Member Info for skittish

On the funding issue - the initial agreement with EHGOSF didn't commit WDC to taking all the available funding.

I'm not sure whether that is still correct given that the original agreement has obviously been varied, but I haven't seen anywhere that that aspect has been varied.

The 13th May RNS refers to a £500K being "potentially" available indicating that there is some discretion there not to draw that money, and thus not have further shares issued.

Also at the UK Investor Show presentation on 19th April slide 2 at 0.45 of the presentation

https://www.ukinvestorshow.com/videos/iconic-labs/

refers to funding being available from Alpha Blue Ocean who have entered into a long term funding arrangement and have already some liabilities leaving a further £11,359,231 of funding available to WDC.

"Long term funding commitment from Alpha Blue Ocean which has funded the resolution of creditors and is committed for upto £11,359,231 of further funding".

The same slide also states no need for an equity fund raise (presumably based upon this financing commitment) so the £11M would not be financed via equity. I guess whether or not it is good all depends on the terms. Presumably it is debt at a rate of interest.

Interesting that they are willing to lend £11M+ without security?

I wouldn't have thought that £11M was needed for day to day expenses so presumably it is available to at least part fund an early acquisition.

I think Alpha Blue Ocean have come in for some criticism in the past and and DS appears to be using them in at least one of his other presently private ventures.

Haven't seen Alpha Blue Ocean mentioned elsewhere in relation to WDC, but it is certainly there on the slide - if you look carefully.

Totally correct Tiburn.

That is one of the things which impressed me about AAOG - the depth of knowledge on the Board.

These people aren't here for a quick turn.

Linton Capital DS's private equity outfit also shares not only him, but also James Cane at finance and Nick Butler. Nick Butler was also a special adviser to the Prime Minister 2009 - 2010.

So they really are all top drawer.

News can't be far away. There has been a news blackout on what is actually happening at Tilapia for almost 4 months. The last proper news was 29th January 2019. And the share price has essentially been flat at 10 pence ever since.

It can't go on for much longer.

Maybe gmcc's excellent find from offshore-technology.com was the first bit of breaking news to come.

I suspect that when the news tsunami does break it will be huge with news on multiple fronts over a period of several weeks.

Bring on the RNS's and pity anyone who has not spent the last four months building a decent position here.

Newanda - you are "not slow to the table" - very informative posts.

It is sometimes difficult to keep up with all that is going on.

Quite where ATOG fits in with AAOG (if anywhere) we are yet to find out.

DS does appear to have some sort of ongoing relationship with Alpha Blue Ocean as they are providing what seems to be non equity funding to another of DS's ventures Widecells WDC, soon to be Iconic Labs.

I guess he has their measure, and they are not related to AAOG, so I don't think we have need to worry.

Also after he was forced to take on death spiral finance at AAOG to get TLP-103C completed he ditched it as soon as he could via an equity fund raise.

The same may be happening at WDC with another of their current death spiral funders EHGOSF(brought in by previous management, and prior to DS getting involved), who have just agreed to better terms for future funding - but he isn't able to dump them completely as yet.

In any event if TLP-101ST/TLP-102 are on stream, and with SNPC funds we should have no need of any sort of dodgy financing. And with a good CPR debt finance on favourable terms should be relatively easy to come by.

A confirmatory RNS would be nice, however.

Maybe Alpha Blue Ocean is just a form of short term insurance, so that whatever opportunity presents itself related to ATOG is not lost for want of short term funds. I seem to recall that one of the reasons DS and JB's recent foray with ROSE appears to have foundered was that someone else was able to offer a load of cash up front, whilst DS couldn't.

In any event I think that within the relatively near future all AAOG's funding problems will be history.

Tiburn - I'd agree that information policy does not present DS at his strongest.

However he comes from a legal background, Lukoil's International arm, so maybe dealing with the niceties of stock exchange announcements is not his stock in trade.

Upon re reading gmcc's excellent find, I think possibly the article is not quite as contradictory as I had at first thought.

I had thought that re-perforation and acidisation of TLP-102 would be a prelude to oil production - but of course if you were going to use it as a water injector, then you'd want the water to easily penetrate the reservoir in order to force the oil out at TLP-101ST.

Whilst there would be no reason not to RNS that such works had commenced, there could be a reason not to announce their completion as DS maybe would want the pressure to build in the reservoir before RNSing the completion of the works - otherwise the "knockers" could say the water injection had failed.

If, as you surmise, the article could be/is based on a recent DS interview (and confirmatory April 2019 TLP-102 and TLP-101ST works were suggested by satellite imagery) then the article and contents are really very important.

Google Images shows the photographs accompanying the article (which are not in fact of Tilapia) only appeared on the internet one day ago. So the undated article was probably produced on 9th/10th May.

If it is indeed bang up to date, and accurately reflects a DS interview, it also post dates the technical meeting held at the beginning of last week and thus represent current AAOG thinking.

Thus from the article AAOG intends to produce from R2 and Mengo on TLP-103C, and will leave the Djeno and Vandji to TLP-104.

Thus, possibly TLP-103C will produce sooner rather than later.

The article also indicates that AAOG has carried out seismic studies (and intends to do further seismic) - I wasn't aware of that, and believed that all the seismic predated 2016. Not only that the article mentions that seismic confirms the presence of hydrocarbons in the Vandji - which officially is in the "wildcat" category.

So maybe the Vandji is not quite so "wildcat" as DS and AAOG currently suggest.

So if TLP-101ST/TLP-102 do 400bpd and TLP-103C does 1,500 bpd, we could be up to 1,900bpd by year end, with a good chance of striking oil in the Vandji end 2019/early 2020.

If all that is correct, then a confirmatory RNS can't be far off, as presumably DS wouldn't have given an interview (if indeed he has) unless the water injection has been a success.

To my mind there was too much "new" information in the article for it to be just some "hack" making it up as he went along.

If so. I'll forgive DS for being a bit fly when it comes to PR.

Very interesting article gmcc.

It appears to have been created in the first few days of this month so is quite "fresh".

It refers to the new 25 year licence, which was RNS'd on 30th April, so that ties in.

The completion of workovers in April 2019 is really interesting, if indeed it is correct, as since 29th January and completion of 103C AAOG have been really silent on what has been going on at the Tilapia pad.

Is the article slightly contradictory?

It refers to bringing 102 into production for the first time, after re perforation of the reservoirs and then refers to it as a water injection well. I would have thought those would be mutually exclusive - but I'm no expert.

Maybe they have mixed up work carried out in early 2018 with work carried out more recently.

If indeed work has been carried out to make 102 an injector and the pump (purchased around 2013) has been installed in 101 then that is really significant news.

If that has actually happened then it would tie in with the satellite image I posted on 10th April showing some "activity" in the area of well 102 taking place on 8th April. Subsequent imagery appears to confirm that the "activity" is real, as opposed to an artifact in the imagery itself.

Interestingly (and make of this what you will) but that image was viewed by significantly more people than any other image I have posted.

If 102 is now a water injector and 101 is building up to 400bpd then that could give DS considerable leeway on future plans.

400bpd is worth approximately $600K per month, added to the $600K from SNPC - $1.2M per month income. With that coming in many (myself included) would be much more relaxed concerning a delay to seek to produce from the Djeno on 103C.

It would also be difficult to see how the share price would not react to such news as we would be producing significant oil revenue.

I wonder how they came by this information?

And under Congolese law the licence cannot be granted until 20th January 2020.

It isn't DRC.

Groan.....

I don't know the rig costs - but it isn't just the rig - it is all the people to run it, support equipment, generators, accommodation, kitchens, transport, mud rigs, compressors etc etc.

It is a massive amount of equipment.

You just have to view the rig on Google Earth whilst at Tilapia to see the whole shebang is huge.

And as for getting it for "free" from SMP or Schlumberger - if you could pull that one off then whatever job you are in at present, believe me, it is the wrong one.

Things may change after publication of the CPR, but thus far very little appears to shift the share price.

I suspect the reason is the possibility that DS may go straight for the Djeno or Vandji and production would be put back another year+, and it is putting off any investors who are looking for a "safer" bet which can generate some oil $ short term.

We need to get out of this rut - and the only thing which i think will do it is the near term prospect of decent oil $.

The Vandji, if it exists at our location, is indeed a great prize.

The Djeno which does exist, as proved by DS and JB with the TLP-103C drill, is also a great prize.

The Djeno and Vandji have been sitting down there for around 140 million years, so they aren't going anywhere.

But I think that going for a new drill to prove up the remainder of the Djeno and the possible Vandji at this stage produces serious problems.

AAOG was admitted to the market at 20p on 6th March 2017. The shares quickly rose to 33p on the prospects for early drilling and significant production.

By 27th July 2017 tender submissions had been received for 103 and an available rig to drill identified. Delays in the availability of the rig were announced on 14th September 2017 and the shares crashed from 27p to 14p - they have never recovered.

Equipment to drill was in the country and installed at the Tilapia pad by 19th March 2018, but it wasn't until 29th January 2019 that the drill was actually completed.

So it actually took exactly 18 months from "identifying" an "available" rig for TLP -103 to actually completing the drill.

I guess what I am saying is that from past performance if we went for the full Djeno/Vandji drill at this stage it could be December 2020 before such a drill was completed.

If we really got our skates on and did it in half the time of TLP-103 it would be February 2020 before the drill was complete.

And we haven't even got to the stage of "identifying" a rig yet. So we aren't even on the starting blocks.

Could AAOG do the best part of 4 years on the market without producing any significant oil? Could it do it without running out of money? I'm not sure it could.

So to me the only safe route, to utilise what cash we have wisely, and to preserve the company, is to properly seal off the Djeno at 103C, and frack and produce from the Mengo and R2. That is relatively quick, gives decent production of 1,500bpd, and provides plenty of near term cash.

It won't in reality delay the drill at all on TLP-104 to go deep into the Djeno and find the Vandji, as in the real world we probably won't get a rig for that until towards the end of the year anyway, and won't get the results until early 2020.

The previous owners of Tilapia appear to have done quite a bit of drilling, but actually failed to capitalise on what they found and failed to develop the field before running out of money. Geo's after all will happily drill day and night, produce great reports, all using other peoples money, and then not produce a drop of actual production which can be turned into cash.

Let AAOG not repeat the mistakes of the past.

We need significant production to shift the share price. We can't wait another year+ for it.

We need R2/Mengo production early doors, and getting it won't actually delay 104 going for the Vandji.

The diagram is interesting - but I think we can still get 85%.

My take is as follows -

You've got Gross Production - which is self explanatory.

The deduct the 15% Royalty - which is for use of the asset belonging to Congo.

Then the operator (AAOG) can deduct its costs, up to a maximum of 50% of the total revenue remaining - although it looks like there a clawback provisions for excess costs.

Then take off 1% PID, whatever that is, that goes to the government also.

That leaves Profit Oil and Super Profit Oil.

The Government takes 35% of Profit Oil in tax, if "excess" profits (Super Profit Oil) are made then they can take up to 85% in tax on the "excess" bit of the profits.

Then the licencees (AAOG and SNPC) take the remaining 15% to 65%, of which SNPC get a minimum 15% ie we can still get a maximum 85% in theory.

So even if we get 85% and SNPC gets a free carry Congo still does quite well out of the deal given then get Royalties, PID, Profit Tax, Super Profit Tax, SNPC's share and taxes and money into the local economy.

I don't think these terms are particularly onerous, I suspect they are pretty standard in the industry.

Tiburn - I think your timelines are a tad on the optimistic side, but overall your logic cannot be faulted.

I also think that topside matters also need to be factored in, especially as gas can no longer be flared. So whilst a pipeline can probably be constructed fairly easily, we'll also need a gas fired power station and power transmission lines.

But the shortish term revenue figures at $20M net on just 56% are simply mind blowing.

I suspect we'll end up with 80%-85%.

The Congolese won't end up out of pocket either, they'll get a free carry, their 15% to 20%, royalties, tax revenues and a boost to the local economy via employment and other revenues.

I think one thing that everyone can agree on, is whatever the route taken to full scale development, the figures for income and profit are quite staggering.

As outlined by Tiburn, even taking the lowest risk Mengo approach, we could be making profits in the region of $100m per annum within a relatively short timescale.

Add that to the Djeno prospect, and even the Vandji and the figures become mind boggling.

And in today's market you can buy all that for under £24M.

Nothing is guaranteed, but the difference between the prospect and the present day reality is simply staggering.

Yes - agree, I have always thought that the only option for SNPC is a free carry.

Ying yang - I think you are over analysing. The $663k was a one off payment in February. The March payment of $600k was the first of the instalments, so April's payment is due, and is likely to have been paid.

The debt could be reducing faster than the payments as we get all the cash from Tilapia, I guess it depends on what the running costs are for the field.

There is a figure in the prospectus for this.

Milkz - yes coincidence, but Novum looks like an already well established IT business, albeit in Germany, so maybe they would have difficulty using the same name for one of their products, if unrelated.

No doubt all will be revealed shortly.

Maybe they're into combining UGC (User Generated Content) with data analytics?

Creating the campaign, managing it, then analysing the response and tweaking the campaign and offerings accordingly and in real time?

https://www.sellbrite.com/blog/best-ecommerce-ugc-campaigns-on-instagram/

https://it-novum.com/en/big-data-analytics/

The two 10M trades are from yesterday, 1st May. Both were at the selling price and the price dipped immediately afterwards, confirming that they are sells and which explains the price volatility in the last 30 minutes yesterday.

Presumably EHGOSP getting rid of 20M, as they would of course have known that the news was about the break.

The obviously believe that it is to their overall financial advantage to possibly pay a little more for future shares, knowing that the could make a quick guaranteed 50%+ on the shares they converted a couple of days earlier.

Overall it will probably be good for other holders in the medium term.

I think we're jumping the gun a bit here.

I see the position thus -

The GM on 17th December 2018 gave authority to issue a nominal amount of shares to the value of £5,221,000 for a period of 6 months.

60M or a nominal value of £3,000,000 were issued on 9th January 2019.

That leaves £2,221,000 nominal value potential shares to be issued before 16th June 2019 or 44,420,000 in total.

Even if they were issued at 10p, that will only raise £4.4M. At 8p it is only £3.5M

They could seek further authority, via a GM, which they may or may not get.

If people have been forward selling in any potential placing above the authority already issued and prior to any GM that raises a massive can of worms -

https://www.fieldfisher.com/publications/2017/02/forward-selling-of-placing-shares-leads-to-public-censure-and-fine

So present authority is only for 44M shares, I wouldn't welcome it but it wouldn't be the end of the world as it isn't a massive increase on the 239M already in issue.

In any event £4.4M (or £3.5M) is not a massive amount of money set against their present income of around £500K per month.

So I wouldn't see the point unless were for a time critical and very juicy acquisition.

£4.4M I wouldn't think is enough to get a rig for either 103ST or 104.

They could go for further authority but if there has been forward selling and they don't get it though certain people could be in big trouble a la Cornhill Capital.

And they may or may not get it through judging by what has been said on these boards.

In any event DS has always presented AAOG as a low(er) risk E&P company. We've get the E so lets get going quickly with some decent P, as that appears to be the only thing which will actually shift the share price upwards.

Boredom?

More interesting, why did we close flat?

Even more interesting why didn't the licence confirmation send us up?

We do indeed live in interesting times.

No - but DS in the RNS of 25th April appears to have signalled that he no longer needs to acquire any conversion shares to attain control of the company. In addition that suggests he doesn't expect the issue of more conversions shares that will undermine his existing position.

Further the apart from the initial cheap conversion shares which were at a set price, all future conversion shares (if there were to be any) would be issued at a price which reflects the actual share price of the company - as the monetary sums are fixed, a higher share price means fewer shares to be issued for the fixed sum, which in turn boosts the share price, thus resulting in a virtuous circle.

Further whilst EHGOSF would be guaranteed a nice return on the cheap fixed price shares, any future shares to be issued would carry a much higher risk for EHGOSF , thus rendering their issue less likely.

All signs point to no more conversion shares.

Further EHGOSF, given that they have unloaded around 22% in the last 5 weeks and given they only had around 6% on Friday AM, and the volume that day (350M or 42% of the shares in issue) they could well now be down to zero.

Thus the cheap flow of shares that restrained the sp at around .003p have now ceased.

Clearly parties have been taking positions, quite a few TR1's to come next week, I think, and Mr Aftab with 5.81% is interesting. He only bought after DS signalled no more conversion shares.

Is he in for a quick turn or to acquire the legacy Widecells buisness on favourable terms. If the latter has he left it too late to acquire a decent holding, given that the conversions share tap has now been turned off?

Given that Widecells lost £2M in the last reported 6 months getting rid of this would be a real boost for the share price. That partly, and the influx of new cheap shares is what was holding the price back.

At £3M WDC is barely valued at not much more than the costs of listing on the main market.

Now there are no more cheap shares about, the Widecells business in play (depsite being a car crash it still has some valuable assets, licences etc), Mr Aftab wanting in (and possibly leaving it a bit late to build another decent stake so as to improve his negotiating position) there could be fireworks share pricewise next week.

I think it is a case of "standby for action!"