Member Info for Serif

Thanks, Tac. Just went back to Egdon 2015 RNSs. They talk of being very confident of flows in excess of 500, so long as they managed the “skin” problems which were impeding the flow at the time to 80 from the Ashover Grit reservoir. I wonder if the 710 figure comes from adding in the other 2 reservoirs - or perhaps there is something later I haven’t seen? Their reports give me more confidence that the flow they are expecting should be comfortably in excess of 500 if they get it right - but nervous about anyone getting anything absolutely “right” in this business on recent observations! As you say it will be an interesting opening week - both for the immediate SP reaction (which will no doubt be an over reaction whichever way it goes) - and the longer term implications of flow rates and revenue stability. I suspect that if the results are in the 450-550 range I will feel a lot better about our prospects - and then we will really see what our management are made of in terms of re-energising this company.

Still trying to get my head around what a good/reasonable Wressle result looks like - before faced with the actual result and all the noise that is bound to surround it. I just can’t imagine that it will come on at exactly 500 a day - that number is I believe a reservoir engineers calculation of likely flow based on previous drill results and tests - so what’s the acceptable range of variation?. Clearly 500 plus is an excellent result, but what about 450 or 400 initial flows? Does it make much difference at current prices if we end up with production 10% lower than max if our production still more than doubles to over 200? And if it’s 10% higher than predicted can we make use of that under current planning permission or would we need to hold it back for time being?

Nothing is going to move this share in a sustainable way except success at Wressle, a farm out result or a very significant increase in oil price. Any other SP movements are down to MM activity - such as putting the share up 20% on zero buys yesterday morning because of a (neutral) RNS being issued.

Maybe it’s about managing expectations - the old BA trick - stay vague about how long the possible delay and then delight you with an early than expected arrival!

@Tovoc - minor point but at a 30% share I think we should be getting 150 from 500 bopd - so a bit more cash in the bank.

2.5p sounds pretty good at the moment! That said I take some consolation that they need to keep the SP above that price for 30 consecutive days to qualify for their options - so in practice they will need the SP to be well above this or it will probably fall below 2.5 through usual price fluctuations. So they need to deliver a sustained share price recovery, at least above 3p, and some price sustaining news to get their hands on their options!

Tac, I agree that too much for comfort is riding on success of Wressle, but I didn’t read the rns in quite the same grim way. Firstly everything got repeated, so don’t think they were emphasising the funding point more than they had done in the past - just feels closer now. Secondly I read the phrase “incremental production” to mean incremental over current Eog production, not incremental to the 500 bopd from Wressle - so basically saying if we pay for Wressle development but don’t get the revenue we are going to have to get cash fast. There have been such shifts in attitudes towards offices that expectations for the future may be quite different. How much of presentation of data has to occur in an office - and if important what stops EOG taking on a short term office rental for a farm out/data room, there is plenty of short term space on the market - and might this not become the norm for small companies? On the extra Corrib licence, if it really was nominal cost - why not - if there is to be interest in Corrib surely it makes sense to have the key licences?
Just my reading - it’s tight but not necessarily doomed! Doesn’t mean that I don’t want something to change significantly after Wressle. They mustn’t just give a sigh of relief that their costs are covered again and pick up where they left off.

Thanks, Tovoc. Do you know if we expect that Wressle would be coming on at full 500 bopd from day 1 or is it likely to need tweaking etc to reach that level over the first few months?

Interesting link to a presentation by Alan Linn of PVR given by Christy41 on advfn. Shows an active management approach in a company that has been equally affected by the Irish political scene. Hope our team are working as hard to develop partnerships around renewables and carbon capture options that could make Corrib an easy political decision for the Irish Government to support. If pvr do get approval for permits for an OIL and gas development and we don’t for a purely gas development then that would be a telling moment.

Personally still think there is value in EOG assets which is why I stay invested and comment. I see a successful Wressle as stabilising the company for the foreseeable future, but we have to seize this opportunity - forced on us by the financial situation - to restructure permanently the cost base - and not go back to how it was. This is a small company and needs every available penny spent on value adding activity. Irish politics is outside its control, but salaries are not and Directors need to align their expectations to a small company rather than corporate world. If they believe that their contribution is worth more than that, then increase their shareholdings and share in the success of the company through the value they have added. It’s not complicated.

@Tovoc. I was wondering where the 1.3 million had gone that was raised a couple of years back specifically earmarked to pay for the 3 Irish surveys planned at the time, but not yet carried out. Well page 48 of the latest report shows that it was eaten up by large Director salaries - whatever the recent cuts some of them took - over 600k a year. Those still in place moving forward need to ask themselves some hard questions about what they are taking out of this business in terms of the value they are bringing in and what is sustainable/justifiable in this size of company.

@youbet. Totally agree and hope they are actively looking for a Plan B rather than just trusting to Wressle expectations. Perhaps this is the point of having Steven Williams on the Board? Frustrating thing for us is nothing presumably can emerge until we get there. Just have to hope as investors that it’s there if needed.

True, but then getting rid of Fin Director and Office costs and reducing salaries by 50% should enable them to balance outgoings and revenue for the short term even @$40 oil, so the £800k is to pay for Wressle. It’s whether it comes on as expected that will determine what happens next - the strategy since March seems to have been to hang on for Wressle outcome before deciding on next funding steps. If Wressle doesn’t work out as expected then they will have to raise funds for next steps - for Wressle and elswhere - as they have made plain all along.

Couldn’t see anything in the rns we didn’t know already, either, so not sure why the market negative reaction. Simon has been saying since March that our position turns on Wressle coming on stream in H2 and at predicted volumes or we would need to raise money - by whatever means available. We should find out in the next 4-8 weeks if Wressle’s good and that should help a recovery. So being positive and hoping that Wressle meets expectations, the message here is don’t burn the cash so fast in future on salaries, and don’t relax the purse strings just because revenue increases. Maybe 50% of a previously inflated salary is appropriate permanently in terms of what is now the company size?

I think Petrel have been shouting at the Government for some years now - and if we were all Porcupine we would probably have given up hope as well. That’s why it’s all about Corrib and gas for us now in Ireland. Let’s hope the Irish Government come up with a clearer and more consistent position that potential investors can work within.

@Tovoc, yes I believe you are right and that technically our licences should not be affected. However a hostile Government position could still put off investors as they might be concerned about endless political hurdles that could be put in their way in terms of moving projects forward. No one yet knows where the Irish Gov stands on this (as opposed to the Greens position), and however the debate is current framed I think it boils down to the question “do you want us here to get the gas or not - can we rely on you to play ball?”

Interesting that the article is written by the MD of nephin and he is focusing on “future exploration”. Suspect it should all be seen in context of the Climate Action amendment Bill that has been going through the Irish cabinet for agreement - and the various parties taking up positions to influence what comes out of this. When this bill comes out it may give a clearer indication of what will or won’t be allowed to progress - and by just raising the risks around banning future exploration maybe, just maybe, it could push the government to indicate that current licences may be sufficient to cover the predicted gas shortfall. Now wouldn’t that be good for Nephin and Europa! Who knows what political games are being played out.

Light on management maybe, but we still burn up a lot it seems on overheads. Seems to me that two (or three) of these small companies with their reduced portfolios could be run by a single management team, which would immediately turn say the current Eog oil revenue into extra profit, with little extra costs - especially if it was operated by a company with similar interests. I am not sure under current circumstances what additional value is added by these separate management teams, when particular opportunities, such as Ireland, could now probably be look after by an appropriate non exec appointment to a merged company board.

What do others think would be the main arguments against going for a merger with someone with overlapping interests, such as Egdon, in the current environment? There might be obvious cost savings and an ability to focus resources. Would a merger necessarily cause more damage to the SP?

Really helpful investor call this morning. Chairman apologised for not talking to all investors earlier, and suggested would be using this format to update more frequently in future.
Very good to understand Roberto’s thinking behind the potential new play and why it could be very exciting - he’s made a big call here so no wonder he is feeling “hot breath on his neck! What I took away was that if he is right (and we were told that we should hear more on this in early Nov) it looks like we could then have a potential farmin partner in the wings which should fund next stages. We got short term timescales, straight answers and some updates on Brunei and Sarawak which gave a strong impression of definite movement on both these - while recognition that there was some levels of bureaucracy to work through - still a way better place in terms of politics moving on and things actually happening. Really good effort by company and I hope the recording is put on the website as it would be a great place to start for potential investors.