Member Info for skittish

If they did a bad job - SMP - then of course we are allowed to withhold payment!

If they happen to sue us first for unpaid costs, we simply counter claim for all the costs and expense we incurred by the delays.

Whether there are "setoff" provisions in the contract is irrelevant - if they haven't complied with the terms of the contract ie to provide us with a rig that works, then we are entitled to money back and that money could exceed the costs of the rig in the first place.

We don't have to pay up first and then spend years chasing them round the court system.

DS is an Oxford educated barrister, so would imagine he knows what he is talking about.

And if we win then they pay our costs.

And we were never going to drill in April - we were going to frack using Schlumberger equipment.

Don't forget the drilling cost us twice what it was meant to - with parts having to be flown back to Paris for repair - and a welder on site at all times to continually repair the rig.

Anyway ending up in court is par for the course in business - no no big deal here.

continued......

And now SNPC are going to dramatically boost production from their MKB operated fields – which have been performing poorly for the last decade or so – by bringing in a new unnamed oil services company

www.africaintelligence.com/aem/oil/2019/06/11/snpc-and-ebata-bring-in-new-unknown-players-to-develop-mkb,108360787-art

Surprise – they'll be able to increase production when they've failed to do much for years. I would say that these new unknown partners will almost certainly speak Russian.

So there is a theme here – Russia suddenly coming into Congo big time and Congo being willing (and able) to pay its dues to Moscow.

Moreover, the New Age/Lukoil deal on Marine XII appears to have been at an undervalue

www.oilfieldtechnology.com/offshore-and-subsea/10062019/wood-mackenzie-comments-on-lukoils-marine-xii-move/

$800M appears to have been a 36% discount which is explained away, but it would make more sense to me if this was part of a wider deal to pay down debts.

New Age also wants to sell down part of its 75% interest on Marine III, next to us. They also cooperate with Lukoil in Cameroon on the Etinde block, so it appears logical that they could cooperate on Marine III, and assist Congo and SNPC on further paying down Russian debt by selling part to Lukoil.

It would also make sense if SNPC were to sell part of its share in Tilapia to Lukoil, and would explain why they were so desperate to keep their share at 44% vs AAOG at present. They would get cash, a free carry (off Lukoil), and again pay off some Congo debt to Russia.

One of the directors of New Age, David Peel, their EVP of Exploration and New Business worked for Lukoil from 2014 to 2018. Surprise – he did the Marine XII deal!

DS worked for Lukoil also, of course.

Strategically, geographically and economically it would make sense for all parties if AAOG, New Age, SNPC and Lukoil were to cooperate on Marine III and Tilapia.

It would also explain the long wait to get to where we are now and why DS has been so reticent to disclose the CPR (or indeed anything at all) to anyone.

Now that matters have been cleared at the highest levels regarding Congo and Russia/Lukoil DS may be at last free to finalise his grand plan.

I wouldn't say it was quite there yet, but if he drops the CPI tomorrow, then it gives a little longer to finish the big deal.

All IMHO, DYOR etc – but it does all make sense.

Tiburn I agree with much of what you say – fundamentally this is sound despite the share price being ravaged by the market.

DS is right to be mystified, but I think the present performance is explained by fickle and easily spooked pi's, who obviously don't want to lose hard earned cash, and understandably can't bear to see it dribble away.

DS is not mightily expericed in running an Aim company and what he could get away with on his other ventures, comes up against the hard reality of pi foibles and the savagery of twitter.

That said there is no doubt in my mind that DS has been playing for time from end January to date. I was always a little surprised that everything appeared to be put on hold for the CPR, and now it isn't coming – at least for quite a while yet.

DS is still playing for time, even now.

Question is why, and how much longer can it go on? He is up against something of a deadline on 28th June and in extremis could find himself out of a job. I can't see any way he can get R4 though at present as it requires 75% of the votes.

So what gives?

You are right on the financials for SNPC and Congo – they are both brassic.

This is the latest on Congo finances (behind a hefty paywall, unfortunately)

www.africaintelligence.com/aem/oil/2019/06/11/with-mercuria-s-new-gameplay-snpc-s-debt-plays-havoc-on-its-future,108360782-eve?CXT=PUB

So all the more remarkable that they continue to pay us to maintain their 44% share. Why are they so desperate, when the most obvious thing to do would be to settle for 80%-85% and a free carry? Congo would still get well over 50% of the money generated via royalties and taxes etc. SNPC would get 15% to 20% for nothing.

But Congo has new friends – President Sassou-Nguesso met with Presidet Putin in Moscow on 23rd May 2019 and the following day Lukoil signed agreements with SNPC on oil development and cooperation

www.offshoreenergytoday.com/russias-lukoil-talks-cooperation-with-republic-of-congo-president/

Congo has good reason to be friendly with Russia as renegotiating its debts to Russia will bring forward the release of IMF loans. Congo has already restructured with China and certain global traders.

www.eurasiareview.com/29052019-congo-seeks-closer-relations-with-russia-oped/

The Congo/Russia deal actually goes much deeper, and allows for cooperation on all manner of issues from nuclear technology to military cooperation.

Surprise, surprise Lukoil then buys New Age's 25% interest in Marine XII on 7th June 2019 – a move that had been predicted by africanintelligence on 15th May 2019 – albeit with a then unnamed Russian company – obviously it was going to be Lukoil. continued.......

Wow gmcc - that is quite revealing!

"Potential exit down the road."

They won't be interested in tiddlers.

Also more to this maybe than meets the eye.

Lukoil have only just entered the country following the agreements in Moscow on 24th May. So has DS always had an eye out for them - or just recently?

Too much going on within a few km of Tilapia for this not to come good - and big hitters joining in the choreography - Putin - Sassou Nguesso - makes for an interesting situation.

The geography is, I think, as important as the geology here.

Following their sale of Marine XII New Age have confirmed that they intend keeping Marine III - with seismic later this year and drilling (off shore) in 2020.

Some of the $800M from Marine XII will be reinvested in Marine III, and they will be targeting the same reservoirs as targeted in Marine XII - ie it is a Djeno target.

www.energy-pedia.com/news/congo-brazzaville/newage-sells-interest-in-marine-xii-licence-to-lukoil-176829

Given that most of their leads are adjacent to us - it would seem sensible that the drilling will be adjacent to us also.

http://www.newafricanglobalenergy.com/wp-content/uploads/2019/01/Congo-Marine-III-Block-Scale-Map.png

So New Age will be targeting the Djeno next door to us and expect to find something similar to Marine XII there.

Marine XII will be producing 100Kbpd by 2025.

www.offshore-mag.com/regional-reports/article/14034663/lukoil-farms-into-oilproducing-permit-offshore-congo

In fact I think New Age are being a bit coy on their map of the Marine III targets with just putting in the targets as completely surrounding our licence area. They might as well have gone the whole hog and put some targets in our area also. As they haven't done it - I've done it for them and incorporated the apparently successful CNOOC wells also.

I've called it "Greater Tilapia" where New Age targets are red, our licence area (approximate) yellow and the CNOOC well locations marked.

https://ibb.co/2s2qDDH

It would actually make much more sense for New Age, instead of acquiring an expensive drilling ship, to drill from onshore. Their targets mostly appear to be around 6-7km off shore, and just within range for directional drilling (which apparently can go for up to 10km) with a suitable rig. And it would be around 60% to 75% cheaper for them.

The only problem is that the whole shoreline comprises our's and CNOOC's licence area. CNOOC's licence area at the shoreline comprises mainly rain forest or animal sanctuary, apart from at the very southern end where there is a narrow strip between the coast and rising land.

In fact we at AAOG have the only decent sized coastal site (about 3-4 km2), with the RN5 road neatly diverting around it, for many tens of kilometres either side, on which all manner of rigs, tanks etc could be situated.

It would be far, far cheaper (and less risky) for New Age to drill their wells from our Tilapia site and co operate with us on developing whatever they find. Rigs, pipelines, tanks etc - all would be cheaper, and the cost could be shared with us.

We could even swap some of Tilapia for a bit of Marine III, and if Lukoil joined in it would be like all old pals together.

Geographically, I'd say it was obviously logical.

And could explain the delays.

DS has been acting mighty strange recently - after all the presentations and visits to Pro Active over recent months he's gone very quiet PRwise. (He still knows where Pro Active is because he was there for Widecells last week)

We are in something of a sweet spot - I've updated my Tilapia map

https://ibb.co/BcwyM9z

Showing 103C, our approximate licence area (in yellow), New Age's "leads" on Marine III (in red), and the various CNOOC pads to the east of us.

Regarding the CNOOC pads S and E1/E2 may (only may) have been failures as they no longer have any equipment on them.

But N2, BN, N, C and S2 all appear to be fitted with equipment and tanks. CNOOC has an exploration and appraisal licence, so cannot actually produce, but the tanks suggests some limited appraisal production.

The large gap between BN and N2 is due to the animal sanctuary and tropical rain forest between.

BN is around 3x the size of the other pads suggesting it is intended for some directional drilling and multiple wells eventually.

The New Age interests are obvious.

http://www.newafricanglobalenergy.com/wp-content/uploads/2019/01/Congo-Marine-III-Block-Scale-Map.png

And we are right between. Tilapia is effectively surrounded by “leads” and appraisal drilling from two completely unrelated operators.

I'm sure DS will have noticed this.

And others also.

New Age sold their 25% Marine XII interest to Lukoil last week. They are apparently looking to sell down part of their 75% stake in Marine III.

DS at one time held a senior position at Lukoil.

Much is made of the fact that we can drill offshore wells from our land based position. So far we've reached out around 2km. But directional drilling can go much further apparently – it could even reach out to New Age's leads around 5km from the coast.

The problem for New Age is that most of that coast line is taken up by either the rain forest, the animal sanctuary, or our licence area.

But they would save themselves a lot of money if we allowed tem to use Tilapia as a “base” for their directional drilling – and maybe jointly develop their leads. And they may seek participation from their new found Russian friends at Lukoil.

Enter DS, stage right.

A man with a plan.

DS indicated - pre RNS - that it was "hopefully good news".

Clearly the market disagrees, and our market capitalisation is now under £20M.

Do we really need a CPR at present? I think not.

We've been obsessed with the CPR (and producing from the Djeno) ever since 103C completed in January, and we seem to have been led well astray, only really to find ourselves where we were.......at the end of January.

The share price really suggests that we are a company in trouble - but it appears to me to be overdone.

Tilapia actually costs around $65K per month to run Tilapia. Income from 101ST at 53 bpd should be slightly in excess of $100K per month. On top of that you have central costs and consultancy fees. So AAOG will be running at a monthly loss, but not a huge one.

Income from SNPC over the last 3 months amounts to $1,979K. They average $663K per month, the last payment was greater because Apri'ls payment was only $600K (although we're still $10K adrift somewhere).

So if money was set aside to frack 103C, there should be $3-$4M left in the bank. DS still has authority from last years AGM to raise a few million, so if in the worst case scenario 103C was damaged beyond repair he could scrabble enough together for a cheap drill on 104 to the R2 or Mengo. TLPM -2 produced 2,000bpd from R2 alone when on test.

That would be enough to kick start production and cash flow - if all else had failed - but he chooses not to do it.

Question is why, and why obsess with the Djeno, all for no result (as yet) when what the market clearly wishes to see is some increased production?

For the record I think we are producing more than 53 bpd, but DS chooses not to RNS it.

Why all the obfustication and great gnashing of teeth when we could produce, albeit relatively modestly, quickly and at limited cost?

Negotiations with SNPC? I thought that these were probably complete, but maybe I was wrong. I don't think we could mislead them into thinking there was less oil there than there actually is - they know the country backwards. And from the latest RNS they clearly wish to retain as much of Tilapia as they can.

I also suspect the prospect of a big fund raise in the AGM notice is aimed not at shareholders (although it spooked them also) but at SNPC - "entering a capital intensive period" - (or such like) and designed to make SNPC sit up, as Congo is clearly borderline broke and cannot fund such works.

General thoughts on the AGM - I can't see how DS can get R4 passed as he needs 75%. And if he can't get that through then he will really struggle to raise those funds - if he really wishes to do so.

If he does, he will need to come up with something persuasive before the end of the month.

Negotiations on a JV? Personally I'd veer to that.

"each around 5-15km"

Should read 5-9km long - although the total leads adjacent to us stretch for slightly in excess of 22km NW to SE, with Tilapia in the middle.

Tiburn - nice calculations, although I think the timings are a bit optimistic.

However I think all this will be superseded by whatever DS is planning at present, hence the long delays on the CPR and production plan.

The New Age map

http://www.newafricanglobalenergy.com/wp-content/uploads/2019/01/Congo-Marine-III-Block-Scale-Map.png

shows two "leads" immediately to the NW of Tilapia, one immediately to the SW and one to the S.

They are in diagram form, showing that they are each around 5-15km wide/long with around 1km between each.

It would make much more sense (to me) if they were just one big (massive) prospect with Tilapia slap bang in the middle leading to a total field similar in size to the adjacent Nene/Banga fields to the West.

That is supported by the CNOOC drilling to the East of us, although, of course, we don't know what they might have found.

I suspect that DS is working on an overall plan, which will render talk of 103C/funding/SNPC share etc superfluous and take AAOG in a new and perhaps unexpected direction.

Well worth waiting a little longer for.

Days? Weeks? Who knows?

Frustrating - yes - but one thing the knockers cannot get over is that the extensive CNOOC drilling to the E has taken place and the maps produced by New Age showing leads to the N, W and S have nothing at all to do with DS.

There is a big prize to be had here and AAOG is geographically and figuratively right in the middle of it.

This gives an overview of the New Age interests in Congo, including Marine III.

http://www.newafricanglobalenergy.com/congo-brazzaville/

Marine III is the licence from which Tilpaia was carved in 2005.

At Marine III 3D seismic is planned for this year, and an exploration well in 2019/20 targeting "multiple plays" - sounds familiar?

I'd say it sounds like page 6 of AAOG's April 2019 investor presentation - "multi-horizon field"

http://www.aaog.com/archive/presentations/AAOG-company-presentation.pdf?v=020419

Click on a detailed map of Marine III and you get this -

http://www.newafricanglobalenergy.com/wp-content/uploads/2019/01/Congo-Marine-III-Block-Scale-Map.png

New Age's "leads" quite literally surround completely our Tilapia field, to the North, West and South, and are not just "a bit" close to us but right next to us.

The East land based side is of course where CNOOC have drilled around 7 exploration wells right down that entire side of our licence, from the mouth of the Kouliou River in the north to Tchissanga in the South - all within a few km of Tilapia, in the last 18 months.

So it looks like Tilapia is literally surrounded by immediately adjacent large scale oil prospects - and we've "accidentally" hit the Djeno

I suspect interesting times lie ahead and we are close to finding out what DS has been up to this last several months and why we are now in “radio silence”.

Coincidence? Or part of what they've been waiting for?

Quite widely reported on Kremlin leaning websites but virtually nothing in the West.

Interesting.

Now THAT is what I call a scrap yard........

http://www.blockenergy.co.uk/media/photo-galleries/norio-operations-nov-18-photo-gallery/

One of the current darlings of the O&G sector.

Makes AAOG look like an oil major by comparison.

Yes, irish, beautiful video, and beautiful countryside.

That video appears to have been taken around June 2018.

I've posted this before, but for newcomers, this is another video taken around 12th/13th September 2018 showing the expansion of the site and the pre-spud ceremony.

www.youtube.com/watch?v=TlSBC1y7H6k

this doesn't actually appear on the company website (don't know why).

The site has expanded again since then, northwards and the flare re-sited, a new communications tower built, although all appears to be fairly quiet at the moment, on the actual drill pad, so far as I can see, although there is some evidence of vehicle movements around mid May.

BC, if you think that is basic you should look at some of the latest pictures from that darling of the moment BLOE - there looks to be more rust at their site than oil. Rusty tanks, rusty tankers. Makes Tilapia look very neat and state of the art.

There also appears to be some recent spoil/tailings dumping on our "patch", slightly to the north of the drill pad which has taken place within the last couple of months, but it is difficult to tell where they are coming from. Certainly the TLP-103/103C pad appears to be clear at the present and I can't see any evidence of activity on the local CNOOC pads either at this time.

CNOOC appears to have been quiet since October/November 2018 so their exploration and appraisal programme may well have come to an end and they too are planning their next moves. There appears to have been some sort of spillage of material at the CNOOC "BN" pad around October 2018, so that may complicate matters for them.

It is generally cloudy over Tilapia at the moment, with lots of early morning sea mist (satellite flies over at 09.10UTC each morning) so difficult to get a good view, but good weather predicted for the end of next week, so satellite cooperation permitting, we may get a couple of clear pictures then.

I also follow WDC and in the latest Proactive interview on 15th May DS did look as if he had caught a bit of a tan. Family holiday or a trip to somewhere near the equator? Who knows?

The AAOG twitter feed is also interesting - last year constant pictures from the Tilapia site all year long. Admittedly there was quite a bit of activity - but this year no pictures at all, just London based presentations.

Contrast and discuss.

And reports of activity on https://offshore-technology.com/projects/tilapia-oil-field/ - still current.

Hoping for some news next week. DS does like his end of the month RNS's. I'm not convinced it will be the news we are expecting, but you never know.

The news lock down is interesting - either DS has lost his phone down the toilet or maybe there is a blockbuster and he dare not say anything for fear of being accused of misleading.

Fingers crossed!

I'm gutted.

AAOG is the first share I've invested in since 1346.

After the Black Death I vowed never to invest in shares ever again.

But AAOG appeared to be such a good prospect I decided to break my self imposed 673 year rule.

Now I find DS and JB might contract Ebola.

And only one of them is likely to live.

I'm now barricaded in my downstairs toilet, with copious amounts of "toilet duck" to repel any zombie like invaders.

Any advice on what to do next greatly appreciated.

(Asking for a friend).

Odd that they have unloaded for no profit in fact they have made a short term loss although 7they will be compensated later DS indicated that they were supportive in a number of ways and maybe converting Into shares to allow an institution to buy a sizeable stake was one of those ways in which they have been supportive

Correct me if I'm wrong - please do, I'm sure some one will.

"The conversion price (per Share) for the Bonds is now the greater of:

I. £0.004 (the "Minimum Conversion Price"), or

II. 90% of the lowest closing volume-weighted average price of Ordinary Shares in the 15 trading days prior to conversion (the "Theoretical Conversion Price").

To the extent that the Theoretical Conversion Price is below the Minimum Conversion Price the shortfall in the amount converted will be settled at the time of the next tranche."

So WDC have received £400K for 100M shares @ 0.40p per share - so far so good.

But the Theoretical Conversion Price (TCP) is below the Minimum Conversion Price (MCP).

So what does this mean?

I guess you've got to work out the TCP. I guess starting with 0.3666p which is the average closing price in the 15 days prior to today then multiply it by 90% which neatly gives 0.33p. So the TCP is 0.33p.

"To the extent that the Theoretical Conversion Price is below the Minimum Conversion Price the shortfall in the amount converted will be settled at the time of the next tranche."

So the TCP is 0.33p, the MCP is 0.40p, so the shortfall is 0.07p per share or £70,000.

So £70,000 is to be settled at the time of the next tranche.

The amount then to be converted for the next or last tranche is £100,000 via the issue of 25M shares. So presumably the shares will be issued but WDC will only receive £100,000 less the £70,000 or a net £30,000 for those shares.

That is why the relatively small amount of £100,000 (25M shares) has been left outstanding.

If at the time those shares are converted the price has been above an average of 0.4p for 15 days then there will be no further shortfall.

To me still suggests news is imminent as EHGOSF has always required a tidy profit on their conversion shares when they sell.

Same registered office as AAOG.

The way I look at matters is to consider that UNIlad was sold in a fire sale for £18M.

DS offered £10M but was outbid, as the successful bidder LADBible had also bought a judgement debt of £5M.

UNIlad was relaunched by members of WDC's present Board with £200 in 2014.

So it went from £200 to a fire sale value of £18M in four years.

The reason for failure? Essentially mismanagement both legally and financially.

Legally because they got into a dispute with 33% owner Alex Partridge, whom they tried to oust in 2015/6 and who obtained £5M in the aforementioned court judgement in 2017.

Financially because they lost control of expenditure and owed the Revenue £1.5M, and no doubt many others money also.

DS described it as "runaway train".

So at WDC they now have a proper accountant who will look after the pennies, and DS (Oxford educated barrister) to keep them out of the Courts and to prevent any legal stupidity.

That leaves the UNIlad guys to be "creative".

With proper structures and controls in place they reckon they can do in two years, what it took then four to do at UNIlad.

The 2017 judgement debt shows UNIlad was worth at least £15M within two and a half years, from a standing start in 2014.

Fire sale value £18M after 4 years.

But in the fire sale the UNIlad guys got to keep all the intellectual property and contacts - which is probably where much of the value existed.

This article

https://www.thedrum.com/news/2018/10/05/lad-bible-confirms-bid-unilad-reveals-5m-debt-owed

says the company was probably worth £40M-£50M before it went into adminstration.

£40-£50m gives a valuation of 4p to 5p per share, assuming no more shares are issued, and the Widecells business is dealt with effectively.

So that is effectively my target two years hence.

I suspect that DS is pushing at an open door.

Despite incoming oil revenues it is clear that Congo/SNPC is severely strapped for cash. This is evidenced by Eni having to pay Congo OPEC membership subs, last weeks China debt restructuring and the Trafigura debt restructuring of a couple of days ago.

SNPC have no spare cash and field development is likely to cost a lot more than $28M over the next few years.

Better to take a reduced share and a free carry - that way Congo still get 15% Royalties, SNPC's say 15% to 25% share and 35% oil profit tax.

If they are negotiating about anything it is simply the % share for a free carry, rather than the principle.

That said I have a suspicion (no more than that) that most if not all the negotiation is actually concluded on that front.

It is clear that AAOG (JB and DS) have an excellent working relationship with the Congo government.

The Congo government wasn't obligated to issue the letter from the Minister confirming the licence extension (RNS 30th April). In fact it probably wasn't actually required by DS or JB, but it was given as a favour to DS and JB by the Minister as they probably felt that it would settle any concerns shareholders had over the issue. The licence itself cannot be renewed until 19th January 2020, under Congolese law.

I also suspect that the offshore-technology.com article has more than a grain of truth in it.

I did initially think that maybe offshore-technology was a couple of guys with a rusty typewriter, in some dingy Nairobi basement bashing out articles that contained anything which happened to come into their heads, at any particular moment.

Far from it - and offshore-technology.com appears to be totally legit and a leading website for oil technology matters. The Tilapia field article still retains a prominent position on the first page of their website. There is a facility in which a complaint can be made to the editor if a company considers they've got anything wrong - presumably no such complaint has been made.

Why are the shares 10 pence, with the CPR due by the end of the month?

Well I'm out of ideas.

We seem to be in an ever tighter range these days. Volume gets lower and lower, which I think is good (for now), but the share price does not appear to be suggesting the imminent release of block buster news.

Don't get me wrong - I think that much is going on behind the scenes (of which the Ministers letter and offshore-technology are flashes of light in the darkness) - but the share price stability is very puzzling.

No doubt all will be revealed, and possibly quite dramatically, in due course.

Ah - makes sense!