It has gone up in 10-30% hikes per day with no news, which as balance was experienced over a longer time frame on the way down to 1.5p - just natural buoyancy finally asserting itself.
Be great to reach 5p asap before key news imo, then 30% day hikes have a substantial impact on the re rate back:
5p becomes 6.7p
6.7p = 9p
9p to 12p potential - on expectation
BFU FIELD
- Rolling support and positioning for the foundation being built and proof of concept established
-The promise of the field production growth following MF as evidenced Aug 2021 with 62k barrels in month is coming right now - in the context of the field fully banked with butane, enhanced GGS steel pipework in place, well head works completed, pipes dewaxed and a higher injection rate possible to deploy.
- Month on month prod growth and field performance stability is powerful, translates directly to revenue growth and re investment in the field towards the 7000 bopd plateau.
- This stability in turn allows RBL to be finally gained to fully leverage the BFU, Cole Creek and CUDA reserves booked, retire the Senior loan and its onerous terms for capital repayment every month of c$1m come what may, plus interest of c $400k
- RBL revolver benefits are also rolling over time as the capital payments can be offset - $1m a month that can be spent on field work and re paid later.
- Revenue increase per month = accelerated field work programme, which generates increased revenue and so momentum gained and maintained.
Thats the COPL progression coming, nothing will stop it now.
Joint venture is in addition and not a dependency.
Money has been off working elsewhere following going concern and longer timeframes/poor comms and BH impacts in Q1, plus paid BB manipulation to help reduce SP in the interim.
Recently GGS funding, GGS installation on time and budget, JV letter of intent and two H drills on WOGCC positives
No production increase yet into profit as installing the kit and takes time, but soon
As Cole Creek recompletions are ongoing and take time no increase in prod yet - soon
As prod hasnt increased into profit levels yet, no RBL - soon
As no RBL, SL is not yet retired - soon
As no JV yet and unknown terms, no increase in sentiment and stability this causes - very soon with LOI in place
All coming to a head and positions being taken.
Morning Edgein
Just a question on the working interest field costs
As i understand it CUDA couldnt afford to pay for their share of field upgrades so COPL just used their share of production revenue to offset as per the lease agreement.
On the same basis, i assume CNOOC were liable for 15% of the drill costs in the Fed Deep license and for BFU works presumably - perhaps same arrangement with their revenue held to cover their share of the GGS, butane etc - unclear to me in accounts either way.
Given the CNOOC challenges on working in USA what do you think the position is? If Exxon is JVP they are accustomed to partnering with them but not sure on this Wyoming opp and how it plays out.
There are some macro carbon capture partnering nuances aswell
https://corporate.exxonmobil.com/news/news-releases/2022/0627_exxonmobil-and-cnooc-and-shell-pursue-carbon-capture-and-storage-hub-in-china#:~:text=IRVING%2C%20Texas%20%E2%80%93%20ExxonMobil%2C%20Shell%2C%20CNOOC%2C%20and%20Guangdong,Petrochemical%20Industrial%20Park%20in%20Huizhou%2C%20Guangdong%20Province%2C%20China.
"ExxonMobil, Shell, CNOOC, and Guangdong Provincial Development & Reform Commission have signed a Memorandum of Understanding to evaluate the potential for a world-scale carbon capture and storage project to reduce greenhouse gas emissions at the Dayawan Petrochemical Industrial Park in Huizhou, Guangdong Province, China. "
Have to consider it reached 0.3p last year, not much resistance to reaching that again in this build up - the fundamentals are improved , two CPR confirmed and both projects with drill extensions so more time for farm in, with encouraging macro Geopolitical movements both in TL and UK in the sector.
Pre news positioning expected - this may cease trading and come back re rated on farm in news, then drill build up and full sale to follow will no doubt boom.
Money to be made at each step, special dividend pay off and rerate to mid cap in Barons future as they move on to the next project, but without need for cap in hand as funds ability to drill themselves to set up projects for sale once proven.
Interesting position for Baron during this transition, the board strengthened plays.
Two assets, both with positive CPR and low cost drill ready
Positioning
Edgein
Yes, great news - two H drills completed at JVP cost - has to be them as COPL pot less with going concern fears at the time of spud in Q1, unfortunate timing - for some anyway.
I read the following in the APD link doc:
"Southwestern Production Corp proposes to drill a pilot hole to 9,079' TVD in the Frontier formation, then kick off horizontally to 8,961' TVD/11,053' MD to test the Frontier 2 D Sand formation. If productive, casing will be run as well is completed. If dry, the well will be plugged and abandoned per State of Wyoming requirements."
If plugged and abandoned, would wells also remain confidential as listed?
Http://pipeline.wyo.gov/OperatorsFrame.cfm?Oops=1
southwestern production corporation
When i look at well status it brings up a graph and table
there are 3 listed Pa's - plugged and abandoned
Two listed as confidential as highlighted - I assume they wouldnt be listed in both categories? so hopefully they are both productive.
Stas contacted WOGCC previously and got a reply, perhaps we can double check as if productive then thats c 1400 bpd scale as Eazy outlined - on terms as agreed.
All good Gents.
Material is the JVP agreeing to fund two H wells up front for the Fed Deep.
Investment decision was obviously made before Dec to go for drilling and so JV was implied - which they must have advised AM at the time - he believed it and so mentioned in interview that the JV was likely in Jan 2023 - its obviously the scale of deal and commercials that needed more time once the JVP board reviewed.
Cole Creek completions have added to the overall understanding and looks to have also been added into the JV, taking more time to negotiate.
If it was the JVP own field they would keep drilling until delineated, some optimum drill results gained, some not, but it seems they had enough data from these two drills to finalise commercials - indicating drill success and at very low cost to them.
Majors spend $100s millions on offshore duster campaigns, the c $8m spent on COPL FD field is immaterial but the strategic gains are not.
The H wells may not have been put into production yet if successful, their status is confidential so not reported in normal monthly updates on WOGCC - or they may already be in prod and revenue flowing to COPL on terms agreed at the time - all yet to be seen.
Http://pipeline.wyo.gov/OperatorsFrame.cfm?Oops=1
Select southwestern production corporation
select current wells
then at bottom WC, select display wells
shows there are two confidential wells logged on WOGCC
They were not RNA as must be subject to NDA in the Joint venture discussions.
click on
49-009-49002
BFDU 41-30-3576FH
Horizontal well drilled in the Fed Deep targeting Frontier 2 - confidential well status confirmed Dec 20th 2022
click on view APD and it downloads a well status file:
"Southwestern Production Corp proposes to drill a pilot hole to 9,079' TVD in the Frontier formation, then kick off horizontally to 8,961' TVD/11,053' MD to test the Frontier 2 D Sand formation"
Anticipated spud date was Jan 8th 2023
So unknown well result - or who paid for it.
Then back out of this and select 49-009-49001
BFDU 42-19-3576FH
Another Horizontal well with confidential status
This time targeting the Frontier 1 formation , anticipated spud date was Feb 8th 2023 but may have been delayed due to weather, equally confidential status granted May 1st 2023
"Southwestern Production Corp proposes to drill a well to 9026 TVD/ 11,118 MD to test the Frontier 1 B formation."
Again unclear who has paid for it, but assume the JVP or BH as each Horizontal well is around $4m which is way beyond COPL resources.
We do not know if the wells were a success/ or put into production yet and booked production also confidential , but assume they were successful as the JVP was discussing commercial terms as of April 20th when both well results would have been known:
"Discussions with a large oil company who approached the Company regarding the exploitation of its Frontier oil resources are continuing with current focus on commercial terms..... Substantial additional technical evaluation has been undertaken during this period, which has led to a better understanding, and increased confidence, of this resource."
Substantial additional technical evaluation = two Horizontal drill results and evaluation of said data.
Letter of intent has just been signed.
JV is coming.
Monthly net profit after tax projections following GGS and Cole Creek conversions:
Aug - estimate c 1800 bpd = $1.7m
Sep - c 2200 bpd = $2.1m
Oct - c 2500 bpd = $2.4m
Nov - c 2800 bpd = $2.7m
Dec - c 3200 bpd = $3.1m
Estimated net profit range, with no RBL or JV contribution in H2 2023 = $12m
Add assumed cash on account - c $2m
Funds in period = $14m
Fixed costs in period:
O&A - $400k p/m = $2m
SL interest payment $440k p/m = $2.2m
SL capital repayments assumed in period = $5m
Variable cost assumptions
Butane/condensate - $300k p/m - $1.5m
Equipment/parts/Consultants etc - $200k p/m - $1m
Costs estimate in period c $11.7m
Funds in period c $14m
PROFIT range is achievable in H2 period
Money talks and agenda driven made up de ramping walks
COPL coming into profit territory soon with GGS deployed and MF rate of injection 4 times more than previously.
The BFU is not dependant on nor part of the JV and will become the cash cow foundation.
At 2000 bpd approaching he concept is proven, profit range gained, RBL with a revolver can be actioned, capital repayment every month delayed and just interest paid.
All funds can then go into field development towards the 5000-7000 bpd plateau range, as well as further drilling.
Which gives $5 million net profit a month after all costs.
Dakota formation wasnt mentioned in the JV scale to date and may be developed:
Jan 10th 2022:
"The Company estimates the Dakota discovery to be approximately 37,000 acres (58 square miles) in size, of which 77% is under the Company's leasehold. The potential resource is significant, with Oil in Place ("OIP") in the Dakota Fm. reservoir sand estimated by COPL to be 400 million bbl, with 308 million bbl. of this estimated to be on the Company's 47,992 gross contiguous acres of leasehold."
Plan to sell TL for millions and reinvest in revitalised North Sea
reminder of positioning
"Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration and appraisal company, is pleased to announce that, as a joint venture non-operating partner, it has submitted an application in the UK offshore 33rd Round of licensing, conducted by the UK North Sea Transition Authority ("NSTA") (the "Licensing Round"). The Licensing Round attracted 115 Bids across 258 Blocks or Part-blocks.
It could be random, but there have been updates June 5th and July 6th - perhaps update on Friday Aug 4th or Mon 7th possible on July production and completion of the GGS, last update confirmed it was still on schedule for completion end July.
Perhaps these monthly updates were advised to AM and he has taken this on board, delegated the RNA main body development with latest prod to SWP and his daughter?
We may expect/hope for monthly updates from now on, they are essential at this pivotal time of transition to profit , excellent practise going forward.
SWP and the field team are very efficient - the previous flaring hearing presentation material and delivery was first class and a credit to them - flaring approved.
They have had to deal with multiple problems as they arose in the field with very limited funds:
- gas flood was working very well until pressure issues slowed prod
- worked through issues such as wax build up and developed paraffin treatments,
- analysed all offset well data and models with demonstrated excellence which delivered stellar drill performance with the discovery well in one hit,
- now installing the GGS at a good rate,
- Cole Creek low cost delineation of Frontier 1 ongoing as a key JV deal component, gaining prod rises in tandem.
You would not bet against this team delivering , especially given momentum is now established and funds are in place to prosecute.
Once BFU prod rises to profit levels and rising , with the MF working well then RBL is viable as outlined - giving SWP further funds for BFU field development, then it scales towards the maximum production plateau of 7000 bpd and field work paid by profit.
The JV is a substantial bonus on top of this solid base in development. Its already apparent that SWP bring much to the table for EOR at Cole Creek and overall field knowledge - meaning they wont be pushed aside but work as a team with the the JVP who would deploy their unlimited funds, equipment and team to best develop the field.
"Our Company brings considerable experience and understanding of Cole Creek, including operating the early stage enriched gas miscible EOR project at the neighboring Barron Flats Shannon Unit. This EOR experience can be directly applied to Cole Creek as they have many similar reservoir characteristics"
If as surmised the JVP use CO2 for EOR and storage then the project scales rapidly as does profits for both partners - the development timeline is driven by the Majors appetite for rapid monetisation of the oil and carbon storage, in what is probably going to be a showcase example of how oil extraction can be offset efficiently at scale.
It takes time to set up a deal of this size and complexity, with follow on intent for Federal Deep in time, but the LOI signed is a key milestone and indicative of commercial terms finalising.
Why is Cole Creek just a few drills ? because you want that to be the case?
And for that reason Exxon not interested is stretching credibility to ridicule levels
Perhaps you may consider some research before you trot out this nonsense ?
such as:
RNA Jan 23
"The results from the Frontier 1 11-27 recompletion is a game changer for our Company as the defined oil-bearing reservoir currently covers a large area at Cole Creek with evidence it extends further down dip on the east flank of the anticline."
"The area within the "Oil Down To" elevation is approximately 8,000 acres with reservoir sand thickness ranging from 50-115 feet "
8000 acres of a total COPL acreage of 50k is not a small area, would require multiple drills to delineate and exploit, Exxon were the previous operator in the 1960s, they are obviously very happy to go back in now modern technology allows.
We do not know the scale of Frontier 1 OIP in Cole Creek following the JVP technical evaluation. What we do know is that confidence is high and the overall leasehold area resource has probably increased, leading to the LOI to lock in exclusivity whilst the JV commercial terms are finalised.
RNA Apr 20th:
"Substantial additional technical evaluation has been undertaken during this period, which has led to a better understanding and increased confidence of this resource."
Its pure unfounded speculation to assume its a smaller scale of JV as its not FD first or excludes it - why would they ignore1.5 Billion barrels and leave it on the table for a competitor?
Its far more probable its just Cole Creek first as easier to develop, due to topside in place, the 100% WI and then FD in development intent. They can use the existing vertical wells to drill the laterals and increase prod rapidly as Edgein outlined who is in the industry - its the logical approach.
Equally - there is a third interpretation of JV scale - that its the Frontier formation across all leasehold
"Discussions with a large oil company who approached the Company regarding the exploitation of its Frontier oil resources are continuing with current focus on commercial terms"
Consents required
read 100% immovable requirements in the terms for AM
perhaps funds asap following minimal number of wells drilled
possible funds in next 6 months:
BFU net profit after costs c $10m
RBL facility c $70m
JV payment for x working interest following initial drill results - c$50m
Morning DH
I was thinking on this, Deeps is excluded - maybe as most resource sits in Cole Creek following the JVP evaluation process last year? - be great to see that report key findings once out of NDA.
It makes matters a lot easier though as excludes CNOOC who have 15% of the Deeps - could be part of wider deal to buy their WI before developing it in any form.
JV is with COPL who own Coe Creek 100% WI, nice.
Fastfood
"there will be no joint venture, because I say so"
" Even if itβs certainly not Exxon now."
going forward following JV ...
" Well Exxon wont invest more than $100 million p.a in the field, trust me on this, look at my track record"
You should have burned that FF account, amazed you have the temerity to keep posting your nonsense as if your invested and have insight we should trust without evidence to support - no comment yesterday on the LOI at all pays for all.
"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."
Its non binding, the JVP can still walk away, but after a years technical evaluation they have signed the LOI, indicating they do have confidence in the asset and have formalised their exclusive position for a set period of time - if terms are not agreed in this period then COPL can open this up to other bidders.
The JVP would not have signed the LOI if they had no intention of completing the JV, its no guarantee they will sign the JV of course, DB is correct, but it is indicative of their intent to do so and as such should be considered in the context of this being the perfect project for the specific Super Major many assume to be at point:
established basin onshore USA
established operation in PRB
business model focus on expansion of carbon capture
recent acquisition of Denbury carbon capture infrastructure
largest resource onshore find in decades - proven find
Past working of Cole Creek by Mobil and these optics should another develop
Given this context, the JV is far more likely than not objectively.