Member Info for rossannan

MrMagoo31

No, they are only fully funded up to the point that they start to drill the SWP exploration wells. Look at the per well costs that LK has quoted for that exercise. LK needs to come clean about the funding of the SWP exploration wells - he must realise that the idea of them being funded by free cash flow from other operations bit the dust long ago. One answer would be crack open the LIND facility before it expires. Arguably that would be better for shareholder value than issuing more shares.

It speaks volumes that CERP chose not to answer this question:

“In your 10th October RNS you confirmed an end Q3 2018 cash balance of US$1.97 million (end Q2 2018: US$2.35 million). What would that end Q3 cash balance have been with Steeldrum’s cash stripped out?”

Instead they tell us:

“• The Company's cash position was announced at US$1.97m at the end of September 2018 in the Q3 update and we have since raised a further £2.5m (gross)
• This was used to fund the following:
o Repay the North Energy Capital AS loan facility in the sum of US$1.25 million (instead of the intended drawdown from the 2018 Lind Facility which was referred to on 10 October 2018 in the Company's Business, Operational and Financial Update);
o Establish and implement a multi-well drilling campaign on the Steeldrum assets and also in the South West Peninsula ("SWP") - driven by value and "best bang for our buck"; and
o Upgrade facilities in the SWP, particularly at Bonasse and Icacos, to speed up oil production growth and sales and also allow for early sales from any exploration success at the SWP in 2019”

So we don’t have figures for the last two items, but they will come out of the remaining cash of $3.94million, along with the cost of the raise. Is what is left after that going to be enough to kick off the initial foray into SWP? No way, particularly if you factor in even relatively modest cash burn between now and the end of Q1 (always remember that being “operationally cash flow positive” is not the same as being profitable).

Folk can kid themselves that Goudron WF and/or Bonasse/Icacos/Steeldrum operations are suddenly going to eliminate and reverse the cash burn. They might over time, but not quickly enough to fund the initial exploration drilling in the SWP, not if it is going to start in Q2 anyway.

CERP chose their words very carefully. The question was: “Does Columbus Energy need to raise any more money?”. The answer was more than a little evasive, referring to “funding our ongoing activities in Trinidad from our own available cash resources”.

Is exploration drilling in the SWP an ongoing activity? Not really - it has not started yet. I see what they did there. Until LK comes clean about the funding of this drilling, this is a barge pole stock for me, particularly with WTI where it is.

It is hard to imagine that LK is simply going to let the LIND facility expire in January. If he does and then hits shareholders with a placing shortly afterwards to fund exploration drilling in the SWP, the shine will well and truly have come off him.

willowpillow

To be fair, you could get them for 2p at one point on LK’s first day.

http://www.energy.gov.tt/wp-content/uploads/2018/11/MEEI-Consolidated-Monthly-Bulletins-January-September-2018.pdf

Not really new information given that we already have an overlapping production figure for the end of Q3. Next month’s Bulletin will be interesting though - did October see the IPSC figure increase? If it didn’t, CERP will have to go some this month and next to hit that 1000bopd target...

bigmj

How confident are you that 1000bopd will be confirmed? Are you envisaging this being a peak figure hit sometime before EOY or the actual figure at EOY?

http://www.searchanddiscovery.com/documents/2014/10626persad/ndx_persad.pdf

No answer as yet to either of my Questions to the Team:

“In your 10th October RNS you confirmed an end Q3 2018 cash balance of US$1.97 million (end Q2 2018: US$2.35 million). What would that end Q3 cash balance have been with Steeldrum’s cash stripped out?”

“What efforts is the Company currently making to lobby for reform of the Supplemental Petroleum Tax?”

are, not is

With luck they may be more inclined to answer this one than my last one.

That’s a fair point about SPT, so, FWIW, I have submitted this Question to the Team:

“What efforts is the Company currently making to lobby for reform of the Supplemental Petroleum Tax?”

Gibbo1066

You would think, but it doesn’t appear to be working.

Gibbo1066

This is the problem, it doesn’t matter if you double the asset base or the MCAP or both if the share price stays the same. As I said, I have no doubt about LK’s ability to grow the assets and the MCAP. Shareholder value is a different thing, but when it comes down to it this game is all about shareholder value. Nothing else matters, as faz7475 might say.

Gibbo1066

I would suggest though that the initial targets do not have that transformative potential. They have the potential to prove up a decent asset that could offer a decent return subject to the necessary funding being secured, but surely only a deep well in the SWP has the potential to be truly transformative.

Gibbo1066

Yes, LK is not NR and presumably the company is now much fitter for purpose from top to tail. When LK appeared on the scene it did not take him long to identify and address many of the things that folk had not liked about the previous regime and many things that they had not even known about. My problem is that he has not lived up to his rhetoric about dilution. The narrative after Schroders appeared on the scene was about CERP pretty much washing its face going forward, allowing that lump of money largely to be retained for the initial assault on the SWP. But LK did not have the handle on Goudron that he thought he did, with all the cash flow consequences that we have seen, and it is now far from clear how further issuance can be avoided ahead of that initial assault on the SWP in mid-2019.

Bamps21

Recent history has shown that that kind of aspirational statement by LK is not something that shareholders can take to the bank. Accretive is as accretive does.

Gibbo1066

I am sure that LK will continue to grow the business, but too much cash burn can lead to dilution and before you know it the business has grown but shareholder value hasn’t.

Is the SWP is the answer to everything? I am not clear what the initial shallower wells will have to offer that is so much better than the wells currently being drilled by, say, TXP. That kind of production is capital intensive and can be a bit of a slog - just look at what happened to TXP today. A deep SWP well could indeed hit the mother lode, but a well like that would be a very expensive proposition.

It sometimes feels as if CERP is more about producing rosy scenarios than producing oil - I suspect that not a few of CERP’s retail investors are looking to make their money through other retail investors going mad for one rosy CERP scenario or another. My pick in the sector, TRIN, is boring by comparison. No exploration, no talk of big deals, just development drilling onshore and then offshore, stretching into the future. Definitely about producing oil though. Works for me.

Gibbo1066

The conclusive evidence one way or the other would be CERP’s answer to the question that I sent them yesterday:

“In your 10th October RNS you confirmed an end Q3 2018 cash balance of US$1.97 million (end Q2 2018: US$2.35 million). What would that end Q3 cash balance have been with Steeldrum’s cash stripped out?”

Given though the $1million plus quarterly cash burn up to that point, culminating in $1.7million of cash burn in Q2, and the way that the Q3 figures were dealt with (suggesting to me that they still have something to hide on the cash burn front), this is a lot more than speculation/supposition.

Just to be crystal clear, it’s all in my posting history and I won’t be responding to any more posts like that (even just to say that it’s all in my posting history). If anyone actually wants to talk about CERP though, I would be happy to respond.

steward1

As I said, if anyone is interested, it is in my posting history. After I had posted it for the umpteenth time earlier this year I made it clear that I wouldn’t be posting it again.

ColonelDrake

Isn’t that the problem though - it’s always going to be better going forward but it never quite turns out as expected, sometimes not even close. So far self funding has proved to be a bit of a mirage. What has changed to address the cash burn that can be extrapolated from the historical data and which indicates that the funds from the recent raise will be pretty much exhausted before even a shallower well is drilled in the SWP? If the Team have the nerve to answer the question that I emailed them yesterday, the picture will become a lot clearer. In the meantime, I think it is safer to assume from the way that the Q3 figures were dealt with that they have something to hide on that front. I would suggest that denial is no answer to cash burn. Perhaps LK should bite the bullet and crack open that LIND facility while it is still available. The alternative seems to be issuing more shares in Q1 2019.

steward1

Check my posting history if you want the answer to that one - I have provided it often enough!