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They are too busy to plan any information strategy roll out it seems
Dont know what they dont know on communications perception?
Do not prioritise or value information management/marketing? as they contract Cathy company for this role which should be in house and valued could be the case
Some considerations may be:
1. Have just one day workshop with key COPL staff with one agenda – how to best manage information in COPL control for sentiment increase and associated mcap rise
2. List all the development items coming - have a working document maintained database of promises made and if notifed for completion of task, such as cole creek well recompletions – are they all done? What was the net impact? are more works planned?
3. Decide what news can be issued as a series of RNS – e.g as an example for future drilling , issue news as one offs on the theme – when casing received , all staff and materials sourced, well spud, drilling progress – on schedule, early results - emphasise what each well means when complete in planning – once in JV it shouldn’t need to be confidential. AM used to state many pieces of info when he did interviews – so issue same detail in RNS.
4. Have a plan and tick off all stages to completion by task , specify follow up tasks– update market as done.
5. Decide on a set date for updates each month – could just be all plans previously advised are progressing as planned, or an issue resolved etc – it doesn’t have to be play by play, but encourage SH to be interested and engaged – repeat the strategic necessity of actions and what this means.
6. Identify ley actions apart from field works to improve comms/marketing and sentiment – website is a good start – photos of the board isnt to much to ask, let alone interviews – the current no action approach is toxic - but easily dealt with.
7. Peer review RNS for understanding, removal of nuance or different interpretation – clarity and minimise multiple messages in each RNS the goal.
8. If some tasks not achieved as planned outline why – RBL not gained yet due to….? Saying nothing has impact – things change, accept this is the case and bring SH with you
9. All this micro management of comms may seem onerous – but pay off as the prod rises to profit and cashflow increase drives sentiment
10. JV changes everything – then the Major writes the comms, but improve the company up unto that event.
"COPL has agreed to crystallise all hedge losses from October 2023 to December 2024, totalling $10.96 million ........ In addition, it has agreed to pay a revised interest rate on the same terms as the Senior Credit Facility on the outstanding liability.......the same maturity as the Senior Credit Facility, due March 2025."
Current SL debt c $37m
Add this hedge offsest of $11m
March 2025 plan agreed is to for repayment of $48m total, over period.
Allows COPL access to substantial funds until March 2024 to secure Joint venture with reasonable terms - they can pay a contribution of initial field costs, which brings wells online and then revenue is boosted.
Or
Message sent is that with these funds ($17m scale) and with the BFU production approaching 2000 bpd profit zone, they can develop the field on their own for a period, then agree the JV on a more solid foundation with perhaps two Horizontal wells online at c $8m total cost - the funds are there now to do achieve this, being substantially more than the capex known to be required for the field and to cover losses until 2000 bpd reached.
Assume lower end of production at 1000 bpd each well and it brings an additional 2000bpd on top of BFU prod - creating revenue that can pay for the next wells, each adding reserves which leverages further borrowing - this hedge restructure allows this catalyst to kick start the production far into profit territory in Q1.
Then they may indeed scale by partnership.
It seems the JVP is in no hurry to land the discovery by this partnership yet, albeit the Letter of Intent buys them some exclusivity time for an unknown period
All funding/positioning seems to point to a JV agreement being reached in Q1 2024.
Either way, production will rise in period and with it revenue - after that its just scaling.
New NED is going to be from the oil sector - how else can he perform this operating and field costs benefit-cost monitoring role he is employed to do:
"COPL will shortly appoint a new director, who is expected to focus on production increase and operating costs control. A new reporting and governance framework will further provide the board increased visibility and control of COPL operating activities."
Anavio are finance not HC sector- so who do they bring in?
Someone known to the JVP would not surprise - all players closer align.
Once his past affiliations known, each can make their own conclusions.
The Letter of Intent was signed July 24th just after the GGS completed - perhaps not happenstance.
"COPL America Inc. ("COPLA") affiliate has signed a Non-Binding Letter of Intent ("LOI") for a Joint Venture with an established energy company to develop and exploit its oil reserves and resources at its Cole Creek project ."
Since then all actions designed to ensure they can fund COPL America
- Refinance September 6th just a few weeks later
Gaining $8.5m of funds, demonstrated alignment of Sl with $5m and Anavio with $3.5m to the JV positioning:
" COPL has the full support of its existing Senior Credit Facility Lender who has agreed to: restructure 100% of the WTI hedges from Sep23 to Jan24, freeing up c. $5.0 million of near-term cash flow, and (iii) allow the reallocation of significant COPL expenses to the COPL America Inc. operating entity."
At same time - COPL board changes, O&A savings.
Oct 2nd, SL waives covenants - cash on account required reduced to $1.5m from $2.5m
Oct 6th - further Anavio funding of $4m
SL waives loan interest payments - from October to the end of January 2024, saving $3.5m in period.
Total finance in period July to date enables $17m of funding access
next act - new NED from Anavio:
"COPL will shortly appoint a new director, who is expected to focus on production increase and operating costs control. A new reporting and governance framework will further provide the board increased visibility and control of COPL operating activities."
all leading towards JV positioning
As an aside:
Two Frontier wells were planned, permitted and recorded as confidential wells on WOGCC.
Specifically highlighted intent on Sep 22 presentation, slide 24
https://www.canoverseas.com/wp-content/uploads/2022/10/COPL-September-2022-Investor-Presentation_Final-20-09-30.pdf
"The first 2 horizontal wells will be drilled commencing in January 2023 targeting Contingent Resources in the Frontier 2 Fm"
They were permitting 16 wells for Phase 1 delineation
"COPL is permitting 16 delineation wells at a spacing of one well per square mile for Phase 1 of the delineation"
Previous highest production was double this September 34k month with :
plastic pipes,
No flaring,
No enhanced GGS well head equipment
No direct tie in to the gas plant by higher producing wells
No effect of the M/F gas bank movements, transition from pumping to flowing wells
No removal of wax build up to date
No winter well head works completed
and half the NGL injection rate
Its a proven technique that works, just needs the time to do so.
Given these constraints removed, COPL estimated 5000 - 7000 bpd in their simulation as shown on previous presentations
The remaining board are the survivors who have bought into the new way forward, Anavio and SL driving finance and best positioning COPL for the JV, minimise comms until delivery.
AM gone to a technical role and JV discussions was always his goal as soon as the discovery was made - he probably suggested this rather than was pushed imo so he can walk away from the car crash SP and bask in the glory coming once JV lands and delineation of the field, win win for him.
Meanwhile - no comms from new CEO , who is acutely aware of the journey to date and the need to provide 100% proof of advance in production as his first deliverable - no more empty promises of JV completing, RBL, SP 50p etc - just wait for completion of stated goals is an understandable policy at this stage.
Once they are established then COPL may develop a mid cap professional approach to comms and SH accountability - a long road to go but he has taken the first steps with GGS online , O&A cost savings, $13.5m funding package to end Q1 at just 1200 bpd and enhanced NGL injectant to $500k/month.
The easiest win is if Oct prod has risen, to publish this asap by RNS on progress instead of just on WOGCC - no reason whatsoever not to.
If planning for Nov 15th update as mentioned, then add two weeks of Nov prod and further increase of trend north worth the wait.
Doing some research on another share Bushveld I owned in the past and noticed the similarities with COPL (not a recommendation)
great assets and market - vanadium, with diminishing world supply and growing need for EV
valued at less than cash on account
poor board decisions - CEO recently replaced
Just increase their ownership to 100% of one of their assets
"misunderstood" position by the market and priced accordingly
SP fall from 50p to 1.5p over a few years period despite advances in assets and position
They are also at a pivotal moment for growth, recent post there
"What has to be acknowledged by all and cannot be refuted is the fact that the 'big money' is taking up positions."
Not a recommendation for his share - but interesting to see how they progress once HNW positions taken for growth and how that occurs in relation to COPL similar position.
Careful
Indeed - to me the confidential wells are listed = were drilled - they dont list permits for which COPL have 12 outstanding to drill BFU.
That being the case, then as you say AM may have drilled them as a priority rather than do the GGS works and played it to the wire on cash flow , breaching that in Feb so going concern notice had to be issued.
Implied that if weather had been kinder he may have got away with it - may have felt that he could as would have done the cashflow calcs - but it appears the SL called it aswell as Canadian regs - and then the crash - in sentiment, SP and all else to this dismal level.
But if AM did get the drills done, data needed by the JV as per your May transcript then it may have been essential to gain JV progression - prove Frontier 1 and 2 flows.
Business is war after all - by all and any plays viable to achieve strategic goals and progress.
I do not like the means in the slightest, but the end may yet justify them for AM if he lands the JV with reasonable terms.
All you say has good basis Speel, but I think its a lot deeper than it appears on the surface.
There is no guarantee the JVP would be able to buy the asset if COPL went to the wall - would you allow this risk of a competitor snapping this if your the JVP lead negotiator? would be a career limiting move .
The BH needs to shepherd and support COPL into JV (to benefit the JVP and them) - they get max return by the eventual sale of asset as a major shareholder at that time no doubt - they are here mainly for that outcome imo, not just for the bond interest etc on the way which they could have gained with far less risk by another deal (if the Feb going concern caused COPL to go out of business, BH would have lost all their funding)
The discovery attracted the BH in the first place when AM only had the Bridge loan option - and keeps them here imo.
JV is progressing it seems - The Letter of Intent is indicative of main terms agreed rather than remaining at loggerheads due to AM holding out for a better deal and JVP ability to wait him out.
Equally the funding package is designed to fully fund them to end Q1 and into profit zone. The JV may happen in this period or not, we shall see.
Dont forget meteor strike on COPL Leasehold area, vaporising the discovery - cant count that out of course NG.
Not sure how much distance AM would or could keep Anavio from the JV discussions and progress, as they are bank rolling COPL along with the SL.
I was thinking perhaps the reason JV taking so long is that JVP lost confidence in COPL business management and looked to bring Anavio/SL into the JV agreement qualifying terms - get the COPL finances sorted by mandates on cost savings, hedge, GGS paid for by them to gain prod increase etc - for a % of course of the end prize.
Indicative is the recent full Anavio support to fund COPL into Q1 and JV landing - they must be party in some form to how the JV is progressing to have this confidence, even if not at the negotiating table with AM.
The cost saving measures also look to be from Anavio, as its a 180 turn on the 50% pay rise awards AM remuneration committee awarded the board, Ludwig and Carello then exiting stage right in June . Perhaps at JVP request to Anavio? , all towards getting finances sorted before they JV.
Next week new NED from Anavio appointed , presumably with an oil operations background to safeguard Anavio interests, as they are money men.
"The Company will appoint one additional independent non-executive director to be nominated by the Purchaser by no later than November 1, 2023."
What may be a consideration is that Anavio and JVP decide on this NED appointment together, perhaps a consultant used by the JVP or associated with them previously - once he is announced then useful to understand his background.
Assume COPL version of an arms length creditor is one they dont want to declare.
Fair enough, but some elaboration could be done and still maintain confidentiality.
"to pay certain legal fees relating to the JV "
or
"to secure essential parts for the field well heads which allow production to increase"
or
"secure casing required for the planned delineation campaign"
If just a debt for something else, why be so mysterious? its toxic for market and SH sentiment.
Whatever this and other opaque creditor payments were for, its probable that most relate to advancing the company in some form, so why not state the truth and support the SP for once, the market can and does read between the lines - make that understanding work for the company for once.
Due to multiple actions and events, the COPL board appear to not demonstrate any interest in the mcap or associated SP, let alone shareholder opinion by marketing/bolstering perception and adding value in any form.
Board statements made to the contrary do not impress, actions will:
"The Company now has a focussed executive team and Board aligned in their focus on delivering value for all stakeholders."
"Following a challenging period for the company both financially and operationally I am committed to delivering on the potential of our increasingly well invested assets. It is my simple aim to drive maximum value from them"
Focus is on production, to eventually let the money do the talking, but quick wins to be had on route are still not considered.
Sort the website out for one - pay $50k to a consultant to do so and then declare it done in prep for partnering with a Major with latest position, it needs to look professional by association.
"No morale compass"
morale = the confidence, enthusiasm, and discipline of a person or group at a particular time
moral = relating to the standards of good or bad behaviour, fairness, honesty, etc. that each person believes .
But both work in this instance :)
Difficult to maintain morale with SP crashed and manipulated, minimal progress news, lack of transparency and constant dilution - who was this arms length creditor? the COPL board cruise tour agency fee for their annual knees up in The Caymans?
None of us knows what is happening here in the background, true motives or outcomes. Cornerstone investor?
I can but hope it will eventually go well and PI get some of the spoils, as the prize is vast - im not influenced in the slightest by any that look to downplay the value of this asset once sold to under $100m - they are agenda driven and part of the malaise.
I do believe however that pivotal news is coming soon , with a month of $500k spent on NGL injectant in the bag, pressures managed with the installed pipework etc.
JV will be when it will be, but all seems to be progressing on this front aswell, why would it not? its the biggest find in decades onshore USA by a large margin.
GLA
Query for SH familiar with WOGCC
COPL had two confidential well drilling permit applications approved and as recorded in WOGCC, with API numbers :
49-009-49001
APD description:
"Southwestern Production Corp proposes to drill a well to 9026 TVD/ 11,118 MD to test the Frontier 1 B formation. "
49-009-49002
APD description:
"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."
The number of drilled wells listed in WOGCC in well status:
http://pipeline.wyo.gov/OperatorsFrame.cfm?Oops=1
which lists 2 confidential wells.
So from this data, can it be assumed that the two confidential wells were drilled (not just permitted) , were not P&A and so may currently be operational?
Thanks.
RNS Jan 23rd was pivotal:
"Approximately 50' of Frontier 1 sands remain unperforated in the 11-27 well. These sands will be completed when the perforated sands in 11-27 are hydraulically fractured as part of a stimulation campaign on the recompleted wells later this year."
"Oil production from the Frontier 1 from the 11-27 well at Cole Creek will have an impact on the Company's petroleum resources through reclassification of Prospective Resources to Contingent Resources, and ultimately its Reserves as additional producing wells come online."
All 7 recompletion wells should have been done by now, but no further results RNS.
Increased reserves allows further leverage in RBL - perhaps they were confirmed to SL and assisted in securing the latest lending terms with them as collateral - these organisations always need collateral - albeit not specifically stated either way of course, a la COPL.
The strategic advancement however from these recompletion works (at ultra low cost at $150k per well ) was in increasing the scale of the discovery by 8000 acres and ratifying the pivotal discovery drill 14-30 by proving that Frontier 1 flows in Cole Creek:
"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. These results have also confirmed our internal evaluation of the Frontier 1 after the drilling and evaluation of our 14-30 exploration well last year. "
The JVP needed this evidence - following which they did a complete field appraisal of all data similar to RS , which must have been positive as it led to the letter of intent to Joint venture.
Asymetrical warfare then followed.
FF
"I hope you’re right re multiples of 9p. If you believe even in a minimum of 9p why oh why are you not remortgaging the house ? The answer is Risk re our current balance sheet and the as yet unproven cost evaluation re getting the oil out."
You again equate current SP with the eventual delineation and sale of the discovery - the two are utterly different and at the moment have zero correlation - because the market does not value COPL even at their topside equipment value, let alone BFU reserves and certainly not discovery potential in any form.
The reason why investors are not loading are multiple and unrelated to the discovery or "ability to get it out"- again this is not going to be done by COPL but by the JVP in any case, using all their resources.
What is unclear are the JV terms, how this may provide value to shareholders in the future - of all types.
Once the JV is signed and terms known, trajectory towards field delineation known and sale of asset approach - then COPL should see some serious investment materialise and mcap grow - until then all wait on the BFU to develop towards 2000 bpd and the debt to be managed on better terms, providing proof of sustainable development and lower risks.
FF
"What I am saying is having 2billion barrels of oil is one thing. Translating that Asset into a worthwhile SP North of my 5-9p prediction is another."
No one is saying anything different.
Its a process - once discovery is delineated it will get sold.
That will be lump sum deal as benchmarked similar - which is based on the proven reserves following drilling - this is the standard sector approach.
The oil is found, increasing WTI price, low tax, safe jurisdiction, biggest onshore US find in decades, RS have independently verified 1 B barrels but only evaluated a part of the field, there is an LOI in place with a Major, the PRB is a hotbed of M&A etc - it hits all metrics objectively.
The JVP has the will, the means in terms of funding, staff and materials and the opportunity by JV with COPL.
There are Horizontal wells operating now from Frontier adjacent to COPL leasehold , its not a new formation nor requiring new risky extraction techniques .
After that - its just the scale of P2 found and the terms of the sale deal, which will gestate into a mcap improvement multiples of SP 9p equivalent $70m.
FF
Your mixing up current SP with the ability of the discovery to be sold for fair value.
Of course there is no value assigned yet to mcap as it hasnt been delineated nor sold to the JVP at fair market value. It does not mean it wont be as you imply.
Your valuation of eventual sale of asset was 7c per barrel - so you assume some value and therefore production can be realised? so justify your valuation that being the case.
Or is it this?
" If you can get say 50 million barrels out at a Cost less than what you get for Sales / then that would command a certain price re the SP."
indeed - but the field is 1b - 1.7 B barrel OIP with EOR at 50% = take the low end at 500m barrels and its ten times your 50m number, for which you assign a sales value of $1.5/barrel in your valuation of $70m sales value at SP 9p.
I really do not understand what your saying frankly, not convinced you do either - reminds me of my friends wife - if she loses one argument she does not acknowledge it or concede one aspect - just moves onto another negative.
Https://www.upcounsel.com/indirect-subsidiary-definition
What Is an Indirect Subsidiary?
The significant factor in determining whether a subsidiary of a company is an indirect subsidiary is that, while the parent company does not have complete control over the subsidiary (as in the case of a wholly owned/direct subsidiary), it does have enough interest in the company to affect the operation of the subsidiary. A good example of an indirect subsidiary is what may occur in a joint venture when one of the companies in the business arrangement has more than a 50 percent interest in the new company that is formed.
Great exampole FF
more deflection then FF? - working on your calcs for your valuation of $70m then?
Of course fields decline over time, this example you provided was after they had extracted one Billion barrels :)
"total hydrocarbon production in the Michigan Basin has surpassed 1 billion barrels (Bbbls) "