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Bohemia: Firstly, I appreciate that despite openly admitting to shorting CEG your posts have substance, are respectful and not just negative one-liners trolling other persons or the company.

Yesterday you gave a contrary opinion to my previous post which gave $$$ ROI modelling and key justifications and USPs to develop Saffron with farm-in partners.

You wrote…’TXP have 8 development wells to drill, they don’t need to find work for the rig. They don’t really have a lot of free cash either…….. No one is going to fund further MC wells on an assumption they’ll produce a flat 80b/d for four years….’

Please listen to Eytan’s VOX interview. Key tweaked points and commentary below in [ ]:

• ‘during testing, we produced very high quality 48 API oil from the lower cruse’

• ‘it flowed naturally to surface. This did not happen with S1, nor has it ever happened in the SWP before.’ [S1 proved oil, but not flow]

• ‘it’s actually quite a big deal’

• ‘we’ve proved the presence of moveable HCs in the lower cruse’

• ‘[technical challenges due to blockages and shale etc] could not sustain production but this is not a fatal error’.

• ‘It can be remedied but could have taken weeks, perhaps months [of engineering time and cost], so the decision was made to plug and test the upper levels.

• ‘current S1 production is only from the upper cruse and for S2 there’s another 11 feet of testing to go’

I agree TXP would not buy an 80 boed well for $3.5m (similar to TRN's recent purchase) unless production had been proven for 6+ months, but I disagree TXP or other regional players can’t or won’t scrape together $3m Capex for Saffron 3. It’s a low-cost JV, low risk (4-year ROI if same result as S2), big reward (if 200-300boed in lower cruise) with an ROI in <15 mths.

Simply put, for the first time in 100 years of Trinidad’s oil drilling history, CEG proved its acreage in the SWP had moveable HCs in the lower cruise. IMO ‘this is quite a big deal’ and will generate substantive interest.

Questions

I concur you may be right that no one will ultimately sign an S3+ farm-in, however do you accept the possibility exists that there could be one, subject to a certified CPR, due dili of the well data, and proposed engineering solutions to produce from the lower cruise?

Off topic: based on your obvious experience and analytical skills, do you accept the possibility that since the OO/Placing and until the S2 RNS, some traders may have ‘played’ the stock down during very low trading volumes physically buying/selling at daily losses, to earn mega profits shorting CEG using CFDs/derivatives?

GL

Starchild
https://www.lse.co.uk/profiles/starchild

Instead of exotic CLNs, a farm-in will generate cash with NO risk to CEG or further share dilution. The only dilutive effect would be a virtual 25% sale of (say) 3 Saffrons. Key assumption: a revenue split 75% to farmee until capex repaid, then reverting to 25% as offered to Leo. Pre-reqs: S2 tech analysis and a CPR done.

ROI example 1 (approx maths)

If only middle and upper cruse is successful and 100 boed produced x 3 wells, gross cash generated for 300 boed @ $60 PoO x 360 days = $6.6m/yr. Let’s halve this due to royalties and opex. Result: $3.3m free cash/yr.

• 2022 CEG 25% $800k; farmee $2.5m
• 2023 CEG 25% $800k; farmee $2.5m
• 2024 CEG 25% $800k; farmee $2.5m
• 2025 CEG 25% $800k; farmee $2.5m (by 2025 all $9m Capex costs recouped)
• 2026 onwards: CEG 75% $2.5m/yr; farmee $800k during the life of the wells

ROI example 2

If lower cruse is also successful and 300 boed produced x 3 wells, gross cash for 900 boed is $20m/yr. Let’s halve this as above. Result: $10m free cash/yr.

• 2022 CEG 25% $2.5m; farmee $7.5m
• 2023 CEG 25% $6m; farmee $4m (by 1st qtr 2023 ALL farmee’s $9m capex recouped)
• 2024 onwards: CEG 75% $7.5m/yr; farmee $2.5m during the life of the wells

Summary: If oil is found in lower cruise @300 boed, CEG would have cash to drill Saffrons 6 - 8 in < 2 years.

Sales pitch

Script for CEG to use on TXP, TRN, PRD, and others including the company that offered a JV in 2019/20:

CEG, ‘Hello TXP. Would you like a 3 well farm in? ‘

TXP, ‘Why?’

CEG, ‘Because Starchild told us to’

CEG, ‘See his two ROI examples above, and the recent certified CPR. Note the CPR estimate for middle/upper cruse only. We’re offering a 25-75-25 split. Worst case is you get your capex back in a few years. Best case, you’ll make it like bandits especially if PoO is $70+.’

TXP, ‘What about production declines in middle cruse if oil from lower cruse can’t be produced?’

CEG, ‘You’ll still get your capex back eventually. Trinity just paid $3.5m for a well producing 83 boed. They’re clearly not worried about major well depletion’. (https://polaris.brighterir.com/public/trinity_exploration/news/rns/story/xlqz67w )

CEG, ’We’ll throw in a goodie. CEG has c$100m in T+T tax credits. Let’s structure the contract to mutually benefit.’

TXP, ‘OK, but only for 1 well’

CEG, ‘OK, but you must spud by 31/12/21 and give us $500k up front’

TXP, ‘it’s a deal’

Alternative endings to the script

1. TXP, ‘let’s discuss a farm-out for all Saffrons’ Or, ….

2. TXP, ‘let’s merge in a friendly T/O.’ Or,….

3. TXP, ‘no thank you. Bye bye’ (Back in the TXP office, ‘OK lads, let’s launch a hostile bid’)

Bottom line: A Saffron farm-in would mean: NO exotic funding. NO RBL. NO CLN. NO extra shares. And NO risk to CEG.

DYOR and GLA

Starchild
https://www.lse.co.uk/profiles/starchild

PS: Must dash. I have a CEG RNS to write. I just wanted to tease my grumpy shareholders.

The SP has taken a pounding, but as far as I’m concerned yesterday’s RNS although disappointing was not the end of the world. At least the risky Arena offer is probably in the bin.

CEG is now c$1.7/yr gross revenue better off than it was last month subject to production being maintained. (360 days x $60 PoO x 80boed) Any additional production from upper cruise will add revenue. I was tempted to sarcastically write,... ‘oh my G+d we’ve won the lottery, I don’t wanna be out of this share by friday’, ...but I won’t as I will be accused of ramping.

As I see things today CEG has four choices:

1. To scrape together $3m to drill Saffron 3 with the assumption the middle cruise is proven to be oil bearing. However, the contractor must propose viable engineering solutions to successfully extract oil from the lower cruise, based on expert analysis of S1 and S2.

2. To farm-out S3 and let someone else take the risk. CERP were offered a 25-75-25 deal for S2. The likely worst-case scenario for S3 if a minimum of 80 boed is produced @$60 PoO +, the capex ROI will be <4 years. The deal can be sweetened with farmee options to drill S4 and S5 on success. This will mean CEG can do Saffrons 6+ with less risk, if lower cruise has been proven at S3 etc.

3. To farm everything out including current production, on condition S3 is drilled ASAP. With minimum overheads, CEG can collect more net cash.

4. Last resort: Merge with a regional player as they will save most of CEG’s $3-$4m/yr G&A. However, unless the financials are MUCH worse than expected (I believe CEG has just about enough cash to pay $7m legacy debt, assuming the dispute is resolved), it will be daft to do so until the lower cruise is proven or otherwise, as this could impact 2P/2C reserves. Hence points 2 and 3.

The above would not apply if CEG had no legacy Bahamas (disputed) debts. Or if CEG truly believes it can monetize Bahamas assets by year end.

Some anti-CEG commentators are talking about ‘the imminent next placing’. Listen to the probing question near the end of Eytan’s 25/5 interview, starting at 29m 50secs https://ukinvestormagazine.co.uk/challenger-energy-group-presentation-at-the-uk-investor-magazine-virtual-conference-25th-may/ (if the link is auto censored combine ’uk investor magazine’)

Bottom line: I’m not selling up nor putting my shares in the bottom draw yet, because I believe CEG has solutions at its disposal. The quicker they are announced, the better. By end of September not later, unless major(s) actually visit the Bahamas data room as opposed to procrastinating whether to do so or not.

DYOR. GLA.

Starchild
https://www.lse.co.uk/profiles/starchild

Anonymity: I wish you well.

The same applies to all other holders who sold up yesterday, even those that hurled abuse at me over the last few months. To state that I only post positivity is false. I have often commented on what could happen if things go wrong.

Today’s Saffron 2 RNS https://www.londonstockexchange.com/news-article/CEG/appraisal-update-saffron-2-production-test/15110546

Highlights

A commercial production rate (81 bopd) has thus far been established at Saffron-2, from approximately 66 feet of Middle Cruse reservoir units; produced oil is already being sold and generating immediate revenues for the Company

· To maximise near-term production income additional clean-up, testing, and optimisation of producing zones is currently underway; the Upper Cruse reservoir units also remain to be perforated and produced

· The Lower Cruse reservoir units exhibited good pressure and produced high-quality oil (480 API), but testing of these zones was halted due to the impact of mobile shales on the well bore; these lower zones have been isolated from the currently producing horizons, capable of being re-entered for future remedial actions in support of production

· Well data and projection of aggregated well performance is being used to reassess overall Saffron field resources and economics, with work underway to determine the optimal forward plan for development of the Saffron project as a whole

Observations:

The total oil sands in lower-middle-upper is 300-370 feet and the Middle Cruse formation only has 66ft of various Middle Cruse sands. It is producing 81boed. This is in round figures $1.75m/year gross revenue @ $60 Poo. Approx. half is free cashflow.
The lower cruise needs TLC engineering skills, either eventually at Saffron 2 or a Saffron 3 to get production from the lower cruise.

Had it been proven the lower cruise had no oil, and unlikely anywhere else in the SWP, it would not have been good. However oil is being generated and earning money out of only 20% of total sands. Best analogy I can think of is Percy-1 having discovered 150m boe which was the minimum for commercial investment, without knowing whether any oil was at the Jurassic level.

I’ll be interested to see Malcy’s and Proactive’s take on this later today.

GLA

Starchild
https://www.lse.co.uk/profiles/starchild

ps: there was never a prediction of 4000boed by year end. It was a multi-saffron peak production figure. I believe the aim is 1500 boed by year end.

What is CEG’s fair market value considering CERP merged for £24m in a fire sale when PoO had collapsed? To help answer this, it is good to watch 2 recent presentations:

Eytan’s Proactive 29 April one. 31 mins. https://www.youtube.com/watch?v=oEl4lw107OA and his QA session 6 May, when the SP was c3.15p. 38 mins https://www.youtube.com/watch?v=97B0ZuskdrI

An interesting comment in the 2nd presentation was the timeline for knowing and resolving Percy-1 final debt bills,… ‘I hope by June/July’ …. after Saffron 2 result. The date has slipped, but I assume we will know soon after the S2 result.

Other points

On 25/3/20 BPC’s SP collapsed when it issued a force majeure notice to the Gov to delay the planned Percy-1 spud. The SP went from a 51.7p high on 25/2/20 to a 9p (adjusted) low on 21/4/20.

On 26 /5/20, the Stena drill contract was announced (source https://polaris.brighterir.com/public/challenger_energy_group/news/rns/story/rdzqj8w ). It caused the SP to increase to a high of 33.44p (adjusted) within a week. A more than 360% increase in 5 weeks. (SP source: https://finance.yahoo.com/quote/CEG.L/history?p=CEG.L )

I am not suggesting a decent S2 result will make the SP increase 360% to 6p. However, AIM is known for traders that pile into a share when the going is good and piling out when it is not (and for profit taking). IMO, the current ultralow price is not because CEG is worth a measly 13m MCap (when CERP was merged for almost double that in a fire sale), but because lack of news and low volumes has helped a tiny group manipulate the SP down for derivate/CFD profits.

Richelieu:…. ‘Why do you think derampers tend to spend day in day out on various BB? To make money’…. On Sunday you made some valid points. Negative posters on here are generally grouped into emotion and motive:

Demographics

• LGO holders, the daddy of CERP, who lost money due to a mega dilution since 2015
• CERP holders who lost money due to the BPC merger in 2020
• BPC holders who lost money due to Percy-1 in Feb 2021
• New holders since Feb 8, including those who participated in the OO/Placing

Today, all the above are sitting on paper losses. Some continue to hold or sold out and occasionally air their frustrations aimed at the BoD via this BB which is their right. However, I suspect some bombard negativity for financial gain because they are shorting CEG via CFDs. On the flip side, in 2020 there were some amateur cheerleading pump/dump/pump/dump traders. They bombarded positivity, then negativity until flipping again. The most blatant were allegedly banned. Those who collude with others to do so on BBs risk prosecution.

DYOR. GLA

Starchild
https://www.lse.co.uk/profiles/starchild

Thebhoys: you are totally off the mark again. I invested in 10m shares in the Placing NOT the OO. Options in an OO have percentage limits based on someone’s holdings. Placings do not. I participated in both.

Anonymity: some feedback to your points.

Had the SP not been manipulated by shorters during very low trading volumes, it would likely have remained at around the 3.5p OO/Placing price. I considered the 3.5p price discounted and so did other subscribers. We were not under a collective hypnotic trance. Placings can fail if not seen to be at a discount. Some commentators (even the anti-BPC Oil Man Jim) believed the SP could increase leading to the S2 result subject to funding certainty.

I therefore considered <3.5p artificially low and a possible bargain, so I bought >2m shares since the placing at between 1.625p-2.72p. I did so in 11 trades spread over several weeks to hedge in case the SP went lower for the above artificial reasons which it did. It annoys me that stock market rules allow a tiny group of traders to buy £20-40k worth of shares, sell them at a 5-10% loss, earn profit by shorting them, buy, and repeat. But I saw their game as an opportunity. Had the SP stayed at around 3.5p pending the S2 result, I doubt I would have purchased those 2m+ shares.

Just to be clear I did not top up to ‘lower my average’, although now being at less than 6p, is an indirect consequence. I now see CEG as 4 separate investments for me and possibly some other LTHs:

1. Pre-Percy 1 result

2. Between the result and placing

3. The placing/OO itself

4. The 2m+ shares I bought since.

As I see it, if all the CEG ducks line up in a row OR a Bahamas farm-in happens, I could earn a 7 figure ROI. If only some ducks survive, I could still get a decent 6 figure ROI. If all the ducks get shot, I’ll lose money and keep the shares in the bottom draw until I can de-risk in various stages over 2-3 years to minimise losses. I’m willing to take the risk but strongly urge others to DYOR.

To add one more justification to the nine yesterday, why I subscribed to the OO/Placing and bought more since………

10. Precedent. Since BPC’s inception every placing or OO has exceeded the offer price at some point or was indemnified (Lombard). There is one exception. On 4/2/11 BPC’s SP peaked to 23.21p, worth £2.32 today (MCap £229m!) when PoO was $110/b. In March/April 2011 a placing was done in 2 chunks to raise £45m. This was at 18.75p, worth £1.875p today and is the only time in BPC/CEG’s history an OO/Placing has never reached the issue price afterwards; ever. PoO collapse soon after didn’t help.

If there’s no RNS next week and the SP gets artificially manipulated even lower, I plan to buy more. IMHO, the S2 result will minimally be ‘OK’ rather than a total disaster as S2 is S1’s twin and one of the justifications of the CERP merger was BPC’s engineering skills.

GLA.
Starchild
https://www.lse.co.uk/profiles/starchild

NEWS FLASH: The Bahamas Government did something they said they would never do: called an early General Election. It will be on 16 Sept. IMO if the opposition comes into power, it will be to CEG’s advantage.

I bought another 450,000 shares yesterday and approaching disclosure territory under rule 8.3 if M&A is on the cards.

I did so because I believe…..

1. They were cheap.

2. A Saffron 2 RNS will very likely be issued soon.

3. It is unlikely the news is bad otherwise it would have been disclosed already, NOT 2 weeks later to hide it.

4. CEG is earning approx. $10m gross revenue @ $60 PoO and is not broke.

5. The disputed Stena debt is manageable and CEG must have a plan otherwise Arena would have fallen about laughing at the idea during initial due dili, rather than signing a term sheet @ 4.2p.

6. Alternative funding is a possibility, even farm-ins for SWP instead of the ‘have your cake and eat it’ Arena deal.

7. A Bahamas farm-out would add a giant dollop of jam on the bread and butter.

8. IF the S2 news is bad (unlikely), and it is believed there is very little hope of monetizing the Bahamas asset, we may have a friendly or hostile merger on the cards.

9. If M&A applies re point 8, it must be at a premium to seduce those that paid 3.5p in the OO/Placing including me, otherwise it is unlikely the 75% vote will pass. If a marriage was forced upon me, the prettiest, most intelligent, and wealthiest girl in town is TXP. (Note for Touchstone’s lawyers: that was meant to be a compliment). TXP could issue new shares for our CEG ones (similar to BPC/CERP) and based on its offshore presence could leverage a solution to the Stena problem it would inherit.

LGO-fan: your comment….’any increase in SP following a positive/ok result from S2 is likely going to be offset by the dilution cause by a likely equity raise to fund S3 and onward’… I don’t mind some dilution at the asset or share level to pay Stena (to conserve cash) and fund growth (to create cash).

IceMax: Although I do not agree with many points you raised about Auctus on Friday, you provided an in-depth cerebral fair opinion. However your Thursday post was somewhat typical of the one or two liner anti-CEG comments churned out by shorters and angry ex-holders, hence my sarcastic reaction. Sincere apologies if my tongue in cheek Braveheart clip in Auctus’ defence, caused offense.

I totally agree this BB should not be used for personal attacks. I am on the receiving end of many because I generally post upbeat researched commentary and do not aggressively publicly criticise the BoD. I consider it bad form to do so against persons who cannot defend themselves. The same applies against commentators who are no longer permitted to post on here, some of whom I had major disagreements with. All said and done, I am not suggesting BoDs of public companies should not be publicly criticised, however if I had a major issue, I’d sell my shares and move on, or if I had a substantial holding communicate with the company privately. And in exceptional circumstances, organise a shareholders’ mutiny.

DYOR. GLA.

Starchild
https://www.lse.co.uk/profi

Icemax: your comment yesterday…. ….’But the Auctus note was one of the worst I've seen. Not only was it massively out of date even when published, the address of the company's financial viability at the time was simply shocking in it's lack of detail. Complete toilet paper….’

Point noted, however perhaps you can kindly elaborate on your professional/academic analysis expertise compared to Auctus before giving us such dramatic unsolicited advice as an expert ‘counsellor’. Without causing offense (and tongue in cheek), I believe this 1 minute Braveheart scene may come to Auctus mind if they read your informed post. https://www.youtube.com/watch?v=4S7QARslq74

All: my TXP ‘comparison’ post yesterday was to justify that the 2 Auctus reports IMO had merit in terms of future potential CEG SP projections of £100m MCap with S2-S4 on stream (April 2021 report) and £220m-£320m (Dec 2020 report). Any implication I was trying to justify that CEG should be at those TXP levels now, is totally FALSE.

The current SP having lost more than half its value since the ‘discounted’ 3.5p OO/placing due to manipulation when trading volumes have been very low, is IMO ARTIFICIAL. Watching a SP decline so quickly for no news-based reason is extremely frustrating to holders and a joy to shorters. However, there is one and only one benefit: If you believe the S2 result will be satisfactory or better, the SP will increase, so BUY at bargain rates. If you do not, then hold or sell.

My assumption, which should NOT be taken as unsolicited advice, is the S2 result is OK and delays are being caused because of funding negotiations for S3+, and possibly a mini-CPR is awaited.

Yesterday I purchased another 200,000 shares at 1.625p but am not suggesting anyone tops up based on my assumptions. Had the SP not been manipulated by shorters, I wouldn’t have bought shares between 1.625p-2.725p since the OO/Placing both of which I substantially participated in. If I’m wrong, I’ll lose more money. If I’m correct anyone buying now will do well.

I will ignore the recent deeply offensive posts against me for now.

GLA

Starchild ‘the desperate fool’
https://www.lse.co.uk/profiles/starchild

Icemax: your comment yesterday…. ….’But the Auctus note was one of the worst I've seen. Not only was it massively out of date even when published, the address of the company's financial viability at the time was simply shocking in it's lack of detail. Complete toilet paper….’

Point noted, however perhaps you can kindly elaborate on your professional/academic analysis expertise compared to Auctus before giving us such dramatic unsolicited advice as an expert ‘counsellor’. Without causing offense (and tongue in cheek), I believe this 1 minute Braveheart scene may come to Auctus minds if they read your informed post. https://www.youtube.com/watch?v=4S7QARslq74

All: my TXP ‘comparison’ post yesterday was to justify that the 2 Auctus reports IMO had merit in terms of future potential CEG SP projections of £100m MCap with S2-S4 on stream (April 2021 report) and £220m-£320m (Dec 2020 report). Any implication I was trying to justify that CEG should be at those TXP levels now, is totally FALSE.

The current SP having lost more than half its value since the ‘discounted’ 3.5p OO/placing due to manipulation when trading volumes have been very low, is IMO ARTIFICIAL. Watching a SP decline so quickly for no news-based reason is extremely frustrating to holders and a joy to shorters. However, there is one and only one benefit: If you believe the S2 result will be satisfactory or better, the SP will increase, so BUY at bargain rates. If you do not, then hold or sell.

My assumption, which should NOT be taken as unsolicited advice, is the S2 result is OK and delays are being caused because of funding negotiations for S3+, and possibly a mini-CPR is awaited.

Yesterday I purchased another 200,000 shares at 1.625p but am not suggesting anyone tops up based on my assumptions. Had the SP not been manipulated by shorters, I wouldn’t have bought shares between 1.625p-2.725p since the OO/Placing both of which I substantially participated in. If I’m wrong, I’ll lose more money. If I’m correct anyone buying now will do well.

I will ignore the recent deeply offensive posts against me for now.

GLA

Starchild ‘the desperate fool’
https://www.lse.co.uk/profiles/starchild

Refer to TXP 13/8/21 RNS https://www.touchstoneexploration.com/wp-content/uploads/2021/08/August-13-2021-Q2-2021-Financial-Results-and-Operational-Update-TSX-FINAL.pdf

TXP basic summary, NOT a deep dive: In the last 6 mths it averaged c1400boe/d while appraising some large oil/gas discoveries. TXP has $11m cash, access to $20m funding and drew a percentage towards its current cash. 65m boe 2P reserves 31/12/20. MCap is $285m CAD and was >$550m 6 mths ago. This is c£160m / c£315m.

CEG summary: average 450boe/d. If S2-S5 produce 200+boed each, it will be the same as TXP today, excluding Suriname. CEG is negotiating access to $17.5m in funding although I DO NOT LIKE THE DEAL and prefer JVs. On 31/5/21 CEG had $10.7m cash and has a disputed $7m-$14m Bahamas debt which when resolved could be paid in shares, leaving cash for growth. CEG too has potentially large discoveries of >200mboe in the SWP, which S2 will help towards de-risking. And a potential Bahamas farm-in. 1.3m boe 2P reserves. Its MCap was £14m last night.

Rebuttals to yesterday’s negative posts

1. I am not a pro-analyst and rely on experts such as Auctus to provide opinions as part of my DYOR and research. Auctus are connected to Investec, CEG’s joint broker which is no secret. Auctus openly states in disclaimers that it receives payment for services. This does not mean they are paid to mislead, lie, exaggerate, or twist facts borderlining on corruption. Auctus make a case and do not pick numbers out of hat. If they did so, they would lose credibility and possibly their right to provide opinions to clients. The reputational damage would spill onto Investec, an international bank, broker, and wealth advisor.

2. As for the Auctus reports being out of date, this is simply NOT true. The underlying facts are the same, the difference being shares on issue. In fact Auctus were conservative in their PoO outlook. I therefore converted to MCAP rather than using an out-of-date SP based on the then shares. It is simple maths. Based on TXP, if ALL ex-CERP assets line up, why can’t CEG be £220-£320m in 2023 as stated?

3. I was criticised for……’what's the point of giving Galvy an honest overview (which he asked for) without also saying the negatives, i.e all the debts (many millions) CEG owes to various parties’…… I totally resent the inference to dishonesty. I’ve made it clear in several posts, including today about legacy debts. It is NOT a secret. I cannot fit every variable in the 3000-char limit per post.

As part of DYOR, read the following ‘alternative viewpoints’ by ex-holders, some of whom may be shorting CEG. However, you will find very little research other than negativity and attacks.

https://www.lse.co.uk/profiles/antha/
https://www.lse.co.uk/profiles/zagegypt/
https://www.lse.co.uk/profiles/jono44/
https://www.lse.co.uk/profiles/johnbriggs/

Compare their ‘analyses’ to Auctus reports and make your own minds up.

GLA

Starchild

Galvy: your 2 questions were to the point and very good… ‘what does this old dog have going for it today that LGO or BPC couldn't make a success of in the past? I would really like to see this company succeed and I'd love to recoup the significant losses I made with CEG's grandparent. Can it do that?…’

All current holders and potential new ones initially waiting for the S2 result have similar questions including me.

I’ve been a BPC holder since 2014, a CERP one since July 2020 and now have several million CEG shares. This is not a boast, as I’m currently sitting on large paper losses as are others.

OO/Placings are bad and very dilutive if it is to pay debt, for survival or to pay the cleaning lady. They are good and less dilutive if capital is being raised for investment, expansion, or acquisition. This is like any IPO and generally well received. 10 yrs ago when PoO was $100/b+, BPC raised £46m from IIs @ 18.75p (£1.875p today) source https://polaris.brighterir.com/public/challenger_energy_group/news/rns/story/xpmmejx

A key 26/3/21 RNS explains CEGs potential. Instead of a high risk/high reward Bahamas mega drill, it’s lots of little risks/little rewards which if added together can be substantial cashflow. Refer to https://polaris.brighterir.com/public/bahamas_petroleum_company/news/rns/story/ry4n3kr Summary below based on $60 PoO:

a) CEG is earning c$3m/yr free cashflow to pay the bills inc $4m/yr G&A.

b) $1m capex for incremental production. Success = 100 bopd = $1m/yr free cash. (ROI 1 year)

c) $3m capex to spud S2 Trinidad. Success = 200-300 bopd = $2-3m/yr free cash. (ROI 1 year)

d) $2.5m capex to spud Suriname including an EWT ($700k). Success = 500+ bopd = $2.5m/yr free cash. (ROI 1 year)

e) Saffron 3, 4, 5, 6, 7, 8, 9 full-field dev (2-3 yrs) 4,000+ bopd $25m+/yr free cash. Capex <$60m. (ROI 2 years).

f) Infill drilling programs 200 - 400 bopd $3m - $4.5m/yr free cash. Capex <$6m. (ROI 2 years)

g) New Biz dev opportunities 100+ bopd $0.7m/yr free cash. Capex $2.5m - $3m. (ROI 4 years).

Summary

1. If all the CEG ducks line up in a row = £220m-320m MCap potential: (Source Auctus pages 1, 17 and 18 https://d1ssu070pg2v9i.cloudfront.net/pex/bahamas/2020/12/08133633/Auctus-BPC_IOC_08.12.2020.01.pdf )

2. If just 3 Saffrons succeed, Auctus stated a potential £100 MCap (Source 27/4/21 https://d1ssu070pg2v9i.cloudfront.net/pex/bahamas/2021/04/28113530/Auctus-BPC-27.04.2021.pdf )

3. The above excludes a future Bahamas farm-in, possibly leveraging Uruguay. LGO/CERP did not have those assets.

I prefer SOME expansion with JVs at the asset level. 75-25 until capex paid, then 25-75% splits in CEG’s favour. Mini farm outs rather than RBLs, OOs or placings. This would likely increase the SP (confidence re no placings), and with a higher SP, CEG can leverage a Stena deal involving shares which would help it retain several million $$$.

DYOR and GL!

Starchild
https://www.lse.co.uk

As expected, ex-shareholders and admitted CEG shorters who regularly post negativity were all out in numbers. Their aim was to justify why a decent RNS was not. The same folks will probably do the same if S2 is a success, with Vicky Pollard type comments such as …’yes but no but in a few weeks the oil flow will diminish to one boed’…and…’yes but no but a placing is coming at 0.01p for a gazillion shares to pay Stena.’

‘Hostile bid’

One flawed argument was why a major would pay millions in a farm-out, when they could buy CEG for $20m in a hostile bid. Rebuttals:

1. Oil majors do not bully their way into buying tiny oil companies in hostile takeovers to avoid paying for farm-outs. It would be a PR disaster. If anyone knows an example, please share!

2. The hostile bid would have to be much more than the MCap and higher than 3.5p anyway. In May, 3B shares were issued @3.5p and I doubt those holders would vote yes for less.

3. CEG would defend its position with the key argument, ‘we told you Bahamas has monetization value as proven by the major’s hostile bid. Vote no and we’ll find another major yet retain control for holders.’

I am not saying at the current SP a hostile bid is out of the question and recently posted about this. However it will not be from a major to get Bahamas acreage on the cheap. If I am wrong, enjoy the SP surge while the matter is being publicly argued!

The only major financial gorilla in the room is the legacy Stena debt. $7m of the $14m is disputed. On 31/5/21 we knew CEG had $10.7m cash, probably including $4m due to LOL in June. If the matter goes to court (which will take ages) and the court orders CEG pays $14m, then there may be a problem if S2 failed and S3-S5 never spudded. This would possibly lead to a CERP type amicable merger with a regional player. At the other end of the spectrum is a Stena settlement involving shares, which means CEG will retain millions in cash for growth.

‘Hostile’ QC

Refer to http://www.tribune242.com/news/2021/aug/16/activists-new-court-filing-over-oil-drilling/?news (thanks LLL). Note Smith QC is legal director of save the bays. Furthermore I find it strange he openly admitted one of the reasons to injunct was for publicity. IMO, CEG has grounds to sue on its behalf and separately for its shareholders’. Due to the attempted injunction being timed when it was, CEG had to borrow at punitive rates vs 2.5p and holders who planned to de-risk some of their shares at a profit during the spud could not.

My take?

1. Yes but no but if S2 is OK, and no but yes but if it aint. And yes but no but I caught my boyfriend snogging that cow Stena behind the school wheelie bin. And I got that Smithy bloke to write him some evils and take an injunction in the Clapham high court thingy for the global publicity.

2. I found yesterday’s RNS positive and look forward to the S2 testing results.

Yes but DYOR

Starchild
https://www.lse.co.uk/profiles/starchild

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