value of the company in a days trading.
If Atomic was acquired on an acquisition cost per barrel of $2.18 on 2P reserves (albeit at $38/bbl), theoretically and using the same metric, a buy out now may look something like $300M-400M.
And there are some investors disappointed today!
The potential of the new discovery appears incredible: Over 1 billion OIP and production at 51kpd - 153kbpd over the leasehold. It will obviously be phased in terms of drills but wow. What a discovery!
We estimate the Frontier element of the discovery to cover an area of approximately 51 square miles with the capacity of up to three horizontal wells per square mile each initially producing 1,000 - 3,000 barrels per day.
I'd suggest the most likely news will be regarding the legal case that was planned for 30th December but settled prior to the hearing. May be coupled with an operational update but suspect Art will keep cards close to his chest on operations this month.
A reasonable expectation is it not, that investors who have parted with their money see signs of a turnaround after months of negativity. You seem offended Sparkz and not dropping the subject, but I recall not so long ago that you were bullish and posting similar so I find it slightly ironic. The beauty of opinion is that everyone has one, but don't get offended if people disagree and challenge you on these boards.
Tiburn, interesting to note that the Drilling Edge site has a different SWP production total than that of the pipeline.wyo.gov site for September.
Drilling Edge: 58.1kbo total (1.93kbopd average)
Pipeline Wyo: 56.3kbo total (1.87kbopd average) [BFU unit + CC]
It puts in to question how accurate the recent production figures for October & November that have been posted on this board from the Pipeline Wyo site. The production figures in November from that site showed an overall decrease (51kbo) which was converse to what Art suggested in a RNS 22nd Nov, stating a 700bopd increase (35%) [2700bpd gross].
This isn't placees selling in my view - any bucket-shop types will have forward sold and those genuinely buying in to invest will be sitting it out. You don't invest large sums to sell at a loss in such a short timeframe when SP is circa 30% of NAV.
Look at the value of sells, <£1k - £10k typically. This is retail selling for probably several reasons - itchy feet, frustration, boredom. In my opinion, this is a direct consequence of having such a large retail investor base (resultant from continued large equity raises). Hopefully with Nigel on board, we can start to attract private investors and institutions once the company properly starts to develop and enhance the US Assets.
John, that message from seems to suggest that the cement squeeze to isolate Frontier was successful (third time lucky) and rig operations have moved to completing Dakota. If that is indeed the case, then fantastic news and we may expect confirmation of flow next week.