Member Info for rossannan

faz7475

I wish!

But as ever I am happy to leave the proper analysis to HH...

Decent increase in July IPSC figure - chances are that a significant part of that is attributable to Goudron/TI:

http://www.energy.gov.tt/wp-content/uploads/2018/09/MEEI-Consolidated-Monthly-Bulletins-January-July-2018.pdf

offerman

That seems a sensible production speculation, I would in fact speculate it to be more like 800-900bopd, assuming that there isn’t a hitch with Steeldrum. The share price is harder to call and will depend on sentiment at the time.

Agreed that LK is refreshingly transparent, in fact LK’s attitude to shareholders is fundamentally different from his predecessor’s. LK can though get a bit carried away - his suggestion that the LIND facility is just insurance seems ridiculously over-optimistic in the light of the current cash burn. You also mentioned his throwaway comment about 50,000 bopd in relation to the SWP. That comment, I would argue, was potentially misleading in the context of what he is actually planning for next year - 2-3 wells (and only one of them in H1) targeting the shallower, fairly standard T&T (Forest, Cruse etc.) prospects. As I said to you the other day, if he wants to start talking about the potential for big numbers that would have to be in the context of Cedros-style big (i.e. deep) drills and they are not on the cards anytime soon.

Garnhiem.

So on that basis it does not look as if Bonasse well reactivations are the solution to the cash burn; it is probably reasonable to expect even less from Icacos workovers and while it is too early to start describing Goudron WF as a bust, even LK’s own figures demonstrate how little he is (now) expecting from Goudron WF in the short term.

So, to be clear, when you talk about “a US$1m draw from the US2.4m (cash in bank) over the next two Quarters”, do you mean US$1m per quarter or $500,000 per quarter (because I cannot see how it could be the latter)?

Garnhiem.

No, it wouldn’t, because even if LK could get Bonasse up to 100bopd in relatively short order that in itself would involve a significant initial cost - even if Bonasse reactivations could bring it to a stable (with ongoing workovers) 100bopd as early as Q1 2019 the cash crunch would already have happened and CERP would already be well into the LIND facility. Even the 2-3 relatively shallow SWP wells that LK has in mind for 2019 do not look organically fundable on CERP’s current trajectory.

BMB

It was in one of the recent medias (I believe it was the AGM Presentation) and I think it was meant to be an actual EOY figure, not an average.

Garnhiem.

The problem with Bonasse is that the most that it is going to contribute within any useful timescale is 100bopd.

Rugby2015

I constantly talk about cash burn because CERP is constantly burning cash.

I thought that LK’s end of year target was 1000 bopd+. Did I miss a downgrade?

HH

I suspect that a new CPR wouldn’t be very flattering when it came to Goudron...

HH

No idea, just thought it was an interesting reference.

T&T PM Speech on restructuring of Petrotrin yesterday evening:

'As the com­pa­ny now fo­cus­es on sig­nif­i­cant ex­pan­sion of ex­plo­ration and pro­duc­tion ac­tiv­i­ties, this will pos­i­tive­ly im­pact the com­mu­ni­ties of the south west­ern penin­su­la. It will be a sig­nif­i­cant re-in­vig­o­ra­tion of the oil econ­o­my in these ar­eas bring­ing much new or ex­pand­ed busi­ness not just for Petrotrin but op­por­tu­ni­ties for the many ser­vice com­pa­nies which will be as­so­ci­at­ed with this new busi­ness mod­el.

In the com­ing weeks the Gov­ern­ment will take part in the an­nounce­ment and par­tic­i­pa­tion in at least two sig­nif­i­cant in­dus­tri­al projects in the south­west­ern penin­su­la. Ini­tia­tives like these will cer­tain­ly con­tribute to the new be­gin­ning that we are work­ing to­wards.

In­creased drilling and pro­duc­tion works, both on land and off­shore, are to be ex­pect­ed in the new busi­ness mod­el.

Trinidad and To­ba­go con­sumes less than 25,000 bar­rels of re­fined prod­ucts a day (gaso­line, diesel, jet fu­el, etc.). The de­tailed eco­nom­ic analy­ses have shown that it makes far more sense for us to ex­port the 40,000 bar­rels of oil that we cur­rent­ly pro­duce and im­port the fu­el we need. The com­pa­ny will now fo­cus on in­creas­ing the pro­duc­tion of bar­rels of oil and each bar­rel will be sold ex­ter­nal­ly on the open mar­ket.'

HH

The first two figures are relatively up to date but the figure for CERP is a couple of years old - are you aware of anything more up to date?

Garnhiem.

“How much are you anticipating for Bonasse well reactivations, Icacos workovers and additional water injection on Goudron?”

I don’t see them contributing significantly to the cash burn, but time will tell. When you talk about “a US$1m draw from the US2.4m (cash in bank) over the next two Quarters”, do you mean US$1m per quarter?

offerman

TRIN - 2P 23.2 mmstb
TXP - 2P 18.535 mmstb
CERP - 2P 11.79 mmstb

The figures that you mention in relation to the SWP just sound like a fantasy number - if LK is coming out with this kind of remote possibility stuff he really needs to have a word with himself and keep his conversations with PIs more grounded. Would CERP be in the process of acquiring more of the SWP at the price that it is paying (and would the SWP not have been explored before) if there was a really significant chance of it being that kind of world class asset?

CaptainSwag

The drain in Spain was significant in Q1 2018 but not so much in Q4 2017 or Q2 2018, so I’m not sure that’s it. We do know that it should be no more than US45,000 in Q3 though, so that end Q3 cash balance will make the picture a lot clearer.

Garnhiem.

Spot the difference between what LK set out to do and where he actually got to. It is more significant than it looks and helps to explain all the cash burn:

July 2017 - LK sets out “to develop a work programme in its Trinidad operations, in a capital efficient manner from existing cash resources, with the objective of being cash flow positive across the Company in Q4 2017”

August 2018 - LK describes what actually happened - “At the end of 2017, Columbus became cashflow positive from operations”

“from operations” makes all the difference. You think I am wrong to predict that the multi-quarter cash burn will continue. What do you think will make Q3 the quarter that it stops?

Garnhiem.

Your reading of the RNSs obviously differs from mine. What end Q3 cash balance do you predict? I am going with no more than $1.4m but you obviously think it will be more than that, so what do you have in mind?

CaptainSwag

Yes, TRIN’s story is clear but dull compared to CERP’s. That is one of the interesting thing about CERP, the different ways that PIs look at it and value it. Are they looking to take advantage of a spike in sentiment, say on the prospect of getting lucky first time in the SWP (or on actually getting lucky first time in the SWP), or are they looking to stay the course until the anticipated growth has been funded and has happened and CERP is profitably producing thousands of bopd? The messages are mixed.

LK did have a clear plan - an initial foray into the SWP from a position of financial strength largely based on Goudron production. Goudron, as is its wont, has not played ball and Steeldrum has now been bolted on to cover LK’s embarrassment. It is all getting a bit complicated and, to me, this seems a shakier platform from which to attack the SWP. It is important to remember that the SWP is not a sure thing, despite the rhetoric quoted by LGO-fan. Would CERP be in the process of acquiring more of it at the price that it is paying if it was a sure thing?

offerman

CERP is probably one of the most interesting oilers out there - it has everything, the good, the bad and the ugly. It certainly has potential but the question is when that potential is going to be realised and at what cost. You are talking about oil coming out of one well in the SWP generating the kind of share price action that has been seen on the back of oil coming out of one well at Horse Hill. For a reality check though, look at my two biggest oilers, TRIN and TXP, which have combined production of nearly 5000bopd and a combined MCAP of less than £90million.

CaptainSwag

“With a cash balance of US$2.4m at period end CERP continues to be in a strong position to fully fund its activities going forward.“

What VSA are not pointing out is that the cash balance at the end of Q4 was US5.4m, end of Q1 2018 - US4.1m, end of Q2 2018 - US$2.4m. That trajectory tells its own story.