Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Also FF, thus is a key point your missing perhaps:
"where is the money coming from to build the infrastructure ? "
once the JVP buys the delineated field, probably in stages, they pay for all its development.
You will get a comment FF
In retort, justify your valuation of $40-70m first. -Ive outlined the rationale for sale of asset in my post - if you dont believe that then fine - but it remains the case that oil in ground deals valuation are in $3 to$5/b range low end.
Your valuing a c 1 Billion OIP resource at $70m top end mcap equivalent - or just 7 cents a barrel. Objectively, are you certain you wish to remain with this valuation? why would you?
Make a case FF , instead of tedious deflection , as otherwise its just your neg opinion without basis - which goes against all industry M&A benchmarks by a geometric factor.
Interesting perceptions of value - at each end of the scale.
Harry - $5B deal done for CC and FD, all reserves plus carbon capture
Fastfood- suggestion of 5p - 9p equivalent to $40 - 70m for same assets in a full buy out.
so a differential of $4.93 Billion in valuation, both cant be right
Both have the same data to access to gain their views , so what basis is there for both extremes?
HARRY VIEW
Benchmark to Pikka deal - in Alaska with no infrastructure in place.
https://www.sbs.com.au/news/article/oil-search-buys-522m-alaska-oil-stakes/memcq5sgt
"Energy explorer Oil Search is buying into oil blocks in Alaska for $US400 million.....
......containing reserves of about 500 million barrels of oil in Alaska's Nanushuk and surrounding oil fields."
"The deal with private vendors Armstrong Energy LLC and GMT Exploration Company LLC will cover a 25.5 per cent interest in the Pikka unit, a 37.5 per cent stake in the Horseshoe Block and 37.5 per cent in the Hue Shale."
So around 200m OIP resource bought for $US400 million.
COPL have between 1B and 1.7 B equivalent OIP resource, assume the lower value.
The field is in Wyoming not requiring all infrastructure to be built, has topside and access to market, ability to have EOR to recovery levels approaching 50%.
Assume lower value for argument, then 5 x $400m = $2B at Alaska deal levels.
There is then some justification for Harrys estimate, as the value per barrel will be higher, the find is likely to have grown in period, plus carbon storage abilities - so a range of $2b to $5b on eventual full sale of delineated asset is not that unreasonable and has some basis.
FASTFOOD VIEW
"Anavio want their money back. 2.6p is their line. Accept a low ball offer 5-9p has always been my view until proved otherwise."
However COPL do not care about Anavio as Anavio do not care about them - they have used each other for their own ends, the next act should be more in COPL favour.
As to valuation of the asset - the sale of the field to a JVP has nothing to do with Anavio getting their money back, there is no correlation at all ,as the JVP deal is done is with COPL.
The eventual sale will be based on the delineated reserves, which as benchmarked is likely to be in the range of $3 to $5/b.
So which argument has more weight?
Its not diamond drilling so they cant visually check the cores for the 28 drills to assess mineralisation , its RC so they will evaluate methodically.
"Assay results from 28 reverse circulation ("RC") drill holes are currently being assessed and analysed"
The first seven show gold in continuous zone, albeit low grade but proof of concept gained and more possible as open:
"Initial analysis of the first seven holes indicates zone of continuous, low-grade gold mineralisation, open along strike and down-dip"
Good progress in real terms - disconnect with market perception perhaps an opportunity.
"This financing package is designed to ensure the Company is fully financed through Q1-2024, at current production levels of approximately 1,200 bbl/d"
so above is the minimum now enabled.
" providing focus on the key strategic priority of increasing oil production to allow COPL America to become fully funded through 2024."
providing focus by all other funds on COPL America increasing its own oil production to become fully funded through 2024 - through COPLA own drilling programme in the Discovery?
"I am delighted to have closed this financing that now allows my entire focus to be on delivering increased production at field site through increasing Q4 NGL injectant."
"The company plans to spend over $500,000 on NGL injectant in each of October and November to increase the density of NGL's in the gas injection"
"The company expects to see initial results from the higher density NGL's before the end of November 2023."
So they have had 3 week of increased level of NGL injectant, this two months increased rate may be enough to stimulate the rise towards 2000 bpd in time.
I get the impression they may not be spending further money on the BFU after this for a while, all funds look to be going to COPL America:
"This financing package is designed to ensure the Company is fully financed through Q1-2024, at current production levels of approximately 1,200 bbl/d, providing focus on the key strategic priority of increasing oil production to allow COPL America to become fully funded through 2024."
So worst case - they are funded until end Q1 even if prod stayed at 1200 bpd.
COPLA have no other role apart from JV and field delineation - its putting them first with most available funding after essential injectant has been funded in Q4. Otherwise they may have said $500k p/m spent going forward - as this is the key field expenditure at this time - no further GGS or drills planned that we know of.
Otherwise, no need for such an extensive funding package if only spending $1m on NGL, which may be sufficient to get to profit territory without further field spend, especially as no SL interest, unedged, reduced O&A costs plus substantial cash on account to cover burn rate.
So what $ balance does COPL America need in the next few months period?
If JV requirement to have working capital, then SL and Anavio must have been aware of that requirement to have done the recent finance deal, which means they may know the scale of JV already and what it takes to land it to terms specified - explains a lot.
Drilling activity adjacent to COPL leasehold
http://pipeline.wyo.gov/Spudcount.cfm
Click on spud record for 08/07/23, with ten spuds that day, most of whom were by
ANADARKO E&P ONSHORE , targeting NIOBRARA and TURNER formations.
For their Township 35N & Range 69W leasehold area in Converse County
COPL leasehold is just to their east, at Township 35N & Range 75 and 76 W
The business has separated the BFU production from the discovery and JV by creating the COPL America subsidiary with AM as President.
What does that say to you?
For me, the BFU will become the cash cow, rising towards the 5000-7000 bpd plateau using the known tech and funds now in place.
What will they do with the revenue once field fully developed?
"$8.5 million of liquidity ensures the Company is fully financed in to the first quarter of 2024 with the intention of reaching possible third party strategic Joint Venture.....
allows the reallocation of significant COPL expenses to the COPL America Inc. operating entity."
All spare funds going forward serve COPL America, whose entire purpose is JV and discovery delineation.
Is there 100% evidence of JV occurring?
Not categorically, but even a blind man can feel the suns warmth on his face and know that dawn is coming.
If you think that the discovery is not real nor JV coming, then I would question if full objective research has been completed - the data is all in public domain.
No im not paid foodie, unlike you - why do this TROLLING otherwise?
The SP has lost value for multiple reasons, and you and your ilk are one of them in micocosm.
I have said many realistic negatives, can you claim the same for positives on the assets, Hard to comprehend really.
You should take it as a complement I dont just filter you and your irrelevancies, as done with many others. The reason I do not is to counter your unjustified comments, such as todays
"Art cannot hide should the billion barrels somehow become a white elephant"
justify this contention by facts, reasoned source data rather than just your neg opinion - you cant of course so instead hurl the sly insults when challenged.
No FF
I decided to attack you because your out to consistently denigrate my investment.
Differing opinions are fine, but your all one way with no filter or ability to debate and rescind your agenda of negative spin
I suggest fast food old chap you read my first of 08h24 this morning, why it isnt 3000 bpd now - in any case we had this tedious argument previously - your estimate was 3000 by year end, i hope your right.
Its not personal - just stick to facts or reasonable position statements with some logic and you wont get so much ridicule and treated as a Troll - you cant support your negativity in this manner so your only low brow recourse is as you ably demonstrate - do you think this a real argument? no one cares what a poster says, only understanding what the Company may achieve
FF latest feeble effort
" Art cannot hide should the billion barrels somehow become a white elephant"
All this potential ,biggest onshore USA find in decades, Governor and Senator support
RS corroboration, even redacted, could not have been RNS without legal impacts
LOI with the JV party is in place
Yet believe the detractors and none of this is real, their spurious arguments only corroborated on the surface by the SP being low - that being the case does not support the view of there being no discovery or JV - the SP has just been manipulated because there fundamentally IS a Joint Venture coming, following a year of technical review by the JVP.
Believe that and the fact that Anavio get their big payday on sale of asset and special dividend for shares they will hold at that time, then all motives make sense, as does the pitiful SP at this time.
It makes no logical sense, but then it isnt meant to in this market. Meanwhile, production is rising and with that the rationale for manipulation of the SP to be kept low for entry decreases.
Wadda
Simply, because nothing is proven 100% yet, my post Oct 9th:
There is no specific timeframe set on when this company will come good.
As posted many times , three factors need to be 100% proven and delivered before this can move forward to a solid base, but when they do, those that made money on the crash will then make money on the rise - as its then expedient for them to do so.
PI then finally get a return if patience has been observed and - despite all - kept their shares.
1 - Production rising to breakeven and then into profit
Been waiting since 2021 for this, rocky road, but now the GGS is installed, MF can continue at double previous rates and prod can finally rise safely - we shall see when they reach the 2000 bpd, but WTI rise and hedge removal are substantial benefits to achieve cash flow positive with lower prod.
2 - Debt management
With prod rising into profit and growing (its not capped at 2000 bpd for 2024, thats just Cowan being conservative - they will see and update in time what GGS can deliver - then it opens the door to RBL for reasons outlined previously. RBL can then retire SL debt, perhaps some Bonds - we shall see. AM claimed a $60m target previously for this facility which is probably reasonable given the enhanced reserves leverage from CC following recompletions, plus BFU - any discovery drills completed add to this leverage.
SL should be around c $34m by now. They would need cash for field work, but SL debt is a drag anchor that RBL would remove, allow investment in the BFU and critically - fund COPL America - their strategic priority as stated in RNS:
"providing focus on the key strategic priority of increasing oil production to allow COPL America to become fully funded through 2024."
3 - Joint Venture
Illusive but pivotal - a year since the JVP approached COPL to discuss a JV - following which much analysis has increased their confidence of the resource, RS validation and the LOI. When JV occurs who knows, but it looks to be coming.
These 3 factors are not yet achieved so the share gets manipulated by every trick in the book, assisted by poor company comms and positioning - but soon these three factors will materialise and the mcap can rise with a solid base created - fully funded into Q1 is the first foundation stone.
Although the GGS works was completed on time in mid July - RNS was a month later August 15th of course - even though it is the number one material advance for the company to get to profit and hence the most important news to get out asap as a stand alone unequivocal statement.
"COPL is pleased to announce that the gas gathering system is functioning and was commissioned on time and under budget in July 2023."
When this statement was made in Aug, was all the system working or just the pipe work done?
RNS of July 6th
"The high-pressure gas gathering pipeline system has been installed, and tested and is awaiting the following:
Delivery of the first three of eight high-working pressure wellsite/production separation facilities required for the upgrade is anticipated by week's end, with the balance of the units being delivered over the following two weeks. Six of these units were fabricated in Alberta to specifications for winter operations common in Alberta, Canada which should mitigate the issues experienced at the BFSU during the winter of 2023.
Upon installation of the wellsite/production separation facilities, the system will be commissioned."
So perhaps some spin - pipework done, but separation facilities not all delivered and installed on time? Explains the delayed news and no prod increase to date.
Considering they planned to start enhanced M/F in Q3 but it seems have only done so Oct/Nov with the $1m spent on butane:
" The Company's Reservoir Engineer and its specialist reservoir engineering firm are developing a revised miscible injection strategy for commencement late in the third quarter following the upgrades to BFSU gas gathering system and production facilities.
Its perhaps 4-6 weeks delay to the prog so not that material, but it does impact production rise being realised when market may have expected (recent rise to 4p in anticipation) and so the long climb back from the going concern crash is stalled yet again - perhaps not fully of COPLs making but they could have managed expectations better - i.e maintain operational key updates each month as they started, but then this petered out.
Critically:
" Oil production from the BFSU is a function of injection volumes. It is the Company's intention to resume injection volumes to a level to return to its previous oil production peak in late 2021/early 2022 before injection volume reduction."
Inject more butane = oil production rise. Its a proven tech, yet the market assumes its in the balance and not guaranteed - so the SP is decimated (plus other factors).
Remove going concern risks by 100% validated prod rise trajectory and the market cap will grow. For most new CEO this is a priority concern, equally introducing yourself to your shareholders is a basic courtesy - a Proactive interview would be welcome.
Perhaps Cowan waits on the prod rise until doing so.
Https://www.youtube.com/watch?v=btDVfbI858g
Evaluation of fracking, EOR and Horizontal wells, where most of the innovation was by smaller outfits until c 5 years ago, as in Southwestern.
Now Super Majors such as Exxon growing in Permian and PRB through partnering and acquisition to better understand and deploy the optimum extraction techniques - their recent Denbury and Pioneer deals being indicative. Add them being at pole position in carbon capture in PRB and the synergy is apparent.
COPL intend to use EOR and H wells for the discovery and have the knowledge of the field, partnering has benefits for both.
"The company that has entered into the LOI with us is the best partner we could have of the ones we have considered. 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"
Once 2000 bpd and profit zone reached, SL debt retired by RBL soon after, JV signed with a Major - the detractors should move on - as really nothing to say after that, the holders here will be proven right in their belief in the asset. There are no "rampers" here , just weather worn committed SH who have done their research.
Money to be made on the mcap way back up.
Frontier will be developed at EOR up to 50% recovery.
The scale of the discovery has grown since the original evaluation by COPL and subsequently by the JVP - it was a 1.7 Billion barrel OIP resource.
Geological facts are neutral.
Fastfood, pedantic point scoring from you again? surely not
20 20- hindsight is a wonderful thing if it works to your advantage.
My c 4000 bpd by year end estimated , you thought 3000bpd yourself at the time, not the lower range you state now to look good.
The 4000 bpd was predicated on COPL having started higher butane injection in July when they finished the GGS, evaluating the previous growth trend in summer 2021 with plastic pipes that reached over 2200 bpd by Aug 21 before slowing due to the pressures.
The field is now fully banked with butane, they planned on increasing the rate of injection to double that of 2021 , Cole Creek completions have been a success - so 4000 wasnt without basis as an estimate.
But a need to better factor in the funding gap , now covered by the various measures to release $17m of capital into 2024.
In real terms, it appears they are only starting inject the higher rate of M/F in Oct-Nov, meaning COPL lost mid July, Aug and Sept profile of higher growth, combined with other field issues to deal with which has caused a s slower growth profile.
"The company plans to spend over $500,000 on NGL injectant in each of October and November to increase the density of NGL's in the gas injection"
Its not as onerous with hedge removed, higher WTI and current very good liquidity if 4000bpd is reached in Q1 instead of year end, as long as it gets there - 2000bpd is profit territory and a pivotal milestone coming.
Unnd
"I do not think that they have any spare cash, certainly not for a horizontal drill."
Fair enough, you may well be right, but I outlined my calcs using data issued by the company to show that they could , would be good to see your calcs supporting your view that they do not of course.
It would be the best move imo as instantly into profit territory, but they do need to manage risks and ensure profitability is reached.
COPL have immediate cash flow benefit with the refinancing, what are they spending it on?
FUNDS
$4m from Anavio on account confirmed today
Further $3.5m by not paying SL interest in period Oct to Jan
"A waiver from its 'Senior Lender' and Swap Provider on interest payments from October to the end of January 2024, leading to a cash saving to the company during that period of $3.5 million;"
Plus whatever funds remaining on account (assume c $1.5m based on burn rate since end June when they had $5m on account )
plus further reduced O&A costs - "The Company reaffirms it is on track to remove a further $1 million of costs during Q4-2023."
plus another $1m from reduced requirement for cash on account:
"reduce the minimum liquidity covenant from $2.5 million to $1.5 million from October to December 2023."
Which makes around $11m in Q4 on account/saved by lower costs/higher revenue as not hedged prod.
SPEND ALLOCATION
They need $1.5m on account
Assumed burn rate average loss per month of c$1.2m based on financials = $3.6m in Q4, reducing with higher prod over time as they expect NGL to show results before end Nov.
They are spending $1m on injectant in Q4 - "The company plans to spend over $500,000 on NGL injectant in each of October and November to increase the density of NGL's in the gas injection"
Gives a cost/spend allocation in Q4 of c $6m with $11m to draw from, a good $5m contingency, allows profit zone to be reached.
Interestingly, $4m is the approx cost of one Horizontal well which on paper they could afford.
Adjust to suit.