Member Info for Spudsoil

Musings about what it will take to get increased interest and excitement pointed toward the company….. It appears very much unloved still.

I’m sure it’s a combination of factors including sector, geography/ geopolitics and company history, but at some point those areas should recede somewhat if we are able to sustain and build production to a level that catches the eye.

All appears to be quiet on the institutional investor front at present, but patience alongside an improving risk profile (financial results plus a forward plan that has sufficient impetus about it to create an investment appetite) may stir some of the II’s in to taking a look.

Another 12 months could see us comfortably north of 1000boepd with projects 3 and 4 closer to bearing fruit.

I do think there’s a good investment case to be made now, and that becomes more robust if we can execute without hiccup over the next few quarters

Thanks for sharing. Best interview PH has given in some time, encouraged to hear about the work happening on projects 2 and 3 that isn’t classed as material but is still important and moving those projects along.

Also good to hear that current cash flow ‘sits well above our break even mark’, the mark which presumably now factors in the additional liabilities (loan interest payments).

I get the impression production has stabilised somewhat, if that is the case it’s a good platform to add what will hopefully be significant extra contributions from the new well.

Key now is increasing the turnaround time between project one wells. WRB01z spudded in December 22, current drill spudded July 23. I hope the shareholder loan and improved cash flow from higher production means the next spudding isn’t 7 months away. Would have been good to get a question in about this in today’s interview.

Lots to be optimistic about

If I’d been offered 10 cents on the dollar for my FRR investment a couple of years back, I would have taken it. Didn’t seem like there was a way back when all the info emerged in 2019/2020. I wouldn’t take 10 cents if I was offered it now. Not sure I’d take parity either actually. Might be foolish thinking but can’t help thinking something is brewing. A few hurdles left to jump but rather than new hurdles being put up in front of us, as was happening a couple of years ago, it’s the existing hurdles that are being dismantled one by one. Fascinated to think how this will eventually turn out. The impasse can’t last forever (I think!) and fingers crossed we’re in the closing stages.

Not sure what to make of this, am all for efficiency but when you’re supposedly on the cusp of securing non-dilutive funding it seems a strange time to fold the position of CFO. Maybe the funding has fallen through and he’s falling on his sword. Or maybe they’ve wrapped it up and he’s surplus to requirements. The guessing game continues with Block

Hi rocklawn, there should be news due over next few weeks on a number of fronts - the q3 update in around 4 weeks I hope will point to a level of production that reflects a degree of qtr on qtr stability, and will also I think capture at least some of the oil sales completed when oil prices were north of 100 dollars.

Alongside the bau production we have the new well for which we may receive a few updates in the run up to the all important ‘we can extract commercial quantities’ rns.

And then we have phase 1 of the new strategy- for no other reason than it being labelled as phase 1 I would hope we aren’t far off an announcement, but I do wonder if the rising interest rate environment has delayed an agreement - whilst I am excited about what non dilutive financing can offer (an accelerated work programme plus cessation of the monthly shares for salary scheme are the two main ones for me that talk directly to shareholder interest) might be wise for a bit of expectation management in this area - I’d love to think we can secure a 100m facility at sub 6 or 7 percent, but we could easily end up with say 10m at 12 or 13 percent - a useful cash injection but not something that really push us on to the next level, and comes with a big financial overhang of hefty interest payments.

An exciting few months and if phase 1 and 2 deliver on or above expectations then the company will be set up very nicely for future growth

Good summary ODR. Most likely for me is 5, just popping a combo of 1 and 2!

What’s your plan to replace him then bigboffer? Always easy to push for change, much harder to define what any future CEO would need to do in order to make this company grow. In a country like Georgia relations with the institutions that matter are so important. We have that and whatever we all feel about lack of progress with drilling and PH’s ludicrous remuneration scheme, we don’t know if we’d be better off with a new chief.

I don’t see the point in voting him out now. There is clearly an excellent relationship between Block and the relevant Georgian institutions, and all the recent press releases point toward a busy period of drilling, financial arrangements and possible deals with other O&G companies. Despite the poor track record and sporadic approach to shareholder relations and communications I’m prepared to give the board my full backing until the current phase of the strategy is either proved successful or otherwise. If that means taking a risk with PH at the helm I’m prepared to do that as it feels like we are closer than ever to a transformational period for the company.

Hi Hepseal

I partly agree with your statement but also think it’s worth building in some flex on higher flow rates initially when 38 was turned back on. So it looked great for PR for the q1 ops update but the reality was the flow rate was always likely to ease off before it settled at a stable production figure. That’s an alternative take on your view, and would help to back up PHs comments. But I can see it both ways. As ever, insufficient detail on specific flow rates linked to each well leaves us guessing, and when that happens with the track record of Block it’s easy to jump to the conclusion you have.

1. All oil producers experience declining production over time if they don’t drill new wells.
2. Finance to support an accelerated programme of drilling will provide opportunities to arrest that decline and shift the dial to a regularly increasing set of production numbers, if a good proportion of those drills produce at commercial rates.
3. We have the support of the institutions that matter in Georgia
4. We acquired gas opportunities from Schlumberger that are well recognised and offer game changing prospects if they can be monitised.
5. Visible progress towards our new drilling plan is slower than expected, leading to share price weakness.
6. Actual progress on non-sexy (I.E. spud) elements of the drill appear to be well advanced.
7. Money talks
8. So do flow rates

Really happy with that update. Stable production is the most important aspect as without that we can’t move forward. We’ve achieved quarter on quarter stability - don’t think we should underestimate how important that is.

I’m also very excited by the fact that project 1 and 2 will be running at the same time. That’s huge for a company that is looking to accelerate growth (and market cap).

And gas later this year .

Things are going to get very interesting with Block!

Today’s interview was best Ive heard from PH (aside from the ‘can’t see Brent dropping below hundred’ comment, on the day it breaks 100 for first time in months!)

Acceleration of drilling pace is key to us growing as a company and to hear him say every 60days for a sidetrack is really encouraging. Whether it’s cash flow or kit supply issues we are obviously nearing the point where we start drilling again, and from there we could be in for an exciting period of growth

The annual report confirmed shares in lieu of salaries would continue until we are financially on a stronger footing. So we are set for the scheme to continue for a good number of months yet. Perhaps earliest we can expect a winding down is when we sell oil from sidetrack. End of year? 2023 promises to be big. I’m anticipating oil prices staying strong for a couple of years yet, even a 50% reduction would see us selling at a healthy profit anyhow. We just need to get the damn stuff out of the ground!

Jv123 - I haven’t posted for a long time on this board but still look in on a regular basis. Your question around lack of communication…… my view is there are two logical explanations.

Firstly, the legal web the company finds itself in means they don’t have the appetite to communicate out formally in case this can be used in some way against them in legal proceedings. I’m not a lawyer and dont profess to know a great deal about corporate law but I can’t convince myself a company could ever be in that much of a legal quagmire that it can’t manufacture a basic update to its shareholders. A simple ‘we are unable to comment further at this stage but remain committed to securing a future for FRR and it’s shareholders’ would do - how can that possibly be used against them? My answer to to is that it can’t, which brings me to my 2nd logical reason, which is a little sinister…..

Shareholders of FRR that were invested prior to the company going private no longer hold equity of any value in the reformed company. The longer the company leaves it between the delist and and future reinvention, the more likely it is that the original shareholders will have (take your pick): died, lost interest, lost appetite for a legal fight etc etc.

So I fear that the the titbits that Looed gets fed are simply statements Aimed to reduce the likelihood of a mass shareholder action/rebellion. And date I say it - it’s working.

I hope so much that I am proved wrong but I just cannot come up with another explanation that makes sense. Why communicate with a (no offence Looed) unknown individual shareholder but at the same time be incapable of issuing the most basic of shareholder updates.

We had 84 pages of annual report for 2022 - with a detailed update on everything you’d expect. I’m anticipating the same today

This was communicated as the (delayed) spud date on this forum. I wonder if the delay (if that is correct) and revised date is linked to the point at which block expect to receive proceeds from oil sales. That in turn (plus successful spud) will likely be pre-conditions for financing. I’m still expecting this to come good and shareholder value increase, and delays in this industry are commonplace at the best of times. The company has done well to get through to this point without another raise - am sure the oil price has been a factor! - and I hope that the next few months enables block to put itself on firmer ground financially. I would be happy to plod along for a few months, complete next drill and then lock in finance if the alternative is to complete the financing deal now but on more punitive terms as we are less financially secure. Whatever happens the next few weeks and months are likely to be news-filled which is always helpful in generating PR. If the news is good then the PR is good and away we go!

Expecting some news next week. The end of year results are due imminently and we should see some comments as part of that release on progress being made in the field. Or we get a separate more detailed interim ops update to confirm spud. We are due an explanation as to why things are taking longer than standard to kick off the next drill. Credibility will be getting questioned (again) if not careful and there’s no excuse - even if we aren’t ready to spud a simple update confirming why would be appreciated by all shareholders. I’m writing this thinking we are also on the cusp of potentially company changing financing news so I am willing to show more patience than normal as the board may be laser focused on concluding that at present, but still it doesn’t take much to draft an update, and it demonstrates they are close to shareholder concerns and expectations.

Thoughts on why things are taking longer than most expected for the new drill:
1. Shipping / transport route could be impacted due to Ukraine war
2. Oil sales to fund purchases could be impacted due to Ukraine war
3. Non-dilutive funding terms having to be renegotiated due to rising interest rates
4. Ordering enough kit for two drills likely to take longer than one drill

I’m not hugely surprised by the delay and anticipated things potentially slowing down due to the war - who knows how Block or it’s suppliers is impacted by sanctions/shipping routes/funding issues.
I do however hope to hear from the company soon with an update on non-dilutive funding plus the two drill programme (that may be me a multi will programme if funding is secured).

If I’ve done my calculations right that’s around £750k of options, so 10% of our mcap. Some will vest in future years as part of the LTIP but others vest straight away. Maybe this is what the gang last year were kicking off about - the reward for senior staff seems hugely disproportionate to what has been delivered in 2021. I’m sure they’ve worked hard but a bonus is a bonus - and rewards success - failure at the well head, and a miserable share price is not success.

My only solace is that if they’ve agreed to take shares rather than cash - maybe they had to as we only have 800k in the bank, but either way the more options our CEO gets the less likely he is to dilute via other means.

Bring on the next drill and the finance package - success with both of those and we should be able to finally look forward with confidence.

Decent update - steady away and primed for bigger news to come, both in the form of another drill (and potentially a second one soon after given they are procuring kit for 2) and financing to support further expansion. All good and we can’t be far away from the monthly share for salary scheme finishing - suspect when next well comes online.