Our live Investing Matters Podcast Special which took place at the Master Investor Show discussing 'How undervalued is the UK stock market?', has just been released. Listen here.
For the record
Without having to justify anything to anyone, I have stated since early September having an extremely busy workload. My companies were and still are progressing some large business opportunities. This was true and still is. What I didn’t mention as it would have been inappropriate, was one of those projects was/is Challenger Energy Group PLC.
Based on recent posts, some insulting, libellous, and/or ridiculous by admitted ex-shareholders or disgruntled current ones, I state the following for the record:
1. Two of my companies have signed an NDA with CEG. The contents are confidential.
2. We have engaged with senior CEG Execs on various matters. Even if no NDA had been signed it is a breach of LSE forum rules to publicly divulge the content of such emails, documents or conversations without permission. Furthermore….. unethical.
3. I/we have never been paid (directly or indirectly) to post here. It was always my hobby that started out of boredom during Covid-19 lockdown.
4. I/we are NOT Billy Clegg / James Crothers / Hugo Liddy and/or the PR company CAMARCO named on each BPC/CEG RNS.
5. I continue to own well over 10m CEG shares. And I have NOT ‘slithered away.’
6. It is for CEG to decide if and when to inform the market via RNSs re points 1 and 2 above. I will not and cannot give a running commentary.
This post is on the record as my integrity has been questioned by a handful of persons described above. Perhaps those folks can get a life rather than hang about forums bombarding insults or mocking others’ current paper losses. At least treat others with the respect you expect from them.
It is for you to decide whether to buy, hold or sell CEG shares. I strongly recommend DYOR or take professional advice.
End of Sunday sermon.
GLA
Starchild
https://www.lse.co.uk/profiles/starchild
I've only just seen the Proactive presentation. Don't know why i didn't get email from Proactive as I'm on their mailing list.
Anyway, clearly CEG are attempting to get funding 'by year end'. My point 9. We await news
Business continues to be hectic, hence my absence. The interims showing c$20m debt are clearly of major concern. My frank opinions where we are today without beating about the bush are below.
Scenarios using round figures
1. Ex-CERP assets sale. CERP was merged for £24m/$32m in a fire sale when PoO had collapsed. It included known debt of 2m (paid by Trafalgar), and unknown debts of $5m, but also substantial tax credits of >$25m net. Furthermore, if Trinidad assets were sold within 2 yrs of purchase (Aug 2020), IMO Heritage may have rights to a cut. IF IF IF ex-CERP could be sold for the same price £24m/$32m in Aug 2022, CEG would pay all its debts ($20m) and be left with $12m. Our remaining assets would be (a) Uruguay, but farm-in under the current anti-drilling climate may be almost impossible, so is it worth spending $1m on fees just in case? And (b) Bahamas, which will mean spending a max $5m on Gov fees until 2024 out of the $12m cash left with the hope of a farm-in if the Percy-1 autopsy merits it. $5m assumes no Gov discount.
2. Merger. CEG shareholders would get cash or shares. Ironically, if the above ex-CERP valuation is met or exceeded, and the buyer doesn’t want Uruguay or Bahamas and lets the licenses lapse, we would get $12m + the value of a potential future monetization of Percy-1 data for anyone drilling in the region. Let’s assume this value is zero. $12m/£9m is approx 50% more than CEG’s current Mcap.
3. Forced asset sale or attempted liquidation by an unfriendly creditor taking the matter to court. See points 1 and 2.
4. Cash injection by a 3rd party. Based on the massive share dilution, it will be akin to a merger as it would include $20m debt payment and capex to spud S3 and Suriname etc.
5. Swap debt for equity. Similar to point 4 unless some of the debt is discounted.
6. Do a deal with local firm owed for S2, to drill S3 and keep almost all production. If a success, CEG can develop S4+ with that firm or others.
7. Offer creditors ‘fair’ interest only payments for 3 years to allow CEG to find a solution.
8. Attempt to get farm-in partners for S3 and Suriname (and Bahamas) and try to keep creditors sweet until August using the justification of the 2-year transfer issue in point 1. IMO, the main creditor appears to be Stena for $12m. They are key.
9. CEG to find an out-of-the box solution not covered above. Or are working on one but it’s not in the public domain yet.
Today we are on point 8 but I would argue Hurricane were in a worse position last year compared to CEG today. PoO is helping for the foreseeable future. FTR, had I known about a $30m hole in March I would not have marked CEG Buy, nor have taken part in both the OO and Placing. However, I have no intent to sell any shares. And have not.
DYOR. GLA.
Starchild
https://www.lse.co.uk/profiles/starchild
JohnBriggs: Friday is not over yet. Furthermore the deadline for interims is Oct 31 Sunday. Nothing stopping CEG issuing a https://www.cegplc.com/news/ as was the case during the environmental shenanigans over New Year, for the company to keep the market informed. Technically anything between 4:35pm today and 0700am Monday makes no real difference as the market is closed. However if the RNS is issued Monday 0700am rather than a news flash before UK midnight on Halloween, this may annoy CEG’s Nomad and the AIM regulators.
I know in the countries I have companies registered, deadlines are midnight local time and not 7am the next day. However none of my companies are listed on any stock markets as I only wish to be answerable to G+D, my wife and the laws of the countries they are registered in (in that order). The idea of being answerable to public shareholders, never has or will ever appeal. I would rather be castrat4d without anaesthetic.
Onlybpc: I am sorry for your current financial losses, however I found your comment aimed at me this morning somewhat disappointing. And no, I haven’t slithered away or sold any CEG shares. I’m just very very busy. I wish you well.
GLA.
Starchild
https://www.lse.co.uk/profiles/starchild
Read https://ewnews.com/pm-engaging-with-experts-to-formulate-position-on-oil-drilling
I see this as quite positive
IMHO. DYOR. GLA.
Starchild
https://www.lse.co.uk/profiles/starchild
Druid: your recent posts re SWP are outrageous and potentially actionable by CEG if shorting CEG based on alleged false intel. Read https://www.cegplc.com/operations/trinidad/bonasse-icacos-cedros-production-development/ re 2039 expiry.
Is CEG lying re 2039 expiry, are you or just another(!) misunderstanding?
Respond in 24 hours please. GL.
Starchild
https://www.lse.co.uk/profiles/starchild/
I’m not enamoured by the trolling, goading and gloating from apparent ex holders. They forget there are real people with paper losses, and this is not a virtual computer game where the objective is to hurt or kill the enemy. It must also be said, if this BB and similar outlets are being manipulated by anyone acting on behalf of (eg) another oil company or individuals with undisclosed conflicts of interest, this is potentially actionable by CEG and its shareholders. At least severe reputational damage.
One major holder sold at least 19.5m shares in 2 trades yesterday within 21 seconds of each other. One was delayed by an hour, the larger shown after close. It was 1 transaction. If they had > 3%, this should be shown in a TR-1 shortly. The only way to execute such a large trade(s) is to contact one of CEG’s 2 brokers. Had they believed a disaster was looming, they would not have quoted.
Analysis and assumptions
1. The latest accounts stated up to $15m is potentially due within 12 mths. What was not disclosed was cash held. If CEG had $5m, then net max debt is $10m. We await interims.
2. The financials also stated CEG has stopped burn rate and expects net cash inflow of $2m/yr, perhaps more (@ Sept PoO) with additional cost cutting and maybe a S3+ farm out that results in decent production and % share.
3. CEG is generating c$10m gross even at 400bopd x$70/b. However, it has fallen out with PRD for reasons unknown. These niggles appear to have started when PRD made a public offer in the middle of the CERP merger.
4. CEG has huge potential SWP exploration assets subject to Capex or farm-out. To a lesser extent Suriname, which too can be JV’d to save $700k capex. I will leave aside Bahamas.
5. CEG has T+T tax credits worth >$25m net
6. Unless absolutely necessary, it will be daft to do a placing now as a max 700m shares can be issued without an EGM.
Solution roadmap
A merger? If T+T assets were sold <2 yrs of the Aug 2020 CERP merger, 18% (?) is due to Heritage. Regardless whether now or > Aug 2022 the new owner would save annual $3-4m G&A to add to the $2m point 2. Plus the mega potential in point 4, less debt at the time.
These and other points could help justify keeping undisputed creditors ‘sweet’ for now. Key messages: …. ‘Give us a few months so we can find solutions to S3+ LC and the stuff in Starchild’s point 4. If we can’t, we’ll search for a CEG suitor or do a placing in the summer. Either way, you’ll be paid in full and a bit extra for the delay. There’s no point using the courts as it can take 2+ years, a load of hassle and mega legal fees. So CEG has a roadmap for your debt and a light at the end of the tunnel. Win win…..’
DYOR. GLA.
Starchild
https://www.lse.co.uk/profiles/starchild
‘Bad’ Druid: I find your written comms ‘skills’ as confusing and irritating as this customer’s verbal ones: https://www.youtube.com/watch?v=CNTM9iM1eVw GL anyway.
Onlybpc: If you've sold up, I will miss you.
I'm still very busy with new biz opportunities for my companies. One deal done. One to go. And a new one just popped up.
I'm also still very much a CEG holder as IMHO there is potential light at the end of the tunnel. And by that I do not mean an out of body death experience. I remain patient.
Pageofcups: keep up the good work with your insights.
DYOR. News awaited. GLA
Starchild
https://www.lse.co.uk/profiles/starchild
The new gov came into office when Parliament opened yesterday. Coincidently and less newsworthy, on the same day 7 years ago I first became a BPC/CEG shareholder.
Refer to the full list of the Gov’s manifesto in the equivalent of the Queen’s speech broadcast a few hours ago https://ewnews.com/read-the-full-speech-from-the-throne
Extract from a key para in full…
“…..My Government will work to ensure that the natural resources of The Bahamas benefit our people.
My Government will strengthen legislation that established a Sovereign Wealth Fund.
My Government proposes that all of its non-financial assets will be held in this fund for the benefit of generations of Bahamians.
My Government will provide the legal, fiscal and regulatory framework with the creation of the Ministry of Natural Resources and the Environment.
My Government will secure Carbon Credit payments for our natural resources…..”
I think it is very wise that the new Gov created one Ministry dealing with the environment and natural resources which logically includes a county’s energy sources such as wind/solar/wave/gas/oil. There was no mention of banning oil and gas exploration. Furthermore, countries do not get massive negative carbon credits for exporting oil and gas, only burning the stuff within their territories. (This excludes CO2 emitted from a FPSO, oil platform, or tanker)
Off topic: I found it interesting that many traders are betting on $100/b PoO, and some even $200. Read https://oilprice.com/Energy/Oil-Prices/200-Oil-Traders-Are-Betting-Big-On-A-Global-Energy-Crunch.html
On topic: Major oil companies may now be interested to farm-out discussions based on the apparently friendlier administration now in office and the potential massive upside if oil is found at current/projected PoO. This is contingent on the Percy-1 autopsy meeting or exceeding expectations. After it has been presented to the new administration as contractually obligated, CEG will make it public for a heads up.
DYOR. GLA.
Starchild
https://www.lse.co.uk/profiles/starchild
LLL: very useful link thanks.
Druid: Re your comment to my earlier post this morning. Without causing offence, based on your posting history I wrongly assumed you hadn’t had much of an education and were possibly academically challenged similar to Little Britain’s Viki Pollard. (Watch https://www.youtube.com/watch?v=7sB5LU3jqC4 warning adult themes). I was clearly wrong. GL
Starchild
https://www.lse.co.uk/profiles/starchild
Fatalcharm/HBURGH68: Thank you for your kind words. I continue to be time challenged since early September working on a couple of large projects through my companies. Subject to my bandwidth availability I plan to pop-up and comment on any RNSs if warranted. No doubt Antha, ZagEgypt and a few others will remain in a holding pattern awaiting my opinions so they can continue to insult the company and me. I wonder if they’ve read the Count of Montecristo? Great book and movie.
I personally continue to have faith in CEG, hence the following IMHO analysis on the future share price subject to patience…...
‘…. A horse trots into a pub and orders a cider, coincidently followed by a Challenger Energy share-shorter who sits next to the horse and orders a whole bottle of vodka to drown his sorrows. And the barman says, ‘hey you two, why the very long faces?’… ‘
DYOR. GLA. And Be nice.
Starchild
https://www.lse.co.uk/profiles/starchild
xxx
Malcy produced a very eloquent elevator pitch yesterday on the financials. Read https://www.malcysblog.com/2021/09/oil-price-challenger-chariot-prospex-and-finally/
Anti-CEG commentators and shorters immediately homed in on the auditor’s paragraphs in the report and extracted worst possible outcomes. It’s the duty of an auditor to independently explain potential risk to shareholders. CEG has $15m due for some expansion and historic debt, however we do not know it’s cash balance today, nor how amiable creditors and future suppliers, partners will be to do deals. For example to farm-out Trinidad S3-S5, or a potential Bahamas one. There is no way Arena would have contemplated doing a $10m deal for expansion, having undoubtedly undertaken some initial due diligence, if they were concerned the business would collapse. Furthermore in CEG’s favour is $70+ PoO. If it was <$45/b I’d be concerned. Currently I am not.
Also of note is Bizzell Capital Partners owns >11% of the company as at 30/6/21 and a £500k CLN outstanding. Stephen Bizzell is on the BoD (source https://www.cegplc.com/investor-relations/major-shareholders/ ). Those shares were ‘bought’ for 3.5p (converted) as part of the company reset in the Spring. There would have to be a dramatic chain of events for them to support mega dilution at a silly rate, or a merger for less than 3.5p. I’m not saying this will not happen, in the same way there is always the risk of getting run over by bus. Risk always exists , so it’s up to you to DYOR.
No doubt, angry ex-holders and admitted shorters will be in full swing.
GLA
Starchild
https://www.lse.co.uk/profiles/starchild
I’ll give my feedback in the morning warts and all. Two initial speed reads of the 2020 financials did not cause me to self-flagellate in despair, nor open a bottle of the best wine Lidl can offer in celebration. The fact of the matter is, shareholders will probably not know the up to date position on various fronts until the interim financials are produced end of September.
What I find unpalatable, is mostly disgruntled ex-shareholders and someone who has openly stated s/he is shorting CEG, immediately extracted the worst possible permutations from the RNS to further their agendas.
GLA
Starchild
https://www.lse.co.uk/profiles/starchild
Druid: yesterday you stated….’even SC is too tired to post an original diatribe these days’…. Respectfully, I suggest you spend your spare time organising 2021 winter solstice events, rather than wasting energy erroneously opining about me on this BB. Furthermore, your choice of the word ‘diatribe’ is offensive as it means my posts are…. ‘forceful and bitter verbal attack against someone or something’. No one can possibly accuse me of this or being a troll.
My post on 16/9 explains the main reason why I have not been commenting on this BB. Read it here https://www.lse.co.uk/profiles/starchild
Furthermore, over the last few months I’ve given researched opinions in good faith, of most permutations that may happen in CEG world with news awaited on various fronts. Refer to my 9/9 post for the list.
1. I STAND BY what I write (caps used for emphasis not shouting) and openly place the above link on my posts so that anyone who wishes to, can review my previous ones.
2. I STAND BY a key post I wrote on 22/2/21 prior to the April placing/OO before we knew the extent of the unbudgeted Percy-1 related legacy debts (dilution ‘haircut’), half of which is/was disputed. That post listed possible 'medals' to be won in this CEG investment ‘race’: wooden spoon, bronze, silver or gold.
3. Since that 22/2 post, despite Saffron 2 not having an engineering solution to the lower cruse YET, CEG can farm out future drills or only roll out middle cruse, subject to current S2 production being maintained. Therefore this ‘race’ is very much still being run on that front and many others.
4. I also put my money where my mouth is and now have >10m CEG shares, several million purchased at 1.2p - 2p.
5. I STAND BY in my belief CEG’s £12m MCap is seriously undervalued, because even if everything that can go wrong does, the company can (a) outsource everything, make drastic cost reductions, and just collect revenue, or (b) merge for a lot more than the CERP c£24m deal purely based on the current price of oil and a possible looming energy crisis. I therefore have no issue with my current investment based on the upside of some news being positive or extremely positive.
I STAND BY the above, ……. and real shareholders ALL STANDBY for news. However, as I am not a clairvoyant, I continue NOT to mark CEG as a ‘buy’ until positive news materialises, because financial circumstances and risk appetite differ between individuals who should always DYOR.
Druid, GL while you're arranging the winter solstice events. It's less than 3 months away....and GLA
Starchild
See https://ewnews.com/forming-your-government-11-more-cabinet-ministers-appointed-in-davis-administration
Recently elected MP Jobeth Coleby-Davis has been appointed minister of transport and housing. She was a Senator and CEG’s inhouse legal counsel for many years. I believe she still is.
MP Vaughn Miller has been appointed minister of environment and natural resources. Although government handover doesn’t happen until the day after Parliament reopens on October 6, it is almost a certainty CEG execs have already knocked on Mr Miller’s door to resolve licensing issues and to provide the results of the Percy-1 autopsy.
Once the gov gets the results, CEG will make them public probably soon after October 6. The current administration is still in power in the same way President Trump was until January despite losing the November election.
If the results are OK, there will be interest by oil majors. It could be argued they could wait 3 years until the licenses lapse; however, it would take another couple of years to issue a new round of acreage bids, assuming the State wants to. If it does, it is likely the royalty goal posts will be moved. Therefore, oil majors will unlikely procrastinate and subject to the Percy-1 autopsy being OK, could have a flutter out of pocket change for a 2nd drill at the Jurassic levels. As part of a deal, if a major pays towards the $150m back costs spent on Percy-1, CEG will have funds to spud Uruguay. As incentive, CEG could give them a 25% chunk of Uruguay acreage. The permutations are simple: no mega spuds, 1 spud, or 2 spuds if a major pays some legacy back costs.
Government debt is $10.3b with a $950m budget deficit projected for 2021/22. The interest rates the State pays are punitive, recently 9%. It is in the interests of the State and Bahamian people to support oil exploration off Northern Cuba. After all, oil tankers pass through Bahamas’ waters daily. Furthermore, exploration, appraisal, and production via FPSO will not be 10 miles off Andros Island’s tourist beaches.
Due to the election result I purchased another 2m+ shares in 250k and 500k chunks on Monday and Tuesday. But that was my decision having analysed the overall risk model based on expected news-flow, which I listed here on 9/9/21.
As I see things, if everything goes extremely badly CEG will merge with another operator at a higher MCap than the c£24m paid for CERP. Currently @$70/b, PoO is on CEG’s side, but during 2020 it was not on CERP’s side. Leo recently admitted CERP was running on fumes. However, if everything goes very well (Bahamas farm-in and/or future Saffron LC success and a full SWP roll out), I hope to get a 7-figure profit. I’m not suggesting anyone else follows my lead nor takes the same investment risks…..so DYOR.
GLA
Starchild
https://www.lse.co.uk/profiles/starchild
The opposition party (PLP) are predicted to win the election. The PM Dr Minnis has already given a thank-you concession speech. (source http://www.tribune242.com/news/2021/sep/16/general-election-results-live/ )
His party is anti-drilling and from reading between the lines over how they dealt with CEG's alleged license fees owed, using the media, somewhat difficult to negotiate with. I hope the incoming government who will take office after parliament opens on October 6, will be more friendly.
The above is good news for CEG.
Subject to the Percy-1 autopsy being OK, any Major Oil-Co potentially interested in visiting GNEISS' data room are probably more inclined to do so today, compared to yesterday.
DYOR and GLA.
Starchild
https://www.lse.co.uk/profiles/starchild
I’m supposed to be semi-retired but my companies are progressing some large biz development opportunities which is taking a lot my bandwidth. Hence the radio silence. I’m still a shareholder and haven’t de-risked any CEG shares, nor plan to do so.
Some acknowledgements:
All: Many thanks for the positive feedback to my previous post on 9/9.
GG: You made my day on 9/9
Buster_Pila re your extremely rude 9/9 post telling me to ‘STFU’, coincidently I did for a week. Without causing offence, in that post you appear to have shown the cerebral capacity of Blackadder’s Baldrick. ( watch 2 mins https://www.youtube.com/watch?v=tGxAYeeyoIc Warning: bad language and the use of a slur word used to describe Germans in the 1910s)… But GL anyway.
DYOR and GLA.
Starchild
https://www.lse.co.uk/profiles/starchild
Dear CEG
Please bombard shareholders with RNSs on the following 20 topics:
General
1. 2020 financials and a recent production & cash update
2. Funding plans
Bahamas
3. If the $7m alleged ‘legacy debt’ is close to being resolved. If not, a simple statement will suffice, such as ….’CEG believes the disputed remaining $xxx, can be resolved by year end and at a discount. Payment if any will either be by issuing shares at a premium price and/or a payment schedule which CEG believes can be adequately serviced from future cashflow.’
4. Confirmation ALL non-disputed Bahamas bills have been paid (excl point 5)
5. Status of licenses and the process to resolve amounts allegedly due to the State
6. Percy-1 autopsy and what the findings mean in simple language. Perhaps Proactive can interview expert Dr Zac Phillips or someone of his ilk.
7. Farm in update. Is a major planning to visit Gneiss’ data room?
8. Are there plans to sue those involved in the attempted injunction which forced BPC to get punitive financing and cost holders $$$ because they couldn’t de-risk part of their holdings prior to the result?
Trinidad
9. Is S2 still producing 80boed+? How’s the upper cruse doing?
10. Farm-in update for Saffron 3++
11. Are there engineering solutions for lower cruise? What do the best engineers in the region think? I’m no expert but could shale oil engineers have some innovative solutions as they deal with large chunks of debris all the time?
12. PRD CO2 JV update
13. Updated CPR based on S2 results?
14. Well automation update
15. Work-over statistics
16. Plans to eventually ‘acquire’ other wells via JVs, leveraging CEG’s know how, automation tech and STOW certification.
17. How will CEG’s STOW accreditation in other areas potentially earn $$$ or save $$$?
Suriname
18. Will the EWT be brought forward using local contractors under remote CEG supervision, with 1 fully vaccinated senior CEG engineer onsite?
Uruguay
19. General update
20. Could a % of this asset be leveraged to get a Bahamas farm-in?
Note: for topics 5 – 7, due to the election on 16/9, CEG will possibly wait until formal government handover. This takes place the day after Parliament opens on Oct 6. This is irrelevant if the current party gets re-elected.
GLA
Starchild
https://www.lse.co.uk/profiles/starchild
All: I would normally email a CEG exec, but there’s nothing confidential or controversial, hence today’s open post. Have I forgotten something?
Jono44: I post opinion and commentary based on researched evidence and facts. I openly share the sources. And never knowingly mislead.
Antha: I’m a troll? How sad. I’m in my 7th decade of life and never been accused of that before. You appear to be an embittered ex-holder or shorting CEG without disclosing it. I respectfully suggest you move on with your life.