RE: SBP26 Aug 2018 21:17
Good evening Seadog. Thanks for your observations.
Just about this new team member. He did not work for the Financial Conduct Authority. "FCA" is a recognised post nominal abbreviation for being a Fellow of the Institute of Chartered Accountants, so he is a well qualified accountant, but not having a regulatory background. And Ludo....it's Delphi, not Delhi and Delphi looks like a unincorporated financial practice for the chap to sell his services to clients. Anyway, his role is no doubt useful, but there is no wider context implication IMO.
I am beginning to think that the non-recourse finance is the hold up, just like it is for Premier Oil a bit further south in the Atlantic with a similar consortium approach.
It is fine to have all these MFD consortium members who will defer payment, operate leases, offer vendor finance and such like, but new production wells are sorely needed to get thing up from what? ..7000 bopd to the capacity of the OSX 3. The first well on TM flowed at 40k bopd but it looks like the 4 (?) horizontal wells have cratered and need to be re-engineered and re-drilled.
CPDL might well defer payment for wet leased jack up drilling rig as company has said, but the consumable suppliers will not. One needs to buy steel casing, tubing, cement, mud, wellheads, etc, and one needs helicopters and supply boats and service companies. A drilling rig is only half of the cost of a well.
Given the formation depth of around 3,000 metres and the relatively shallow water depth at TM, each new well is likely to cost $40 million, of which $20 million is consumables and services. So for 4 wells, who is going to come up with $80 million of non-recourse finance to pay for it, and where does the asset security lie? Non-recourse finance is a secured loan with no recourse to other assets of the borrower. Premier has the same problem but several times larger, because of a higher number of wells and has even resorted to UK Gov export credit guarantees to try and persuade the banks to help out.
It's a similar problem that finished off Xcite Energy with its own consortium at Bentley in North Sea . The OGA insisted on an umbrella financial guarantee, in case any consortium members reneged. No one would do it and the lenders called in the liquidators.
I think that is the problem and the cause of delays. Money is hard to handle. That is where the discussion here should focus.
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