focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
Great research Kylie
"this agreement make a semi-permanent Chinese military presence in the country"
If nothing else, that prospect will energise the Australians, geopolitical driver forcing business positioning.
In context of Aussie increase in marine projection of power in region:
https://www.bbc.co.uk/news/world-australia-64945819
"The US, UK and Australia have unveiled details of their plan to create a new fleet of nuclear-powered submarines, aimed at countering China's influence in the Indo-Pacific region.
Under the Aukus pact Australia is to get its first nuclear-powered subs - at least three - from the US. The allies will also work to create a new fleet using cutting-edge tech.
Beijing has strongly criticised the significant naval deal."
Either way - Sunrise project looks to be going ahead, if only as a bargaining chip to counter.
No motive for most beyond eventually making a return.
There are no rose tinted delusions. This has been a rollercoaster ride with multiple appalling aspects and negatives.
These impacts are fully understood , the reason they are not emphasised by most PI is not because they are oblivious or playing a position, but focusing on the future and not the past, hopeful this will work out, following the shoddy treatment to date.
Fact remains emphasis now should be on the future.
I do not care that AM raised multiple times for CUDA - the bigger picture is that its 100% owned by COPL and they are negotiating a JV for the delineation of the c 1.5 Billion barrel OIP Frontier discovery under this leasehold.
Some may not believe this resource scale, but the JVP does and has signed a letter of their intent to prosecute this find in partnership with the Company we own shares in.
If that positive fact is viewed as position posting, agenda driven or otherwise then when can you highlight material positive facts without judgement of motive?
The risks are reducing, the production is rising, finances will be resolved by RBL, JV should be signed by Q1 24, the asset will eventually be fully sold for minimum $1 Billion - assuming miniscule oil in ground/recovery rate values and CC monetisation, with special paid to BH and shareholders at that time.
I choose to focus on that future, not the past.
If I had doubt on the BFU assets eventual ability to produce up to 7000 bpd I would have sold.
I dont care about others negative perceptions of COPL either and am not influenced by said opinions in the slightest, as im content with my research and understanding of the field.
Could it have gone better by management, SP base higher? of course - thats not in doubt - but it does not change the fact that its still an incline field with reserves of 40 m barrels P2 and inherent value that is soon to be realised after a convoluted journey.
Then the discovery and associated JV is a considerable bonus on top that utterly transforms this micro cap once realised - if we know nothing yet is no cause for despair or thinking it wont materialise - not withstanding the redacted Ryder Scott report, COPL would not issue RNA of such claims without a full evidence base of the find complying with the ultra strict Canadian regs.
Add Wyoming Senator and Governor commentary/backing of the find to this context and consider the response by them if this was not the case.
Latest stated JV position remains - there is no evidence base to believe otherwise and much to corroborate in terms of positioning in PRB by Majors:
"COPL and an established energy company ("JVCo") have entered into an LOI for the negotiation of definitive agreement(s) for a Joint Venture (the "JV") to develop and exploit its oil reserves and resources at its Cole Creek project in Converse and Natrona Counties Wyoming. The LOI grants exclusivity to JVCo for a period of time to allow for the negotiation of terms, and structure of the JV to be agreed, which include the consents required by COPLA."
Proof that the gas flood works at BFU was already established in 2021, it reached 65k a month before the pressures caused the slow down.
They identified the problem and resolved it by some initial low cost fixes and then eventually the full 5 mile steel pipe GGS replacement - this will work and allow the taps to be released safely.
The problem is there is no belief yet that this is the case and production will rise again towards 65k and beyond, as the market has seen too many false dawns with COPL, may only assign value once proven production results gained and trend established over c 3 months sustained period.
GGS was installed and operational early July with no issues , increased rate of injection has been taking place in September, early October is 3 months operational to establish the trend.
I fully expect RNA within 2 weeks on progress, it will almost certainly confirm excellent production growth as expected, as there is no technical reason for this not to be the case.
Steve
Thinking on what you say, as there are multiple interested players is it less now about who may invest and more about who Baron choose to partner with, given they have the asset, its CPR ratified, has TL support with their urgent need for revenue and regional appetite for the produced gas.
Baron only release material/pivotal data by RNA on progress, not marketing spin.
Oct 24th 2022
Farmout
"The Company continues to evaluate options to secure further investment for the Chuditch project, including an ongoing farmout process, which is accelerating with the availability of the revised interpretation. The Company remains in talks with multiple potentially interested parties.
The combination of the PSC extension, availability of the new reprocessed 3D seismic data, and the external validation of Resources that are to be provided via the CPR will be of significant benefit to this process as we move into 2023."
So nearly a year of further analysis, CPR gained, farm out terms discussions, then this week:
"Our ongoing discussions with potential funding partners provide additional affirmation that the technical case is robust and there is alignment on the requirement for drilling an appraisal well on Chuditch, followed by additional exploration activities to delineate the total on block gas resources for this LNG scale project."
The change in the year is technical confidence in the asset, agreement on drill required and also full field delineation for the total gas resource = full investment decision following due diligence by the interested players. Perhaps in period some silly offers (as they will try it on), but now perhaps approaching a deal, as Baron do expect to confirm drill in Q4 2023.
This isnt a single exploration wild cat drill funding they are requesting - but selection of a partner to pay for the campaign to delineate the entire field and procure the block for fair market value, Barons business model.
"Based on these studies, we have selected a preferred appraisal drilling location, which is approximately 4.8km from the Chuditch-1 discovery well. This represents a substantial step-out, illustrating the size of the field and our confidence in the reprocessed seismic datasets. "
conservative drill option adjacent to discovery well not chosen
Bigger scale of field and higher confidence in technical findings would have been shared with interested partners - Baron confidence then begets confidence in partner for investment.
"discussions with potential funding partners provide additional affirmation that the technical case is robust "
Following this affirmation
"The Company is in discussions with various contractors and is actively assessing the availability of suitable rigs, equipment and personnel."
It will be achieved in time - your good at appearing to retreat to appear reasonable - but who do you think your kidding by now Mr Troll?
I look at adult BB with researched and cogent discussion, then compare it to this BB and its chalk and cheese, just insult hurling and distraction off message. so you win (or think you do)
investors looking in may think COPL with its billion barrels isnt real or investable. it is.
HNW dont make substantial investments on the basis of BB opinion/swayed by resident trolls easy to spot such as you FF, but on RNA and research.
I note you dont deny the moniker, Mr F F Troll.
Stas
Perhaps they are positioning for US market launch following JV - close out of LSE in time- PI LSE shares may transfer over once complete - they then re start the comms, but with a N American slant to gain US II
Attn: Mr F F Troll
" What was you on about Repeating my Production hopes / predictions"
Im sure you can work it out. You do not have any shares and are a paid troll , so your hopes are that prod is as low as possible and will push that message as long as you can - im just pointing out your tedious mendacity.
But soon you wont have any ammo. You have been irrelevant for a long time, points made with no substance, at some stage those that pay you will realise the games up and move on.
It would be expedient to release the confirmed trend, August and Sept production in one RNA.
Compelling first RNS by new CEO, using information in his control.
Outline the investment plan for BFU/CC and what this means for cashflow over time.
Interesting timing of confirmation of advanced talks coinciding with the CNOOC interest in TL.
Looks like an entire delineation campaign has been actively discussed with a few interested funders:
"Our ongoing discussions with potential funding partners provide additional affirmation that the technical case is robust and there is alignment on the requirement for drilling an appraisal well on Chuditch, followed by additional exploration activities to delineate the total on block gas resources for this LNG scale project."
Pre planning for drill in late 2023 assumed:
"All of our efforts are currently focused on the Chuditch PSC drilling decision to be made late in 2023 for a Chuditch-1 appraisal well. We are making good progress and are in advanced discussions with a number of potential funding partners."
if they plan to start drilling late in 2023 - say December - then need to agree the terms with partner, legals, signed agreement to allow contracting and mobilisation of a selected rig - even with a fair wind rig mobilisation c 4-6 weeks to secure and get to site with personnel.
Drill logistics key in overall timeframe:
" In anticipation of the proposed drilling of an appraisal well, the Company is in discussions with various contractors and is actively assessing the availability of suitable rigs, equipment and personnel."
Talks are advanced, may expect funding agreement end Oct-mid Nov in this context - the asset is 3rd party assured and has further potential scale.
Big bear
I think AM pushed this to the wire and did complete the drills, probably caused the going concern comms as he didnt expect a slow down of the production in Jan/Feb.
He almost broke the company gaining CUDA, also pushed hardest in North Sea with Oilexco, with at one time the most drilling being done by one company - so he has a history of pushing to the envelope of available funding and risk, in the interest of fast development.
This can work for us now as we are through the worst risk, through BH support - but at a cost. AM knew they were in deep and had to fund him to get their eventual return what else are they going to do at this stage with JV coming?
I think he used up all his cash and leverage to secure the drill contractor, may have done a deal with them/find oil first drill, they get a % or he pays later.
perhaps this? RNA Mar 27th
"Further to the announcement of March 20, 2023, the Company has also issued 26,842,036 common shares (the "Shares") settling $2.2 million of payables to arm's length creditors of the Company."
Then the March $14.8m BH dilution pay for the outstanding drill cost and the GGS, which was only $4.5m and started in April - this expense is within the Q2 financials - two H wells cost around $8m so it was viable.
Otherwise, why wait so long to do the GGS -? This wasnt his priority it seems.
Phase A of discovery delineation in previous presentation August 2022 was for 6 drills
https://www.canoverseas.com/wp-content/uploads/2022/08/COPL_August_2022_Investor_Presentation_Final_080822.pdf
slide 9, red stars marked
Deep well locations A (permitting now)
confidential wells permitted and intended to be drilled in Jan/Feb this year were
BFDU 42-19-3576FH - Frontier 1
BFDU 41-30-3576FH - Frontier 2
They may well have been drilled, the presentation states the plan , 50% of the casing was already bought by Aug 2022 - which means intent and presumed ability to pay for a drilling contractor must have been viable - these wells were exactly as stated targeting Frontier 1 and 2, slide 16
"COPL has been able to secure 50% of the casing required to drill the first two horizontal wells.
– There is a current global shortage of oil field tubulars (casing) due to the Ukrainian conflict.
– Casing prices have increased >50% with all grades in short supply
– Production tubing prices have increased by >30%
• COPL’s Southwestern Unit has identified a drilling rig to conduct the operation.
Contracting the rig will occur once there is certainty around casing supply
• The Company has a well plan for drilling and completion operations
• The first horizontal well will target the Frontier 2 sand at a location in the Barron Flats Federal (Deep) Unit
• The second horizontal well will target the Frontier 1 sand at a location in the Barron Flats Federal (Deep) Unit
Looking forward to when the wells confidential status is removed following JV.
If they are in production - it sure allowed a better negotiating position with the JVP, may explain the long discussion period as would not be surprised if AM hasnt delayed matters by holding out for a better deal - perhaps him at point in COPL America with the discovery fully under his control, delineating it with JVP funds, materials and resources.
Many small cap oilers do not ever make it to production - all just potential.
Even of they do strike oil, the route to market will take many millions which they do not have - have to build all the topside infrastructure, road access, links to refinery to turn whatever oil produced from their first well into revenue, even if it was strike , they could maintain drilling prog to gain substantial reserves booked over time.
Then to do this in USA with their established fields - and then hopefully not in Alaska and its challenges, roads need building, route to refinery etc- or overseas in dubious jurisdictions.
Then the chances of said oil strike being substantial, flowing at high API is remote.
So add all the blockers to transition from exploration to production and profit and the % that truly make it to mid cap is negligible.
These are the facts:
COPL have all topside in place, with expanded GGS capacity
Roads built and route to market
P2 booked from BFU and CC fields
A financial backer in Anavio (albeit with associated cost in dilution, but no free lunch)
Using proven MF tech and at an increased rate, safely manage pressures
With a projection towards 7000 bpd that is now back on track
with 100% of the Cole Creek field owned, 85% of BFU and Fed Deep.
With reasonable SL debt of $37m end June given their standing start,
RBL becoming viable with proff of concept and so restructuring to better terms possible
Bonds that may be paid by shares or offset and paid off when production increases
Revised board and new directors joining.
That 7000 bpd at a conservative netback given no hedge, WTI rise and low tax = c $8m a month net profit once gained
COPL estimated 18 months to get to 7000bpd in 2021, perhaps c 12 months from now they know their field and have the infrastructure in place, H wells viable for Shannon formation as evidenced by an operator north of them.
From standing start of identifying the asset, securing it along with an inherited insolvent partner CUDA Working interest, gaining BH funding and developing the field, dealing with multiple problems back to back, some of their own making for sure - but driving through towards a sustainable operation right now - with $8.5m short term liquidity coming from hedge removal /Anavio finance and $5m banked as of end June.
Comprehensive gain coming per Q is c $24m, which restructures and pays off debt rapidly.
Then there is the JV.
All of which secures mid cap status for COPL, against all odds.
Pilot
you can have debt/liabilities and still be in profit in terms of cash flow, its how you offset/pay back later/ring fence impacts at the critical early formative stage
This is captured in the financials page 3
the only number you need concern yourself with is the table on page 3
Comprehensive (loss) income (2,123)
$2m loss in Quarter, which with hedge removed/O&A reduction of $1m for Q4 means they are approaching cash flow profit , equally $8.5m on account so in real terms they cover the liability in any case.
1- Debt is fully serviced - despite the market retaining doubts - now at $37m - soon RBL possible and the SL will be retired for much better offset terms.
2 - Smaller BH has completed selling according to calculations posted by LLP and others - Anavio is holding for the greater prize and looking to re plan bonds for lower dilution
3 - Prod is rising - just not reported yet, will continue to do so as the MF tech is proven. Winter well head equipment was installed so prod can be better sustained in cold weather.
4 - LOI signed, commercial term discussions since April - JV may reasonably be expected in Jan or before - fact remains a large oil company would not bother signing an LOI if the stated intent to complete was not apparent - it secures the position whilst legals are completed.
Address items 1-4 - then monthly operations comms default to rising production and JV delineation progress.
Sentiment is powerful in the context of lowering risk and increasing upside as time passes.
Pilot
You dont understand what cashflow is then in this context, or dont want to?
its not about warrants/issuing shares which you maintain
Its net incoming/outgoing cash
Which with latest measures means they are approaching profit
It seems the BH is content with the amount of shares they own and not looking to further dilute, perhaps restructure the bonds as long as JV deal occurs - it appears they are aware of the negotiations progression (as it seems are the SL)
"Anavio and the Company have agreed to discuss a possible reduction of the quantum of payment of any "Make Whole Amount" under the terms and conditions of each of its 2027 Bonds and 2028 Bonds (each as defined below), provided a satisfactory Joint Venture is entered into by the Company, hence reducing potential dilution."
The BH gain profit by
- sale of delineated asset and dividend payments
- selling their accumulated shares over time at much higher SP, mcap reflecting the sale payments to COPL over time
PI do aswell.