Member Info for Starchild

My post yesterday provided some basic valuation parameters, one of which was how much CEG was worth in a takeover, to argue its MCap is very much undervalued at £14m. There was some cerebral feedback posted. Thanks.

To be clear, unless there was another long-term PoO collapse, the company does not need to merge with a 3rd party for survival. As such, any takeover would have to be hostile and at a premium to pass the 75% shareholders’ vote.

However, the BoD should consider an alternative to self-funding S3-S9. Today, subject to S2 NOT being a failure, Arena have agreed in principle to lend substantial funds (with CLN rights @4.2p) to start the development of the SWP in two initial phases. The pros are obvious. If all the Saffron ducks line up in a row, and PoO remains > $60/b for several years, with wells consistently producing despite production declines mitigated with CO2/water interventions, CEG will do very well. But why take this risk? If Percy-1 was a success, it would have been farmed out. The whole SWP is potentially the size of a decent offshore oil field, so why treat it differently?

If I was advising the BoD, which again I emphasise that I am not, I would strongly suggest SWP and its potential 220mboe be farmed out. There was interest to do so for S2 in CERP days with a 25% - 75% split, reverting to 75% - 25% in CERP’s favour, after the farmee had recouped all their Capex.

To be totally frank, unless the Arena deal is clarified, I consider it a risk. Why is the Arena deal a hybrid loan based on conversion rights @ 4.2p which is fair enough, yet CEG must provide security of all its assets? This implies it is ostensibly reserve based lending with a Lombard type ‘have your cake and eat it’ type guarantee. What happens if S3-S5 production rates go into decline before the debt is serviced?

Let’s cast our minds back to February. Had BPC announced the Percy-1 spud had been a success with a potential 220mboe (the minimum offshore commercial parameter was stated at 150m-200mboe), there would have been substantial BoD criticism if BPC further announced that instead of a farm-out, it would seek and use $60m in exotic funding or an OO/placing to get to the next stage.

So why go it alone with SWP? By undertaking a farm-out, CEG would be the ones who would have the cake that could be eaten. It would save $10m - $60m Capex and totally remove risks associated with exotic financing, yet CEG could potentially earn a substantial ROI and be a cash cow. The week such an announcement was made, CEG’s MCap would soar, based on potential NPV underpinned with a CPR.

Today CEG has two USPs for leveraging such a move: its tax credits and PoO predictions for the medium term. A third leverage USP could be this week: A successful Saffron 2.

Thoughts?

News awaited

IMHO. DYOR. GLA.

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

Simply answered, it is how much the market values it, which on Friday's close was £14m.

There are many ways to value public companies. One is P/E ratios. Majors are 17x, but CEG is not a major nor making a profit yet. Others: https://www.investopedia.com/articles/investing/110613/market-value-versus-book-value.asp and https://www.investopedia.com/articles/basics/11/common-multiples-used-in-oil-and-gas-valuation.asp

IMO, CEG’s true value is substantially more than its current MCap. The maths (approx) and assumptions:

1. Unless Stena debt is paid in shares, all the $10m cash CEG had (on 31/5/21) will be used to pay it. This leaves zero cash. If paid in shares, the net cash will be an asset.

2. @ $60-$65 PoO, based on RNS 29/6/21 (https://polaris.brighterir.com/public/challenger_energy_group/news/rns/story/rng62px ), CEG is earning $8m/yr gross, with $4m G&A/yr.

3. In a hypothetical takeover, strip out G&A and other costs such as CEG BoD expenses. Assumption: most G&A will be within the acquirer’s current budget. This happened when BPC merged with CERP in 2020. Especially if the acquirer is Trinidad based, with additional savings based on efficient use of local manpower, tech expertise, and automation.

4. Add cash if applicable (point 1)

5. Add $25m net tax credits for T+T which is a USP. Although ring fenced, this increases the NET ROI to the acquirer.

6. Add a percentage of 1P/2P/3P reserves and contingent ones.

7. Add Bahamas IP (we will know the gov position soon). Refer to mini Percy-1 autopsy here https://www.cegplc.com/operations/bahamas/ . With or without a license this IP is worth ‘something,’ even if is not monetized for years for other spuds north and west Cuba.

8. For a non-hostile M&A to succeed, the sale would have to be at a premium based on points 1-7 otherwise the 75% vote will not pass. Note, when CERP was facing covid/PoO collapse, not only did it not have access to Capex, but was haemorrhaging Opex/G&A cash. Due to this, it was arguably sold in a fire sale for £24m. (Note: CEG’s MCap reached £45m in 2018, albeit less evolved than assets now)

9. Whatever happens with S2 testing, CEG is not in the same predicament as CERP was in 2020. CEG could at any time use the nuclear option and outsource everything at the asset level.

10. And the OO/Placing @3.5p was arguably perceived to be at a discount otherwise it would not have succeeded.

Conclusions: IMHO, the current SP/MCap is very much undervalued. If S2 is a success, the SP should soar based on substantial de-risking of future Saffrons and additional income purely from S2. However, if S2 is a total failure, I would argue based on the above metrics, CEG is still worth a premium to the current £14m MCap if local operators have the inclination to play M&A Game of Thrones.

IMHO. DYOR. GLA. Enjoy Sunday and be nice.

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

Following the Percy-1 result, the SP collapsed to 5p (converted). I posted several times pre Feb 8 that this knee jerk reaction to 5p would likely happen. I am not a hardcore ramper and back my opinions with evidence and linked research. Neither am I a SP cheerleading manipulative trader bombarding multiple posts a day talking the SP up or down depending on whether my position is long or short to make a quick profit. I rarely post during the trading day to avoid this accusation, as I hold substantial shares.

I also gave caveated opinion based on pro-analysts’ reports, CERP historical MCap comparisons, precedent, ex-CERP’s assets’ massive potential, that the knee jerk reaction to 5p would unlikely get PERMANENTLY lower. This came with a warning that if S2, and other ex-CERP assets including Suriname proved to be a failure, (and the Bahamas never monetized), the situation would become dire. The SP did fluctuate between 5p and 7p (converted) for 10 weeks until 22/4 when the OO/Placing @ 3.5p was announced.

It is absurd, oil-bearing sands (and oil) have been found, with testing now taking place on Saffron 2, yet the SP is hovering at an all-time post CERP merger low. To a degree, it is like Percy-1 having discovered commercial potential, yet the SP collapsed pending appraisal wells and other testing, due to anti-BPC commentators and shorters issuing warnings that these tests may fail, and anyway previous wells going back 20 years were duds.

IMHO, it can hardly be construed ‘irresponsible’ to state the following:

If you believe S2 will be a success (or at least not a failure), BUY. Because based on all the company valuation metrics I know of (in this plane of existence), the SP will increase. But if you believe everything will fail in CEG world, count your losses and SELL this morning.

If you are a LTH sitting on mega losses and you decide to BUY, consider seeing it as a new investment which should not be done to lower averages (if you only hold pre February shares), but one to have a medium term exit strategy when these new shares reach a certain level, whether 3.5p, 5p, 6p, or 10p. Then take your cash out, and re-invest in CEG if applicable, or elsewhere.

Always DYOR or seek professional advice. And never rely on opinions from anonymous posters including myself. Especially those who contribute one-liners to the CEG debate, or just bombard insults to deflect or derail cerebral discussion.

GLA

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

LTID: your 17:55 post was very informative.

Anonymity: the deadline for Arena is tomorrow. The non-legally binding term sheet will probably be extended; however, IMHO I prefer CEG goes elsewhere at higher than 4.2p. Or at a lower SP with little or no security. Unless clarified, I do NOT like the current deal. If this delays S3-S5 by a few weeks, I don’t care, because there is a decent revenue stream at >$60 PoO.

It’s strange considering low trading volumes and value, that as of this morning a 9th MM has joined CEG’s trading MMs. See 2nd level console.

I see one of three obvious possibilities:

1. A lot of trading is expected

2. CEG is about to replace one of its brokers

3. There is an intent to replace Arena Investors for funding at better rates. Singer are well qualified. See https://www.singercm.com/ and according to London stock exchange have been an MM since 2009.


IMHO. DYOR. GLA.

Starchild

The bullet points below justifying my conclusions appear complicated but are not.

All figures approx, using $60 PoO, despite$70/b+ now…

• @$60, less taxes/boe, royalties, labour, and extraction costs @50% for simplicity, leaves CEG with $30/boe profit. Let’s assume there is no, or very little additional G&A to $3m-$4m/yr.

• CEG spent +/- $3m capex on S2. This means 100,000boe @$30 net will repay the capex in full. 100,000 boe over 360 days = 278boe/day = $6m gross/$3m net per year, resulting in a capex ROI in +/- 1 year.

• If CEG uses +/- $9m from Arena Investors to fund Saffrons 3, 4, 5 and the new Saffrons also yield 278boed each, the loan excluding interest can be repaid in 1 year. This assumes Arena will not convert shares @4.2p. If they do, there is no loan to repay.

• If instead of repaying in 1 year, it takes 2, half of net production income from S2-5 can be used to fund Saffrons 6, 7, 8.

• If existing production is 450boe/day and we add S2 – S8 at 278boe/d each, this equals 450 + (7 x 278 = 1946) = 2400boed.

• @$60/b PoO, assuming half is royalties, extraction costs and labour, creates 2400 x 360 days x $30. And +/- $26m /yr cashflow.

Question 1: If you were Arena, and things were going well, would you (a) covert shares @4.2p? When?, or (b) wait for loan repayment?

Answer (a): if you choose to convert, there is NO loan outstanding, so all the cash belongs to CEG, with some dilution to shareholders

Answer (b): if you don’t convert, or delay doing so, CEG could repay the loan before you convert.

Question 2: Assuming you converted, and things were going well at what price would you sell?

Answer: it will be daft to sell most of the shares @4.2p, if CEG reaches new valuations based on 1000 - 2500 boed production.

My conclusions

1. (A point mainly for traders) If we get an RNS stating Arena have converted some or all their shares, does not automatically mean there will be an overhang for the shares they convert.

2. If the above applies, IMO, there is no artificial barrier to stop the SP increasing well above 4.2p but refer to point 3.

3. The higher the SP, the less dilution if Stena is repaid in shares, which will conserve up to $10m cash in the bank (31/5/21).

4. IMO, for a company CEG’s size, is a very sound cash position and will be reflected in a new SP. Because with Stena out of the way, …….

5. The Auctus analysts April valuation of £100m Mcap (12p @850 million shares) which equals 10p if 1B shares by then (based on just 3 Saffrons) could become a reality and lot higher thereafter.

Yesterday’s RNS was neither good nor bad. But it confirmed thorough testing is ongoing, perhaps more than normal for potential of 200-300boed. Because it will help de-risk and fund S3-S9, if S2 is successful.

278boed will be great. With no guarantee it will.

IMHO. DYOR. GLA.

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

Johnbriggs: your post is daft. If we hadn't had an update today, you'd use that as an excuse to post negativity. Why do you want the SP to go lower? Are you shorting?

Starchild

I found this sentence positive, in the sense CEG are doing a FULL testing job....' the drilling rig has been fully demobilised, to be replaced at site by a Challenger Energy workover rig along with production tanks and major production equipment'. It does not necessarily mean there have been problems. Especially as the rig use was planned and pre-approved by the authorities when the project plan was issued several months ago.

To save opex, not all companies bother to use a workover rig (which is an expensive capital asset per day, whether owned by the company or not ). See https://www.testwells.com/test-not-test-exploration-appraisal/

It is good CEG is going the whole hog, as S2 can, to a degree, help to de-risk S3-S9

GLA

Starchild

RNS: over one third perforated from lower levels and being tested. In parallel, remaining +/- 200 feet being perforated then tested. We may get another update +/- monday, and/ or the full results during course of next week.

GLA
Starchild

LLL: Thanks. Interesting article about Petrotrin which was taken over by Heritage after its failure in 2018. Heritage is indirectly a State owned company and it too is not particularly cash rich. Also see https://tt.loopnews.com/content/colm-slams-erroneous-guardian-editorial-heritage-petroleum . Unless Heritage has taken over Petrotrin’s liabilities, I doubt it will be legally liable should the legal case with Petrotrin ultimately stand. However, it can potentially be advantageous to smaller Trinidad operators such as CEG, TRIN, PRD, TXP in the medium/long-term, should Heritage dispose of assets in a fire-sale, or mini farm-outs. Nevertheless, there is nothing stopping the Trinidad Gov from subsidizing any debt, which to do so directly or indirectly, would be illegal under EU law. However, Trinidad is clearly not in the EU. I doubt the Gov wishes to pay unbudgeted cash, as it has Covid related fiscal problems.

We are awaiting news.

1. The key question on every real shareholder (and shorter’s) mind, is the result of the Saffron 2 testing. I expect an RNS between now and Monday morning. This assumes testing began our evening (Trinidad afternoon) on Friday, or last weekend. Such onshore well tests can take 3 – 7 days.

2. Connected to the above update, is info re the Arena Investor’s exclusivity deal which theoretically expires at the weekend. It will not surprise me if it is extended by mutual consent. I prefer CEG goes elsewhere at better rates (5p+) with less asset security. I have prepared a detailed post to justify this opinion, but will await S2 spud autopsy.

3. I also want to know CEG’s position on the Bahamas licenses. At least whether they are de facto suspended (pending agreement to license fees due) or terminated (pending CEG litigation).

Bottom line quatrain: After a full moon, when Mars is aligned with Uranus, 227 years after the French King loses is head, Trinidadian Prince CEGGY will speak of much wealth of saffron and black gold, to go to the land of the great queen. Stayeth silent he will not, but if he doeseth the prince will speaketh before another full moon.

DYOR. GLA

Starchild (aka Nostradamus)
https://www.lse.co.uk/profiles/starchild/

PS: I note I was sarcastically called Nostradamus yesterday. The difference between him and me, is I give researched based unambiguous opinion, rather than coded messages which can be interpreted 10 different ways.

FTR, I find it totally uncouth that anti-CEG commentators have upped their mind games to influence public sentiment negatively. If attacking and insulting pro CEG commentators isn’t bad enough, they have now resorted to personal attacks against those that give polite feedback or appreciation to other pro-CEG folks. This passive aggressive school playground behaviour and intimidation should stop. Karma.

Fatalcharm: PS.....feel free to PM me

JohnBriggs: I looked at your previous posts across LSE and you appear to take short brief pot shots, mostly negative. A recent comment on IAG was criticizing someone alleging they are a disgruntled ex-employee. So I feel honoured by your lengthy post today. Be assured I'm not as important as you make me out to be. Do you hold any shares in CEG?

GLA

Starchild

Fatalcharm: I agree with you on many points you have stated over the months.

1. The company is not doomed as it is producing approx $8m gross. The current SP and MCap are absurdly low considering a spud has been done and test results imminent. It makes no logical sense using various metrics I know of: turnover, revenue, asset value, potential, +/- $25m tax credits…. All underpinned by $70 PoO. It is the sort of value attributable to a Saffron 2 result which has been proven to be a total failure, with no hope of S3 or Suriname being successful. Let alone the possibility of monetizing Bahamas IP or getting a farm-in. I’d go further that there appears little interest in speculative short-term flutters by traders in the event S2 is a success, which is very unusual for small AIM oil/gas companies. Over the last few weeks large buys have been offset by a combo of large and small sells during low trading volume resulting in CEG losing 40% of its value since the OO/placing. Some sells could be stop/losses. The current price correction downwards is very unusual and gives the impression of manipulation to artificially reduce the SP. Either selling at a loss, to make money from shorting using CFDs/derivatives or the possibility of other factors I do not want to spell out in public. Hint: (a) who would benefit financially in 2021, with a lower SP? or (b) what wealthy entities may want to lower the SP (or even destroy CEG) for non-financial ideological reasons and don’t care having a 6 figures loss in the process? However, if S2 is a success, (and/or other positive news) manipulators will have a problem.

2. Since my 25/7 03:25 ‘CEG’s certified oil reserves,’ post, there’s been a lot of debate with some anti-CEG commentators and shorters nickel and diming how many 10s of millions of bucks CEG has in proven, probable, and contingent reserves. I gave some figures based on gross revenue @ $60 PoO, even though it’s currently $70+. Gross means before deductions of anything including G&A, royalties, taxes, opex, capex, labour, extraction costs. The ultimate source of my opinion was https://www.cegplc.com/operations/results-from-the-cpr/ and maximums based on success cases over several years of decent extraction production. I wish anti-CEG commentators wouldn’t read my posts as if they are an RNS and pick up on points as an excuse to enter discussions to create even more negative commentary for their agendas. Or worse, to allege I wilfully mislead which I do NOT. If S2 is a success, a subsequent CPR will change all the goal posts, so it’s not worth those folks beating on this point anymore.

3. The BoD/senior exec incentive scheme: I gave my thoughts diplomatically, as point 3 in my 24/7 06:42 post.

We await news

IMHO. DYOR. GLA.

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

Hi fatalcharm. quick response with fatfingers on iphone as having very busy day. will try answer Qs in morning. GL

Bohemia: about to do family stuff.

Please don't misquote me. I used the term $60 GROSS even though PoO is over $70/b today. As for the maths, it shows totals GROSS based on if the CPR estimates are 100% reality. Gross means pre capex, G&A, labour, extraction costs, opex, loan interest, office cat food etc.

As for shareholder value, I would say the potential is obvious. However until the oil is extracted no money is collected unless the asset is sold.

Are you still shorting?

GL

Starchild

Parpaing: re your comment to my morning post…. ‘We have had more than one CPR in the Bahamas which resulted in nothing’.

You are correct. From recollection there were 2 Bahamas CPRs done. Assessing the potential of wildcat frontier offshore including CoS etc is different to decades’ established onshore regions such as Trinidad. Many wildcat CPRs often use the terms 1U, 2U, 3U in reference to undiscovered hydrocarbons; 2U is roughly the equivalent of 2P proved + probable reserves, although it is important to remember it refers to undiscovered hydrocarbons.

The proof is in the pudding. 2P reserves can be borrowed against (subject to other factors such as a decent balance sheet) with reserved based lending at $1m-2m per 1mboe, But 2U reserves (….not to be confused with U2 the rock band…..) cannot.

GL

Starchild

Refer to CPR summary https://www.cegplc.com/operations/results-from-the-cpr/ with my updates below based on $60/b PoO.

• Certified 1P reserves means more than 90% chance CEG has 690,000 boe, worth $60 x 690k = $41.4m gross. This excludes SWP + Suriname.

• Certified 2P means proven and probable. CEG has 1.29m boe, worth $60 x 1.29m = $77.4m gross. This excludes SWP + Suriname.

2P definition…’known oil that is capable of being produced economically, and thus the 2P reserves as certified by ERCE relate solely to production capable of being generated from CEG’s existing wells 2P reserves do not assume any contribution from infield drilling and enhanced oil recovery projects. Moreover, apart from routine Opex required to keep wells online, accessing this production potential does not require material amounts of capex….’

• Certified 1C contingent resources means subject to Capex, a more than 90% chance CEG has another 710,000 boe, potentially worth $60 x 710k = $42.6m gross including Suriname, but EXCLUDING Saffron and SWP

• Certified 2C: subject to Capex, CEG has 7.46m boe potentially $60 x 7.46m = $447m gross including Suriname, but EXCLUDING Saffron and SWP

• Certified 3C: (less than 10% chance of exceeding) Subject to a lot of Capex, potentially 24.7m boe, worth $1.7 Billion, EXCLUDING Saffron and SWP

2C definition….’ oil that ERCE considers can be producible from the existing discovered fields, albeit contingent on Capex for infill wells and successful waterflood and CO2 injection projects. As future capital is deployed it would typically be expected that the 2C resource base would migrate into the 2P reserves category upon demonstration of commercial viability. As such, the certified 2C resources position provides validation of Challenger Energy’s capacity / strategy to achieve near-term incremental production growth, as well as providing clear direction as to capital prioritisation during 2021...’

Where we are today

Saffron 2 has 300-370 feet of net oil bearing reservoir sands. It is being tested over the next few days. If successful it will help de-risk Saffron 3 – 9. And the whole South West Peninsula potentially holds 220mboe, worth $13 Billion gross @$60 PoO which is the equivalent of a North Sea field. None of this is reflected in the above CPR summary.

Why I invested heavily since the Percy-1 result was the risk/reward spread, based on Ex-CERP asset potential. It was no longer a case of having to fund offshore exploration and appraisal wells @$50m a pop nor a win or lose binary result.

If everything goes wrong, I will lose more money. At the current ridiculous £15.3 MCap, the market seems to think CEG already has, despite $8m/yr gross revenue. If everything goes right, shareholders will do extremely well. I believe LTHs will be delighted for somewhere in between.

DYOR. GLA.

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

Patoir: well noted. I agree with you.

Edgein: Your 15:55 post was very informative. Please remain in a holding pattern for the S2 result RNS and give us your tech insights.

All: my frank opinions of the RNS https://www.londonstockexchange.com/news-article/CEG/incentive-arrangements-update/15071983 .....

1. Background and logistics

When BPC merged with CERP in Aug 2020, the BoD incentive scheme was the only resolution rejected at the EGM. At the 17/5/21 EGM it was passed and implemented by the BoD yesterday, hence the RNS.

Options when exercised must be paid in cash by recipients. They are not freebies. If sold, those in senior positions must publicly disclose the fact. In BPC’s history to the best of my recollection only once has this occurred. Many years ago, a BoD member who sold a chunk publicly disclosed he had severe health issues and needed cash for medical bills.

Refer to the sentiment on PRD since 21/7 when a director sold a large chunk https://www.lse.co.uk/ShareChat.asp?ShareTicker=PRD&share=Predator-Oil . When an exec sells shares, it does not go down well!

The CEG BoD are not traders. They will never pay money and buy CEG shares at 4-5p for a quick 10%-30% flip. It is for the long-term and will rarely get exercised unless the recipient believes the SP will substantially increase and never get below the price. Otherwise capital is locked, potentially for years.
If the SP never reaches those levels, the options will not be triggered and therefore the RNS irrelevant.

Only one third have been made available, the balance for future use. A biproduct, is it gives leverage to lower salaries as part of the 20-30% G&A reductions, with incentives in return. This conserves cash now.

It has positive inference that the BoD believes the SP has the scope to go a lot higher than 4-5p and 1000boed.

2. Market Sentiment

The timing of the RNS is interesting. Assumptions: The BoD like what they see so far on Saffron 2, believe production can more than double to 1000boed, which implies funding will be available, which further implies the Stena issue can be resolved. If most of these assumptions are wrong, frankly there was no point wasting time discussing incentive schemes and issuing the RNS.

New holders who bought in the OO/Placing and new ones as of Monday will see a positive inference and this potentially includes Arena. Many LTHs who are sitting on 90%+ losses are currently clearly unhappy.

3. My take

If I was advising the BoD which I am not, the timing would not be an issue, but I would have suggested a new mega incentive for Bahamas asset monetization and the production goal to be 2000-2500boed, not 1000boed. This out of sensitivity to LTHs sitting on mega paper losses.

IMHO, I expect the market to react positively next week, however some investors may wait for the S2 test result. It is interesting the RNS was issued after close rather than Monday morning.

DYOR. GLA

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

Something for the weekend to the HC tech experts amongst us…….

1. CEG RNS 14/7/21 https://polaris.brighterir.com/public/challenger_energy_group/news/rns/story/x2gozlw

'...Initial results of the log interpretation [of Saffron 2] have identified over 1,400ft of gross reservoir sands, with in excess of 300ft of net oil-bearing reservoir sands (net pay), as follows:

· Upper Cruse - 131ft of reservoir sand and 27ft of net pay (20% NTG)

· Middle Cruse - 1,066ft of reservoir sand and 217ft of net pay (20% NTG)

· Lower Cruse - 223ft of reservoir sand and minimum 63ft net pay (28% NTG), with a potential further 70ft net pay (60% NTG) indicated.....'

My Summary: between 300-370 feet of net oil bearing reservoir sands, is IMO great potential.

2. Now compare with 3 TXP RNSs from 2019/2020 relating to Trinidad

16/12/19 https://www.touchstoneexploration.com/wp-content/uploads/2019/12/December-16-2019-Cascadura-Discovery-TSX-.pdf ‘significant oil discovery’ in a very deep exploration well.

20/01/20 https://www.touchstoneexploration.com/wp-content/uploads/2020/01/January-20-2020-Cascadura-Initial-Well-Test-TSX-FINAL.pdf

11/03/20 https://www.touchstoneexploration.com/wp-content/uploads/2020/03/March-11-2020-Cascadura-1ST1-Stage-Two-Well-Test-TSX-FINAL.pdf they then talk about gas which confused me

Summary: 1037 feet of net sands. The March 2020 RNS above stated, …. ‘Well tests deliver combined average of 10,600 BOE/D.‘ This tripled TXP’s SP in a few weeks, which then got hit by Covid PoO collapse. It then rose to over 10x the Dec 2020 SP 12 months later.

Observations

I am NOT implying or inferring whatsoever, if CEG has one third the net sands compared to TXP, it means one third of 10,600boed! You can’t compare apples to oranges. And anyway, the matter is somewhat mute if S2 doesn’t pass the flow tests etc. However, I’d love to get a similar CEG RNS one day.

The whole SWP peninsula is potentially holding 220mboe and S2 is the first step. Frankly, as I’m not greedy, I’d be content with more than 100boed for S2, pleased @200 and ecstatic @300.

Have a nice weekend and let's be nice to each other

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

What is flow testing?

How long does it take? [usually a few days to a week]

See https://www.ukogplc.com/page.php?pID=100 for various Q+As such as above. I hold no position in UKOG, but its page is helpful and written in baby language.

GLA

Starchild

Yakee: I have mentioned the P1 result several times and the LOL deal. I have no idea what your other corporate ‘failure’ points are.

If you owned an investment asset such as holiday home, and put it up for auction, would you stand outside on the street shouting how bad it was and how much money you lost?

If you owned an investment asset such as a vintage car, and wanted to sell it, would you use public vintage car bulletin boards to advertise what a heap of carp it was?

If a group of people own an investment asset such as shares in a public company, it doesn’t help if they constantly complain in public forums. Privately in closed Facebook groups, PMs, phone calls/emails or directly to the company…….fine. To air a disappointment such as a failed spud or share-price collapse, fine. But not to BOMBARD negativity. Anti-CEG folks and shorters love such toxicity.

All IMO, as I can’t stop anyone acting in this way.

Where I draw the line is being falsely and libellously accused of things such as wilfully misleading others, and more recently being a pump and dump manipulator. I have no issue with disagreements and alternative viewpoints, when undertaken respectfully both sides.

GL

Starchild

Wotitsworth: I agree with your 08:06 post. We need news on various fronts.

Offerman: Nice to see you again. You made some very good observations in your 16:38 post.

Yakee:
I’m sorry you feel that my recent posts have nothing new to report. If I charged a subscription, you would be in your rights to cancel, but my opinions are free. If you don’t like them, please block me rather than insult me.

You further stated….. ‘Your continuous posts trying to make out you are in the know, or your positive spin on things is nonsense, we all have been had. It worthless and encouraging people to buy this is criminal….’

My response: Respectfully, I’ve held BPC/CEG shares since 2014 and AM in the know. I know CEG very well and provide research and opinion for medium/long-term holders to help in their DYOR, but rarely give short term trading opinions. What I am NOT nor profess to be is a clairvoyant. However, had CEG been a one trick pony, with a binary win or lose Percy-1 drill, the company would be in dire straits.

CEG is not doomed yet because there are various potential positives based on ex-CERP assets on various fronts. Nevertheless, the market seems to have somewhat absurdly priced in worst case scenarios already and ignored the fact CEG is earning $8m/yr gross revenues. (projected based on the June trading statement using $60-$65 PoO and +/- 450boed https://polaris.brighterir.com/public/challenger_energy_group/news/rns/story/rng62px ). With reductions to G&A, opex, staff, and higher PoO, this can generate good cash.

Anonymity:
You made some excellent points about Arena in your 15:53 post. I agree they must have done some DD as part of the decision to execute a term sheet. The only legally binding provisions in term sheets are normally confidentiality and exclusivity. Unless extended, CEG cannot solicit an alternative deal until its expiration on 31/7. I believe it will (or should) be extended.

As part of the initial DD, CEG would have provided a list of liabilities and cashflow forecasts, resulting in a KEY question, ‘how much is owed to Stena etc and how will it be paid?’ Arena must have been satisfied with the answer as opposed to falling about laughing.

IMO, CEG has provided solid legal opinion (probably blessed by a Barrister) on the disputed amounts ever having to be paid. Alternatively, CEG may have shown evidence it is close to a Stena deal at a heavily reduced rate which it will pay out of the +/- $10m cash held on 31/5….and/or…. it will issue shares to Stena and conserve cash. But I very much doubt Arena will allow shares to be issued at silly SP rates.

News awaited on all fronts.

DYOR and GLA

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

PS: IMO, it is pointless for real shareholders to bombard daily negativity or personally attack other holders. It feeds the anti-CEG trolls and certainly doesn’t help our CEG investment to increase in value.