Member Info for rossannan

Awful, awful company.

PinWiz

My TXP posts are almost all on ADVFN.

IK

No, I haven’t, but will do when I get home next week. Not setting much store by LK’s media pieces these days though.

steward1

It was me that suggested that Steeldrum was Plan B. I was indeed implying that Plan A is not working and I do not think that Steeldrum was always part of the plan.

As I explained on ADVFN, the problem is that CERP is in an incredibly CAPEX-intensive business and, while LK still has a lot going for him, he cannot conjure capital out of thin air.

LK did have a credible plan that he offered in good faith, the initial phase of which was based on Gourdon doing enough to at least conserve (if not add to) CERP’s Schroders-derived cash pile, allowing him to do accretive (though “accretive” is a hugely misunderstood word) deals and make CERP’s initial foray into the SWP from a position of financial strength.

Despite LK’s original due diligence and many months in situ before he even produced the now discredited high case/low case production graph, the initial phase of his plan has largely turned out to be a false prospectus. The RNS not that long ago that talked about “cash burn” was one of a series of red flags that led up to the latest RNS. It is now clear that LK has not mastered Gourdon - Goudron has mastered him. The last nine months have seen WTI climb from the late $50s and settle in the late $60s, yet over the last six months at least half of CERP’s cash pile has gone.
LK’s Plan B, buying the loss-making Steeldrum, is a bit of a strange one. Hopefully Steeldrum’s assets will not just eat capital in the way that Goudron has, but we will see how much of that LIND facility he ends up using. As for deal making and SWP exploring, that now has to be done off the back foot.

Looking to the longer term, CERP still has a very attractive range of assets that in time will hopefully sideline Goudron. In the short term though, the “LK premium” element of the share price looks a bit vulnerable and I suspect that 4p will not hold, unless WTI does LK a favour. LK owes the CERP LTHs a resumption of share price appreciation and needs to think hard about what will deliver it. End of the rainbow stuff will just not cut it.

HH

That kind of makes sense and is not necessarily a judgment on anything LK has done - where you have anything like 15% of a company, your house policy may be to always vote against such resolutions. Schroders were not, of course, shareholders at the time of the 2017 AGM, the last time such a resolution was put to shareholders.

HH

That sounds very much like Schroders then, given that they had 92M+ last time I looked.

HH

It’s based on the percentage of those actually voting, so I suspect that just one of them would be enough.

PinWiz

Seriously? Time to ditch the conspiracy theories, kick back and watch a music video.

https://youtu.be/rt0ySa_wKhw

Rugby2015 If it wasn’t Schroders who voted against Resolution 5, who was it? It would be interesting to hear from whoever it was that chose to rain on LK’s parade.

emilyt16 That old chestnut!

IK

No, I asked for one to be deleted to correct a reference to shares being issued for non-cash that should have been to shares being issued for cash, but that took a few with it!

I watched the last few LK media pieces (the ones prior to the latest RNS) and they do not stand up well when you look at where CERP ended up immediately before the latest RNS, let alone when you look at where CERP is now. As a result, I am more interested in what LK is prepared to put in an RNS than in anything he includes in what are arguably share promotion exercises. His post-RNS media pieces have certainly not won over the market, whose muted response seems entirely correct given that Q2 has seen such egregious cash burn and CERP shares are now being issued to buy in production that in turn requires a debt facility. What happened to the road map and to sound financial management? CERP seems to have veered significantly off course.

It will still be interesting to see the media pieces when I get back though, just to see how they then stand up over time. We will see where we are at the end of Q3 and then at the end of Q4. I am quite happy for my comments on and questions about the latest RNS to take an extended Pepsi Challenge with the latest media pieces from LK.

Replacing my deleted post:

1. CF+ is long gone, as the cash balance dropping from $4.1 million to $2.4 million demonstrates. We are now told that “the consolidated group, post the Steeldrum transaction, is expected to remain operationally cash flow positive”. I should hope so - being “operationally” cash flow positive is setting the bar significantly lower. So much for the war chest that LK was supposed to be accumulating, or at least preserving, to fund CERP’s initial foray into the SWP. People can fantasise about the SWP all they like - what the market is focusing on is the dilution (share issuance) or potential dilution (LIND) that could now, in the absence of a partner, be required to fund even that initial foray into the SWP.

2. I had thought the pessimism expressed by LLL about Goudron was overdone, but recent clues did suggest otherwise and it has now become clear that even LK and his team are failing to master it. LK seems to be continually downgrading his expectations for Goudron. Despite the use of the phrase “ramped-up” in the RNS, I wonder how much more time and money CERP will ultimately spend on Goudron WF?

3. At least LK is not brushing his disappointment with Goudron under the carpet or ploughing on regardless. He has initiated his Plan B - Steeldrum - which is being funded by share issuance. Is Steeldrum good value though? It does not look to me as if he is simply buying in profitable production - the LIND facility implies that he will need to prime the pump, and then some.

4. And what is this all about: “New technical work on the SWP has been commissioned involving specialist exploration consultants to develop a technical roadmap for de-risking 2019 drilling locations”? One possible translation: “CERP passengers should expect delays”.

5. Resolution No 5 failing to pass suggests to me that LK is now on a yellow card for excessive share issuance. After all, if you do not keep a lid on share issuance you will end up with a £500 million MCAP and a 4.5p share price. What would be the point of that (from a CERP LTH’s point of view)?

6. Just one more thought about Resolution No 5. Given that it was thrown out, does this not mean that LK is now completely unable to do a placing without going back to the shareholders, even if he tells us that the money is for accretive purposes rather than working capital?

It is going to take a few quarters’ worth of figures to get a proper feel for what is now going on here. Unless, of course, some big deal or SWP well changes everything, but that chat is beginning to sound a bit like a mixture of “careful what you wish for” and “jam tomorrow”.

sellonnews

Over 700bopd? Now that is speculation!

NN

Don’t worry, that’s nothing to do with CERP. Some bad lads got their IPSC confiscated earlier in the year, is all.

No, it’s the major part of the PTRIN (IPSC) total. Figure could suggest flat to slight decline for May but problem is that we don’t know enough about the other operators whose production is lumped in here to be certain. Horseyhead has as good a handle on all this as anyone.

LLL

You seem to be addressing the rampers of yesteryear, who are long gone.

offerman It’s not entirely clear where that 6 months should start from though, given the initial hiccup with WF. Recent talk of an EOY target of 800bopd plus from Goudron suggests that expectations are now being managed when it comes to WF. LK could do with drawing a new graph that reflects his current expectations for production because the old high case / low case graph from Dec 2017 just doesn’t reflect where he has got to (the current high case seems to be the old low case and the old high case was clearly just a bit of a pipe dream).

offerman

As LK talked about doing 500-600 bopd in a recent “media”, I think the market has absorbed the idea that current production may be below the lower case 700bopd, so if current production was 700 bopd, I suspect that you would get a good chunk of your 30%. What I’m guessing that the market has priced in is something like a 600 bopd Q2 average and 650 bopd current. I’m still though more interested to see whether the $4.1 million cash pile is being conserved, particularly after that reference to “cash burn” in the latest RNS. I’m not aware of any particularly significant CAPEX in Q2, just the usual low cost well stimulations and continuing comparatively modest expenditure on WF. LK needs CERP to be financially stable if he’s going to get his material deal done in a shareholder friendly way.

Rugby2015

Presumably what VSA have in mind is the difference between Revenue and Profit. Goudron may be throwing off cash, but how much of it is finding its way to the bottom line? If none of it is making it that far, we are talking about cash burn. A little of that is not a problem when, as here, there is a cash pile, always assuming that WF kicks in as expected later in the year. Too much cash burn and/or significant problems with WF could though throw the funding of CERP’s initial foray into the SWP into doubt. It is meaningless to talk about targets like £1 or £2 until we see the latest production figures and, crucially, the latest bank balance.