Member Info for tedoby

Toes crossed as well as fingers LB!

Thanks Charlie1984

Great summary and appraisal!

Guys I'd be most grateful if someone could help me with this please.

Given we fully own the infrastructure at BF do we receive any rent or payment for maintenance from our WI partners at all?

If so, how much?

Any thoughts?

I like the cut of yours too Noob67.

I thought your post yesterday was excellent. As I do the one just!

Thanks for yours on p/e ratios too Tiburn.

Great research!

The Atomic Group Acquisition was funded in the most part with debt through a loan agreement dated March 16, 2021 between a US based Global Investment Firm and COPL repayable within a 4 year term.

To fund the Atomic Group Acquisition, the COPL drew an initial principal loan amount of $45 million.

The Senior Credit Facility agreement is subject to an interest rate of LIBOR (with a floor of 2%) plus 10.5% per annum with such interest to be paid monthly.

From the first anniversary of the Senior Credit Facility which is March 2022 the outstanding loan principal will also be repaid monthly by COPL.

During the three and six months ended June 30, 2021 COPL paid interest on this loan in the amount of $1.42 million and $1.66 million, respectively.

The Senior Credit Facility has an accordion feature whereby COPL may draw upon up to a further $20 million for future development. As at June 30, 2021, the accordion feature was not drawn down.

If the accordion feature remains unused (I’m thinking of CUDA) then I make the interest payable to be about $470k/month until March 2022. Thereafter the Principal becomes payable too over the remaining term.

As of the end of June COPL held $15m in cash and cash equivalents in reserve. If that cash remains unused I it should be more than $21m by December even taking into account paying the interest falling due and the hedging that’s in place. I make break even to be around 1,400 bopd at the current WTI price. I believe the field could well be be producing more than 3,200 bopd now and our WI could be between 1,800 and 2,000 bopd.

I’m guessing but I imagine given the date the Letters of Intent on the CUDA sale were required to be in place that by the time any payment falls due we could have around $35m as a collective facility without needing a call for equity release. That’s cash in the bank and the accordion feature in the credit facility.

AIMHO

Guys I’d like to apologise for being late in thanking those of you that gave me feedback on my post. I’ve been away from the internet for most of the time since posting.

I’m so glad I posted. Some of the information I’ve had back as a consequence is invaluable. I appreciate all your comments and acknowledgement very much.

Fingers crossed we’ve just made constructive changes and laid solid foundations to build off!

Page 1 of 2

I’ll do my best to keep this as simple as I can guys. For those of you interested I’d just like to explain by way of example how two of the most sensitive metrics impact on any valuation here.

The two are the WTI oil price and the increase in production. I’ll just focus on the Wyoming asset and leave other opportunities such as Nigeria to one side. I’ll keep the math rounded and simple to explain the principle.

Without doubt the best starting point we have is the NPV issued in the RNS on 18th February. it must have been a key appraisal that would have been tested by experts through their course of due diligence. It gave us:-

“The acquisition has a high NPV asset at a price well below traditional metrics: Proved(P1) value of $101.7mm (net of royalties); Proved + Probable(P2) value of $185.8mm (net of royalties) based on WTI pricing for 2020 of $39/bbl”

The value created in the NPV calculation using a WTI oil price of $39/boo suggests the net profit must have been at least 10% in my view and that’s the assumption I’ve made my reasoning on here.

If $39/boo produced a 10% net profit then it’s reasonable to assume that a $75/boo price is going to give us a notional net profit of at least 30%. Netback should be well over $40/boo by now. But netback and net profit are entirely different so I haven't used it or been influenced by it.

So as a base case if we take production at 2,000 bopd and call it 600,000 bopy. Then using a WTI price of $75/boo we get annual revenue of $45m ( 600,000 x $75 ) Now lets say net profit is indeed $25/boo that would give us an annual net profit of $15m ( 600,000 x $25 ) x which in turn represents 30% of turnover. “All In” costs therefore must therefore be $30m representing 70% of turnover.

Typically a valuation or Market Cap might therefore be approximately $150m if we apply an earnings metric method of valuation and use a p/e ratio of 10. I believe on paper that’s where we are right now with a SP of around 65p after yesterday's consolidation.

On the hypothesis that the price of oil increases and we change the WTI price in the equation to $100/boo we get annual revenue of $60m (600,000 x $100) . The “All In”costs stay the same at $30m. But the annual profit increases now to $30m which represents 50% of turnover up from 30% in the base case.

The Market Cap has doubled in this example from $150m to $300m . On paper then we get to a SP of around 130p from just a 33% increase in the price of WTI keeping the production at 2,000bopd.

Page 2 of 2

To look at the impact the increase in production has on the Market Cap we need to analyse the $30m "All In " cost figure and split it into “fixed costs” and “variable costs”. I’m guessing obviously but I think $10m for fixed costs and $20m for variable costs might not be far away. So using 600,000 bopy we get fixed costs of $16.6/boo and variable costs of $33.4/boo giving us the $30m “All In” cost figure.

On the hypothesis that production is increased to 5,000 bopd which is1.5m bopy but keep the WTI oil price at $75/boo we get annual revenue of $112.5m ( 1.5m x $75 ). The “All In”costs in this instance are $60.1m ($10m fixed + 1.5m x $33.4 variable) . The resulting annual profit increases to $52.4m and now represents over 46% of turnover.

The valuation has also increased to $524m on paper and that would give us a SP of around 235p. So an increase of 150% in production would give us a 250% increase in value.

You may hear some refer to this as the impact of ”economy of scale”. Effectively it’s the dilution of fixed costs caused by increased production. Regardless of any increase in the WTI oil price, that's where we should theoretically be on Wyoming in Q2 2022.

Finally if we look at just Wyoming and consider the price of WTI oil at $100/boo which many experts are predicting at a production level of 5,000 bopd or1.5m bopy we get an annual revenue of $150m.

The “All In”costs in this instance are again $60.1m as before. However the annual profit increases to a whopping $90m which represents almost 60% of turnover. The valuation in turn gives us virtually a $900m notional Market Cap on which in turn would give us a SP of around 545p.

If those two metrics happen there’s a seventeen bagger here in the making just from Wyoming in not much more than six months time.

If I’m anywhere near right the opportunity here is simply enormous!

AIMHO

Just as a reminder on 18th February this year COPL issued an RNS containing this as a statement regarding the Atomic acquisition .Viz;-

“The acquisition has a high NPV asset at a price well below traditional metrics: Proved(P1) value of $101.7mm (net of royalties); Proved + Probable(P2) value of $185.8mm (net of royalties) based on WTI pricing for 2020 of $39/bbl;

The acquisition presents a high ROI > 50%; $2.18/bbl acquisition cost on P2 reserves vs a value of $7.52/bbl at NPV10%. (net of royalties) based on WTI pricing for 2020 of $39/bbl”

So an NPV10 at that time was $102m “Proved” and $186m including “Probables”. It was based on a WTI price of $39/boo.

Today we have a WTI price of $74/boo. The adjustment to the NPV’s using the updated metric is not linear, it’s logarithmic.

So just adjusting for the increase in WTI oil price today’s NPV’s are therefore more like $300m “Proved” and $550m including “Probables”. Converted that’s £215m "Proved" and near £400m including “Probables”.

With approximately 16.5 bn shares in issue we should be a SP of 1.26p de-risked and 2.50p including “Probables” on an NPV basis.

That’s just for Atomic!
That’s how undervalued this is guys!

AIMHO

Consolidation will give us wider access to capital markets and may even be a stepping stone to the main stock markets.

With wti rising, production increasing and now opportunities improving from this change what’s not to like.

Placings won’t be the only option to raise finance. But even if it does happen I very much doubt it
will be dilutive. It’s far more likely to be accretive and value enhancing in my view.

My take FWIW is that AM will be in discussion with potential Institutional investors. I've little doubt about that.

Most Institutions have a set criteria that has to be met before they can invest. Invariably one item on their list will be a minimum share price.

If in any Consolidation we see the resultant SP above 1p that should stir quite an interest from Institutions hitherto unable to invest in my opinion. What may have been a stumbling block could become a stepping stone.

To be clear the company has said viz:-

“consolidations may enhance the marketability of the Common Shares and could facilitate additional financings to fund operations in the future."

Emphasis on “could” which shouldn’t be interpreted as “will”

Also there’s no mention of an imminent Placing or one in the short term in that quote as far as I can see and there’s certainly no reference to dilution either explicitly or implied.

To repeat not all Pacings are dilutive. In my view any Placings that may be in the pipeline will almost certainly be value enhancing and accretive. I say that with impunity bearing in mind the positive situation that’s currently unfolding in a progressive market.

AIMHO

Consolidation and Dilution are entirely different Corporate Actions. So why link them together in the same debate unless it’s done for mischievous reasons.

FWIW I think in this case Consolidation is quite likely given it’s already been muted. In so doing I believe the intention is to improve the company’s perception and possibly re-classify the shares to suit other markets along with encouraging Institutional Investment and such like.

On the other hand I see no justification that further equity equity will be released at or near the same time.

Placings can’t always be classed as Dilution anyway. If releasing equity subsequently leads to an increase in value (the Market Cap) in a positive ratio to the increase in the number of shares released then the action must be regarded as Accretion. Not Dilution.

Under the current market conditions and potential opportunities I very much doubt any future equity releases will be dilutive. By intention they will be value enhancing and accretive in my view. At least in the short to medium term with growth and increasing shareholder value featuring so high on the company’s agenda.

The reason why the SP is where it is there has been more sellers than buyers since relisting. Simple reasoning and math since the last placing justifies the fact that there is absolutely nothing untoward going on here. The SP won’t be staying down at this level very much longer in my opinion.

Those that disagree should either sell or stay silent until they’ve done their own calculations and are prepared to share them to support their innuendo. The pathetic FUD created here by some with an obvious trolling agenda is less than discrete and hopefully genuine shareholders won’t be taken in by it .

AIMHO

This hasn't helped today:-

https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjwqseWk47zAhXbAWMBHb-UCykQ0PADKAB6BAgHEAE&url=https%3A%2F%2Fwww.thetimes.co.uk%2Farticle%2Fhow-evergrande-became-investors-worst-nightmare-z775rrd7r&usg=AOvVaw3Ja7AGDw1g0TgI-Obx7Cdj

The following is based upon using an earnings metric method for valuation and keeping the calculation simple

From what we’re told it’s reasonable to assume that COPL Will be producing around 2000 bopd anytime soon and that earnings from that should conservatively be £20/boo.

Working on 300 days production per year we get £12 million annual earnings (net profit).

If you benchmark COPL against its peers you're going to find they produce p/e ratios of between 20 and 30 if not more in some cases. But again let's be conservative and use a p/e of 15.

So at 2000boopd we get to a notional Market Cap of pounds £180m million. Viz:-

2000bopd x 300dys x £20 x 15p/e = £180m MC.

From there given there's 15.6bn shares in issued we get to a current SP of just less than 1.20p.

Again keeping things simple and on the same basis if COPL are producing 4000 bopd by Christmas then we would get a SP of around 2.40p. On a linear basis and excluding economy of scale and anything else material such as Nigeria. That’s 6 bags in 4 months from where we are today.

As a reminder on 18th February this year COPL issued an RNS containing this as a statement.Viz;-
“The acquisition has a high NPV asset at a price well below traditional metrics: Proved(P1) value of $101.7mm (net of royalties); Proved + Probable(P2) value of $185.8mm (net of royalties) based on WTI pricing for 2020 of $39/bbl;
The acquisition presents a high ROI > 50%; $2.18/bbl acquisition cost on P2 reserves vs a value of $7.52/bbl at NPV10%. (net of royalties) based on WTI pricing for 2020 of $39/bbl”
So an NPV10 at that time was $102m de-risked and $186m including “Probables”. It was based on a WTI price of $39/boo.
Today we have a WTI price of $68/boo. The adjustment to the NPV’s using the updated metric is not linear, it’s logarithmic.
Today’s NPV’s are therefore more like $260m de-risked and $470m including “Probables”. Converted that’s £187m de-risked and £338m including “Probables”.
With approximately16.5 bn shares in issue we should be a SP of 1.57p de-risked and 2.85p including “Probables” on an NPV basis.

That’s how undervalued this is guys!

AIMHO

Guys I'm just looking at an NPV calculation to share.

Where are the best places to find production rates and targets please? Is it best to use the Presentation as a guide or has there been more comprehensive and better updates?

Any help would be appreciated.

Using a p/e of 10. Sorry!

Using an earnings metric method for evaluation and keeping the calculation simple

From what we’re told it’s reasonable to assume that COPL Will be producing around 2000 bopd anytime soon and that earnings from that should conservatively be £20/boo.

Based on working 300 days production per year we get £12 million annual earnings.

If you benchmark COPL against its peers you're going to find they produce p/e ratios of between 20 and 30 if not more in some cases. But again let's be conservative and use a p/e of 15.

So at 2000boopd we get to a notional Market Cap of pounds £12m million. Viz:-
2000 x 300 x 20 = 120m.

From there given there's 15.6bn shares in issued we get to a current SP of just less than 0.80p.

Again keeping things simple and on the same basis if COPL are producing 4000 bopd by Christmas then we would get a SP of 1.60p. On a linear basis and excluding economy of scale and anything else material that’s 4 bags in 4 months from where we are today.

I've no doubt using an NPV valuation method would give us higher SP’s and I'll try to demonstrate that later. But for now just keeping things simple can be very useful in my view.

AIMHO.

5.66bn shares traded since the market opened on Tuesday.

3.23bn buys, 1.67bn sells and 0.76bn ???
according to L2.

Hadron needed to sell about 0.75bn to be out and Warrants dold say 0.25bn. So 1.00bn exceptional selling.

Say buys v sells would have been 60:40 without those I have the buys vs sells currently 2.80bn vs 2.86bn

If that's right we have another 60m shares to churn. We may well therefore get through the churn completely in the mornings trading.

The bulls should have it tomorrow if they're not too exhausted in my view.

AIMHO

Just my view and fsg-packet workings.