Member Info for rossannan

laallee

Quite right, it was a great album. Pour Some Sugar on Me is a classic.

laallee

25p would be a M/C of £785k? Do you not mean (assuming no dilution) £785M? Right now it is getting close to an MCAP of £100M, which is a big number in itself. What has changed today apart from sentiment and WTI?

Ibiza28

That is a good question to ask, particularly from a funding perspective. Equity for exploration, debt for development - that is the saying and it describes reasonably accurately what happens in the O&G world. An appraisal well sits in between and has a better chance of success than an exploration well like P1 but less than a development well. It is therefore of less interest to a bank than a development well - the bank would likely ask you to come back in once you are able, on the basis of the results of your appraisal well(s), to start drilling development wells. This is why oil companies have to rely on equity raises, convertibles, farm-ins etc. to get themselves to the development stage and why in a success case (before, on and after the success) the multi-bag potential is always being chipped away at in some way, shape or form.

jimtheknow

Very good summary. All the Punch and Judy stuff certainly adds no value. Everyone has now said their piece, so, as you say, “we need to switch off and see where the chips fall” (although in the meantime it is probably worth keeping an eye on WTI and, to a lesser extent, the T&T Budget on 5th October).

Starchild

Really? What about recent speculation about a lowball offer from a major? You did not exactly dismiss that out of hand. This is something you used to see on the HUR BB - folk bemoaning the low share pice and talking about how a major could steal HUR from them. HUR is a good analogy - the majors, particularly these days, tend to hang back and let these things play out, for good or for ill.

Starchild

I have seen a lot of posts on here suggesting that the majors are likely to become involved in the near future, even at this very early stage. This is reminiscent of what you used to see on the HUR BB. My contention is that the majors in fact tend to let these things play out, however wonderful PIs may believe the prospects to be, and that suggesting otherwise is just empty ramping.

Linton78

More fool us though?

Looking at HUR’s news today, the anticipation that the HUR share price showed late yesterday was badly misplaced. So many oiler BBs are stuffed with “where are the majors?” posts. HUR’s was and you can see this here as well. The majors are not stupid. They hang back in these situations for a reason and save themselves a lot of money in the process. PIs take the risks so they don’t have to.

Starchild

That all sounds great. But at $38 WTI it also sounds a bit like wishful thinking. Is the first order of business not BPC cleaning up its existing funding arrangements? Because once they become unconditional and provide a proper backstop, BPC might have more luck courting alternatives.

Ibiza28

Just to be clear, no-one is or was suggesting that your figures are based on anything other than an all you could ask for success case or that you have made the mistake of discounting the possibility of either a duster or more limited success. The point I am making is that your figures do not work even in an all you could ask for success case and that the folk who are talking about 25p or 40p are a lot nearer the mark.

Ibiza28

I don’t really see the distinction.

Starchild

In his early morning post of 5th September, Ibiza28 said “The figure i would settle for now is around £2-£2.5 per share.”

I am here to be part of the conversation about BPC. Simples. It would be very naive of me to imagine that my posts had any traction on the share price.

Selling out involves a judgement about the current balance of risk and reward. As does holding. You pay (or retrieve) your money and take your chances.

Starchild

No, it was not your £2-2.50 prediction, but as you say you became involved. It seemed to me that you were trying to defend the merits of the prediction itself rather than simply just defend Ibiza28 against my perceived discourtesy in disagreeing with his thinking. In any event, particularly after CoMan’s contributions on appraisal wells, it became clear that any such prediction was nonsense unless 2BN barrels of P90 could somehow be booked on the back of Perseverance-1 and Perseverance-2 alone. That is simply not realistic - CoMan certainly hasn’t come back on that point to suggest otherwise.

In any event, the £2-2.50 argument was already flawed because it completely ignored the bag-reducing potential of the existing CLN funding and the major early stage funding event that the drilling of P2 would represent.

For the avoidance of doubt, I am more than happy to issue a multi-day dilution warning. Anyone who invests in an AIM oiler, particularly one in the exploration phase rather than the development phase (where bank funding is at least a possibility), and who doesn’t expect dilution at every turn (and factor it into their calculations) is being dangerously naive.

Starchild

You and Ibiza28’s concept of a 100/125 bagger £2/2.50 takeout, based as it is on 2BN barrels of P90 being booked on the back of Perseverance-1 and Perseverance-2 alone, is just plain wrong. I have previously put it to CoMan, for example, that this concept is unrealistic and note that he has not come back to suggest otherwise. I am not interested in mocking, insulting or patronising you or Ibiza28 over your thinking on this, just in pointing out that it is wrong, given how it completely ignores the well understood funding/dilution dynamic of oil exploration: how the necessary CAPEX and the associated funding events dramatically reduce the potential “bags”. As I said before, I have no problem with folk talking about 25p or 40p best case scenarios that genuinely could happen, but talk of £2 or £2.50 just cannot be left unchallenged.

I note that although the BPC share price has not moved since I opened my position here, WTI has declined significantly. Against that background I retreated to the sidelines first thing this morning, taking a small hit across the spread.

Ibiza28

There’s a useful article about it here:

https://oilprice.com/Energy/Oil-Prices/Do-Oil-Market-Fundamentals-Justify-40-WTI.html

Harryoffdock

Yes, CERP tends to consume rather than produce money. The latest MEEI update (for July: https://www.energy.gov.tt/wp-content/uploads/2020/09/MEEI-Consolidated-Monthly-Bulletins_January-July-2020-04-Sep-2020.pdf) suggests that its current production may not be that great, probably significantly less than 500bopd right now (you want the column in Table 1A headed HPCL - IPSC: almost all of CERP’s production is included in that figure but the figure also includes other producer(s)). The only significant positive that CERP may produce in the near future (could be anytime in fact) seems to be a repeat of PRD’s $1.75M offer, give or take, for FRAM. That would be a very welcome development - one of those small things that could possibly make bigger things happen.

https://oilprice.com/Energy/Oil-Prices/Do-Oil-Market-Fundamentals-Justify-40-WTI.html

Ibiza28

I think you will find that most of the folk who welcomed the replacement of the previous LGO BoD, who were an absolute shower, by LK & Co. were latterly pretty disappointed, to say the least, with what their 3 years with LK delivered. For a start, three years later, for all that LK & Co. cleaned up some of the mess, CERP was producing pretty much the same amount of oil that it was producing when he took over. As for Saffron recently coming online, are you not aware that its initial production rate was only 25-50bopd? You might want to check with BPC whether Saffron is producing anything at all right now.

J99MES

Correct - CERP’s approach of running on empty and relying on LIND meant that CERP brought very little cash to the merger party and saddled BPC with the LIND debt, which then had to be addressed via Trafalgar who duly gave the BPC share price a battering on their way out.

jimtheknow

Don’t Stena also have a subscription option?