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Cant argue with that LM, but the March 2025 maturity date is not set by COPL, but by the SL.
Equally, cause and effect.
If Atomic had installed steel instead of plastic pipework, COPL would be in a far better position and the poor finance etc decisions would not have been required, CUDA could have been secured with less impact etc.
However, we are where we are.
They were on the back foot from the start and had to hustle to get COPL to this point, they could have gone under.
But im not going to extrapolate the unquestioned past mistakes/field problems/avarice etc forward given the finance now in place and SWP at point to deliver the improvements to production (they at least have done a great job objectively)
Lets see if they come through overall, but I see this new director appointment as crucial, its an acknowledgement of past failings - and of them now being addressed.
"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."
Whats very encouraging however is the increase in the SL loan in real terms by another $11m for 2024, the pivotal investment period to develop the discovery:
" COPL has agreed to crystallise all hedge losses from October 2023 to December 2024, totalling $10.96 million with Swap Provider.....the liability has the same maturity as the Senior Credit Facility, due March 2025. "
This could be the reserves leverage gained from CUDA being realised, as its proportionate in scale to original loan for Atomic reserves, showing proof of concept is established for the M/F with the new GGS kit - the reserves can be extracted, the road to profit is assured, the reserves therefore have on sale value - the SL can recoup their loans etc if needs arise, their key lending criteria.
If this was not evidenced to their satisfaction they would not have agreed to this finance , would not throw good money after bad - implication may also be that the JV is progressing in the background as further surety.
All SL loans are due March 2025 which also implies that by then COPL should be in a position to repay them - or the overall end term date would have been changed at this juncture.
Completely agree with Nelson, it does not take much time to think on adding positivity and emphasis, its such a quick win, but this company seems incapable of such.
All they have to do is just reiterate positives from previous RNS statements that were lost in the stream of news catch all RNS they customarily issue.
Oct 6th
"The Company is excited by the high degree of support and mutual alignment it has achieved amongst its leading capital providers and stakeholders enabling this pivotal financing and restructuring package"
then outline why , what this allows
"This financing package is designed to ensure the Company is fully financed through Q1-2024....providing focus on the key strategic priority of increasing oil production to allow COPL America to become fully funded through 2024."
Its just copy and paste, showing some thought on what measures could be used to increase sentiment and SH value.
BFU Shannon steady prod at 2000 bpd can achieve profit zone and service debt , this could be the revised highest target as implied for 2024 - so perhaps no more phases of GGS, just enough butane M/F to achieve this and maintain:
"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"
Their stated strategy is to invest in COPL America and therefore horizontal wells - 1000 - 3000 bpd average in PRB per well has been achieved and is benchmarked:
"we can bring production back above 2,000 bbl/d on average for 2024 it will allow us to fully fund COPLA for the entire year....The impact of this senior debt and hedge restructuring is to free up over $13.5 million of cash to the end of 2024 for COPL America."
These funds can only be spent on H wells at c $4m = 3 wells - as COPL America have no other spending priorities except discovery development.
The $13.5m funds will be invested in COPLA over 2024, so wells may come on line in stages, each well on line provides revenue.
Its noted that Dakota formation is not mentioned in the JV agreement , could be developed by COPL America alone outside of JV, or areas of the field for Frontier in JV partnership.
A hypothetical but viable programme may be as follows, revise to suit your viewpoint:
- COPL develops BFU to cover company costs and debt servicing, all profits/hedge benefits go to fund COPL America
- Feb 2024 - H well 1 on line at 2000 bpd, using funds from parent company = $2.7m profit per month after all costs and taxes
- May - two further H wells, using funds from COPL, plus revenue from well 1
- end June - with three H wells on line = $8m profit a month = two further H Wells viable
- August - 5 h wells on line, plus further COPL funds = $17m cash flow profit by end month = four more wells viable
- Oct and 9 wells on line = c $22m profit per month
- Dec and 15 wells online = $40m profit a month and so it scales.
If COPL America reinvest all profits generated they can grow exponentially, the catalyst being funds coming through COPL enabled by the recent deals completed with the BH and SL.
If you assume only a third of the wells production is achieved in 2024 as outlined , COPL America could still end the year with c $12m a month profit after costs and taxes.
This is all without a Joint Venture signed. If it is, then funds go towards JV Frontier delineation - which adds even more profits as then the JVP funds kick into play at their appetite and ability levels, all of which gives a % to COPL America
If COPLA develop the field as broadly outlined 24/25, they can sell with c 50 H wells online for $Billions.
If we can work this out as humble PI not in sector - what manipulation in period until this trajectory commences?
Ajep
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.
The key conclusion of strategic note is COPL is now fully financed for all field works to enable them to reach sustainable profit territory of 2000 bpd, there is now no impediment to them achieving this, with proven technology and known m/f induced production ratios, with a fully banked Eastern BFU field and increasing butane rates for the west continuing.
This is a substantially improved "starting" position compared to 2021 - the prod has been capped by pressures, this constraint removed as GGS phases complete.
The BFU is the cash cow, whose sole function is to fund the development of the discovery, as part of JV terms. All funds generated by any and all means ultimately service COPL America, as stated:
"The increased equity financing and debt and hedge restructuring provide COPL's group with more than $17 million in investment "
Which pays for all BFU and CC works - drilling can be afforded, to become the cash cow and realise profits for COPL America to then be fully funded:
"providing focus on the key strategic priority of increasing oil production to allow COPL America to become fully funded through 2024."
To me this is a clear indication that COPLA have the ability to go it alone if needs be as the BH and SL are prepared to fund the best position for COPL America. Why does COPLA need to be fully funded in 2024?
Either to honour JV terms of % paid for drills (but why would the JVP carry them, wait on them being able to achieve funds required at $4m per H well?
Or COPL indicating to JVP they can go it alone if needs be and this is just end game JV negotiations tactics, with an implied end date of Q1 - if deal not struck by this date, then COPLA develop the discovery on their own with funds from their parent company.
My last post Oct 4th at 0716 outlined estimated breakeven at 2000 bpd where in costs around $2.2m and revenue around same with hedge restructured.
Good to see the calcs worked out as tracking this company cash flow has been arduous.
Going forward the SL interest payments paid later is a substantial bonus to cashflow- there is no way the SL would do this if COPL were not well on their way to profit and JV.
Implies a JV cash payment up front in the offing and terms of the SL debt being retired in Q1, with their profits banked and shares for their use to the bargain.
In real terms the cash and dilution is small overall, to progress a 40 year incline field increasing to 7000 bpd and a JV to delineate the 1.7 billion barrel largest find in decades.
Fair runway now with no cash issues, allowing full MF at $500k a month in Q4 - approx. double previous highest rate of injection in 2021 which saw 65k a month prod.
The burn rate is around $2.2m /m without major works
O&A - $330k (with reductions in salary etc in year)
Butane/contractors/materials etc - variable but assume c $470k/m - the butane deal with Tallgrass for maxing the MF was at $300k/m
SL capital - upto $1m/m (as Q2 SL debt was $37m, was $40m in Q1 financials)
SL interest - upto $400k /m
Total costs c $2.2m
Revenue on 1300 bpd base is c $1m net profit after lifting costs and tax (hedged)
so a deficit of c $1.2/m
They had $5m on account end June
Allowing for $1.2/m per month July, Aug Sep = c $3.6m leaving c $1.4m on account (they need min $2.5m on account as per SL terms)
So timing on finance makes sense as does the hedge removal as they were approaching breech of SL terms and liquidity issues.
Going forward all changes due to hedge primarily , the BH funds are a stop gap but not essential if SL is amenable as its the last lap before JV and prod rise.
o $3.5 million equity injection at 4p per share from Anavio
o c. US$5.0 million liquidity released from hedge restructuring
So with hedge restructure profits change as follows as prod rises:
1300 bpd = c$1.5m net profit
1700 bpd = c$2m net profit
2000 bpd = c$2.3m net profit
Meaning breakeven due in Q4, the $3.5m satisfies the SL liquidity clause in the interim, the SL and BH will support COPL until JV.
· c. $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 agreement
Thankyou Gentlemen
Not often I get to tick up my own post a few times...
Southwestern are at point - should objectively give confidence.
When AM first bought Atomic he funded them a few million and they just got on with the field work, expect its the same model now - they know what they are doing as demonstrated to date, its not their fault the pipes were not up to the pressures, could not have known until the M/F did its work in 2021 for the first time.
They have generated solutions throughout - dealt with back to back problems as they arose , chalking up key wins on the way:
MF working and field banked - 65k in Aug 2021 before pressure issues arose
Flaring hearing input - secured agreement and Governor praise
Cole Creek recompletions success at ultra low cost proving the Frontier 1 flows
winter well head kit installed
GGS installed on time and budget
Discovery well drilled and biggest find in decades - one drill proving their field analysis of offset well data, seismic and modelling.
All positioning for the Joint Venture.
I would not bet against them if fully funded - which they now have - by cash on account, $8.5m liquidity coming with hedge removed and BH funds, rising production revenue in time.
Only one thing to keep in mind
2000 bpd is approaching and may be here already, in context of low lifting costs/ taxes and rising WTI price
$2.4m profit after costs/tax - per month as unhedged.
cost spend p/m from Q financials:
O&A - $400k (reducing by $1m p.a = $330k)
Butane/contractors/materials - variable - $400k
SL interest - $400k
SL capital - $1m max
Costs p/m - $2.1m
All upside from here.
The SP before news on prod rise and JV isnt a focus area for COPL
Making that happen is, plus sorting out finance - their stated strategic goals
But once this has occurred they will want the mcap to rise substantially to encourage instu investors and a steadier shareholder base, the PI who came on the journey to date may remain or sell at this level or on news - its immaterial to them.
Sustained and growing revenue creates stability and with that access to further funds on reasonable terms.
Https://www.hartenergy.com/exclusives/armstrong-selling-stake-largest-us-oil-discovery-decades-30487
"The Nanushuk area assets are believed to hold at least 500 million barrels of oil (bbl) and encompass a 1,115-square-mile area. Oil Search said unrisked resource potential is an estimated 1.5 Bbbl."
“The Nanushuk Field in the Alaska North Slope is a giant oil discovery and has been acquired at an attractive point in the commodity cycle, at a very competitive price of approximately US$3.1 per barrel of discovered resource,”
"Australia’s Oil Search Ltd. said Nov. 1 it will purchase interests in the conventional Pikka Unit, Hue Shale and Horseshoe Block from Denver’s Armstrong and GMT Exploration Co. LLC for an initial price of $400 million."
Armstrongs share was 19% of the field
Then more moves:
https://www.offshore-technology.com/projects/pikka-oil-field-alaska-usa/
"Santos became the operator through the acquisition of Papua New Guinea-based oil and gas company Oil Search in December 2021. The Pikka oil field was initially owned by Oil Search (25.5%), Armstrong Oil and Gas (19.125%), GMT Exploration (6.375%), and Repsol (49%)."
The timeframe for Oil search to agree the final investment decision was 8 months, similar time frame for the the LOI to be signed with COPL by the JVP from Oct -22 - July -23:
"Santos and Repsol made a final investment decision (FID) for the $2.6bn Pikka phase one project in August 2022."
Assume same $3/b , with 50% EOR on 1.5 billion resource for COPL
But that was Alaska and Santos now spending $2.6 B to develop their field - $3/b is a ultra conservative base for a developed field in Wyoming.
Even if creditors are in line first on a sale - thats just $55m Anavio and $37m SL, pretty small debt to leverage c$1 Billion asset sale value.
Equally the movement from debt to profit changes many things - SL debt can be retired by RBL which is offset and paid back over years, BH debt paid off by profits that come as H wells come on line, or they remain as shareholders for the special - otherwise they just get their funds back with interest - they could have got that without the hassle elsewhere - the reason why they are here isnt for a small return, or to take over the company - but for COPL to secure JV, sell the field in due course to the JVP at fair market rates.
FF
So that all your negatives then - a mis mash of unrelated opinions all thrown together in a dogs breakfast as fast as you can trot them out to deflect from the fact you havnt got a clue, are not a shareholder and just trying to troll using any angle.
All of these points have been refuted multiple times, you got a lesson today by Ed on unproven and undeveloped with evidence provided - do you understand what he said and its ramifications?
if you did you would not be so negative, being a large shareholder after all
"no one pays Top Price for any unproven Asset"
but it wont be unproven following delineation campaign planned
how it gets sold to COPL, of which PI are shareholders, is very likely in staged tranches of working interest as the drills completed establish the reserves, many examples of this type of deal in sector.
AM own avarice wont allow this to go for peanuts, the greater share will go to Anavio for sure as they funded it - but other shareholders will benefit with SP rise and sale of the field over time.
SP rise triggers coming
prod update Aug
confirmation of upward trend Sep and then Oct
RBL refinance on the back of this and SL retired debt
JV signed -expected anytime up to Jan
JVP confirmed spend programme
Initial drill results, including confidential wells
US market launch
II taking positions - who have the exact share rights as PI
P/E ratio
Sentiment of all the above driving SP increase
The mcap has no relationship to even topside equipment fair value let alone the true value of the reserves and asset, or context of COPL position.
Multiple micro cap oilers scrabbling for partners or funds for a first exploration drill - COPL have proven P2 40m barrels and rising production towards 7000 bpd with the biggest find onshore in decades, Major JV partner with LOI signed - unbelievable disconnect.
MM make money if mcap rises also.
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.