Member Info for rossannan

O/T

bigdouble

Talking of shareholder action, do you know which shareholder or shareholders put the kaibosh on CERP’s Resolution 5?

BMB

As you can imagine, I don’t expect Steeldrum to be properly CF+ (i.e. as a business unit) from day 1 but I do expect it to be properly CF+ at some point down the line. It is worth looking at those earlier LK interviews to see how CF+ on a group basis has morphed into CF+ on an operational basis. In other words, the CF+ that folk, including LK, were talking about then is not the same CF+ that folk, including LK, are talking about now (as demonstrated by the cash burn). Will the cash burn have slowed by the end of Q3? Time will tell.

findahappyplace

The figures say otherwise, I’m afraid. That could change, but watch out if it doesn’t. My approach is to focus on the figures rather than the rhetoric, particularly now that production has failed to meet LK’s previous expectations and he has had to bolt on Steeldrum.

neon

What was defamatory about the post? It was simply part of a discussion that I was having with Garnhiem. about figures in an RNS - as anyone can see it wasn’t about other posters or about officers of the company:

“Garnhiem.

The BOLT payment in Q2 was presented as part of the M&A costs. As I said, M&A costs will recur in Q3. Not the exact same ones. M&A costs may in fact be larger if Steeldrum completes in Q3.

Loan payments amounted to $0.37m for Q2, not $0.4m.

I must indeed have missed the statement on the associated taxes for Spain - I had thought that all the Spanish costs were included in the $1.11 million figure (CAPEX $0.5m, abandonment fund/performance bond $0.32m in total, Spain $0.15m, M&A 0.14m) - can you c&p the bit about associated taxes on here? Was it in an earlier RNS?”

Seriously, what is defamatory about any of that?

CaptainSwag Fair enough - the picture will no doubt be a lot clearer after the Q3 update.

CaptainSwag

I would argue that it is the acceptable face of dilution. I see the alternative as a real risk of a cash crunch.

findahappyplace

The rate at which CERP is running out of money is what is not to like here. I doubt that they are just going to be nibbling at that LIND facility - before you know it they will likely be right into it for working capital, not just for Steeldrum contingencies. And if Steeldrum turns out to be sub-optimal, in other words not quite as presented in LK’s medias, where do they go then?

CaptainSwag

My argument about a pro-rata Offer is that it doesn’t have to involve dilution if folk take up their entitlements. A pro-rata Offer is, after all, the only way in which LK is now permitted to issue shares for cash. I am not talking about an old school keep the lights on LGO placing - I think a pro-rata Offer would be well received, indeed something of a tonic for the troops.

neon

What was defamatory about the following post that was deleted yesterday?

“Garnhiem.

The BOLT payment in Q2 was presented as part of the M&A costs. As I said, M&A costs will recur in Q3. Not the exact same ones. M&A costs may in fact be larger if Steeldrum completes in Q3.

Loan payments amounted to $0.37m for Q2, not $0.4m.

I must indeed have missed the statement on the associated taxes for Spain - I had thought that all the Spanish costs were included in the $1.11 million figure (CAPEX $0.5m, abandonment fund/performance bond $0.32m in total, Spain $0.15m, M&A 0.14m) - can you c&p the bit about associated taxes on here? Was it in an earlier RNS?”

If folk don’t want to read discussions of actual figures in actual RNSs but only want to see cheerleading/end of the rainbow stuff on this BB, that is their lookout, but they need to consider the possibility that they are speculating rather than investing. And, whether they see themselves as speculating or investing, some folk seem determined to go all in here, which cannot be sensible.

Back in the day NR said that he was happy for people to speculate. That did not end well. LK’s recent medias (and, with hindsight, some of his earlier ones) have been a little heavy on speculation and a little light on the financial realities of this capital intensive industry. Why do folk keep harking back to the share price targets in VSA’s notes when those notes themselves quickly fall apart under any kind of critical analysis? Why, with WTI looking a lot cheerier, is CERP now sub-4p? Is the market also concerned about the financial realities here? LK has had the placing option confiscated but a wee one for five would, IMO, be just what the doctor ordered and would buy him the time for everything he is doing to gain some traction. I don’t know about the market but I’d buy that for a dollar.

Garnhiem. The BOLT payment in Q2 was presented as part of the M&A costs. As I said, M&A costs will recur in Q3. Not the exact same ones. M&A costs may in fact be larger if Steeldrum completes in Q3. Loan payments amounted to $0.37m for Q2, not $0.4m. I must indeed have missed the statement on the associated taxes for Spain - I had thought that all the Spanish costs were included in the $1.11 million figure (CAPEX $0.5m, abandonment fund/performance bond $0.32m in total, Spain $0.15m, M&A 0.14m) - can you c&p the bit about associated taxes on here? Was it in an earlier RNS?

CaptainSwag

The July RNS talked about a cash balance of $2.4 million at the end of Q2 2018 after $1.11 million of “capex investment, abandonment fund contributions, M&A and Spain legacy costs”. So not all of that $1.11 million was capex. I don’t know about the timing of abandonment fund contributions (they recur, but may not recur in Q3) but the last 2 items in the list will certainly recur in Q3 (though see note below about the drain in Spain) and the balance is mostly accounted for by the ongoing programme of Goudron production enhancements (as detailed in the Q2 update, just as it was detailed in the Q1 update and will be detailed in the Q3 update).

Of course if you add $1.11 million back to the end Q2 cash balance of $2.4 million you get $3.51 million. The end Q1 cash balance was in fact $4.1 million, so a further $600,000 or so disappeared from CERP’s coffers during Q2 and only a fraction of that is accounted for by loan repayments. So how helpful really is a statement like:

“Cashflow positive position maintained from operations with gross revenues of US$3.01 million during quarter delivering US$0.94 million operating netback after payment of operating costs, workovers and well interventions, royalties and SPT (compared to US$2.64 million and US$0.70 million respectively in Q1 2018).”

when the bank account is telling a different story. The upcoming interims will be an interesting insight into the financial realities of CERP.

Note: In the Q1 update we were told:

“In Q1 2018, the Company largely closed-out legacy issues associated with the La Lora Concession in Spain and is ready to participate in any re-tender process for the Ayoluengo oil field initiated by the Spanish Authorities.
The re-tender is expected in Q2-3 2018. The legacy issues were addressed as follows:
-- Completion in January of various dismantling works of old infrastructure.
-- Formal extinction of the La Lora Concession in March.
-- Completion in March of a Collective Dismissal Process ("CDP") under Spanish law affecting 14 employees. The CDP process was completed on time and the final cost was consistent with the relevant budget approved by the Board. The costs were met from currently available funds. The final cost to the Company of the CDP was approximately EUR410,000 with ongoing costs to maintain the field on a care and maintenance basis reducing to approximately EUR15,000 per month instead of EUR60,000 per month.”

In the Q2 update we were told:

“In Q2 2018, costs incurred in Spain totalled US$ 0.15 million [not 3 x $15,000], including some "tail-end" legacy costs associated with the formal extinction of the La Lora Concession in March and completion of a Collective Dismissal Process ("CDP") under Spanish law affecting 14 employees.”

So much for the bold statement in the 26th March RNS and the Q1 update that “The final cost to the Company [of the CDP] was approximately EUR410,000.”

CaptainSwag

It is not WF that is driving current production. If you put water in you do eventually get some oil out (in theory and maybe even in Goudron), but the bwpd and bopd figures are not going to match in that way. I hate to think how many bwpd it will take per one bopd out of Goudron.

Look again at the July RNS. Most of that Q2 capex was recurring. A significant amount of cash also disappeared in Q1. Why is Q3 going to be any different?

Bigpecs

CERP is anything but cash rich. Zero funding problems? If Q3 is like Q2 it could be down to $1 million in the bank and cracking open that LIND facility (which was supposed to be a “just in case” for Steeldrum, not keep the lights on financing). LK might one day turn CERP into a £500M company, but how many shares will be in issue if and when he does?

CaptainSwag

The problem is that if you look at the July RNS you will see that most of the Q2 expenditure will recur this quarter. So cash is set to get even tighter.

LGO-fan Try going back and watching some of LK’s previous medias. They don’t seem so meaningful now. My beef with LK is not about what he is doing on the ground - I am sure that he has the operational competence that was missing before - but he seems to have badly overestimated production, the cash is running out and the solutions that he is offering do not seem adequate to the task (or at least will not kick in quickly enough to avoid a cash crunch).

LGO-fan Sounds like you are giving too much weight to a media sound bite. The figures may tell a different story.

HoH Seems unlikely to me. Medias are, as my colleague LLL has pointed out, really just marketing.

CaptainSwag The problem is that the limited cash flow from Goudron is not slowing down the rate at which CERP is running out of money. As for Schroders, what happened to Resolution 5 was very likely down to them. House policy or something else?

Garnhiem. I guess you sometimes need a grain of sand before you get a pearl. At the moment though, I can only see the sand.

LGO-fan

Increased news flow of itself adds no value unless you are a trader. Neil Ritson taught us that. It is interesting to hear Steeldrum being presented as something that was always on the cards. LLL’s suggestion that it has been bolted on because Goudron isn’t working out sounds a lot more plausible. In other words, it is Plan B.

findahappyplace

Careful what you wish for! Interims due soon in any event.

That's not a song, kid. That's propaganda.