Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
AM is now President of COPL America, which is owned by COPL with its new board.
The vast majority of upside is in in this subsidiary, but AM wont have to do front of house, be accountable to shareholders or otherwise - he can focus on his skills in negotiation/oil extraction and leave the full company admin and BFU to pay the bills management to Richardson/Cowan.
Its a very good sign, as he wouldn't pass this direct control of BFU over unless its operating well - as its still critical to gong concern success until JV delineated assets start providing revenue, the GGS has obviously worked, they are well on their way to profit territory, capped flow is being released to allow the steady increase in gas flood in September.
He will write all RNS in the background to do with JV and the discovery works , with Richardson/Cowan on all operational/finance and BFU matters - delegation is welcome as long as it comes with real decision making ability on shareholder relations and value - the new team need to do an interview asap and set out their policy on how comms /ops work going forward.
The cost cutting, taking a bond instead of salary is indicative that the JV talks are going well - the bonds, when exercised, will make their holders a lot of money as the field is delineated - also good optics at this critical early stage.
All to play for , a good move for sentiment and better alignment of skills/prioritisation.
Morning RBM
I thought CNOOC would have exited by now also, but appear to still operate according to their website (but out of data aswell, as only 2022 strategic plan listed.....)
It may depend on US election as Trump was the main instigator of the sanctions, large scale geopolitical impacts of divesting or staying in US - as they said in the article:
"All the sources spoke on condition of anonymity because of the sensitivity of the issue."
If Exxon see merit in partnering with them in Guyana, China etc then they have lobbying power in Washington that may be deployed, but who can say.
Otherwise, the JVP would be at point on buying out their WI 15% of Fed Deep if they are selling - it may have impacted COPL JV timeframes if it was a factor.
If those two FD Horizontal wells were drilled as permitted in Jan this year - it was on FD lease not CC where I may have expected the first H wells to be, as 100% owned by COPL - but adds to the JVP understanding of Frontier 1 and 2 and their H well scale of production that may be expected = realistic offer to CNOOC for their 15%?
All yet to be seen.
Great post Stas, like the connectivity.
Looking at CNOOC US Operation and it remains substantial - with 200k acres in Wyoming and Colorado:
https://cnoocinternational.com/en/operations/americas/united-states
"CNOOC International has working interest in approximately 200,000 net acres in the Eagle Ford basin (South Texas), and 200,000 net acres in the Niobrara basin (Colorado and Wyoming). The assets consist mostly of unconventional shale oil with some unconventional shale wet gas, and the majority of our production is operated by Chesapeake Energy"
"Our strategy onshore United States is to maximize value and optimize our shale and tight oil portfolio. As we continue to build our basin mastery, we will focus on working with our partners to develop our most economic and strategic resources."
The last statement interesting - "develop our most economic and strategic resources."
The Wyoming position may indeed be strategic for them to gain exposure to the biggest US carbon storage project/partner and offset a lot of their produced carbon in the PRB/ Colorado - assists the overall optics to enhance ESG if they wish to remain in the US.
They have been subject to sanctions and as of April 2022 were looking to divest US assets:
https://www.reuters.com/business/energy/exclusive-chinas-oil-champion-prepares-western-retreat-over-sanctions-fear-2022-04-13/
"China's top offshore oil and gas producer CNOOC Ltd. is preparing to exit its operations in Britain, Canada and the United States, because of concerns in Beijing the assets could become subject to Western sanctions, industry sources said."
Once out of NDA we should see their position in the JV and Fed Deep development, 15% of 1.5 Billion barrels OIP is well worth having - but perhaps carbon storage far more so given the context.
Https://corporate.exxonmobil.com/news/news-releases/2022/0627_exxonmobil-and-cnooc-and-shell-pursue-carbon-capture-and-storage-hub-in-china
If it is Exxon, then they go into a working JV with CNOOC aswell for Fed Deep, their 15% of costs substantial for the scale of delineation required, gain of tax breaks from carbon capture.
There is no denying that JBER and other MM have had a field day with this share, whilst it has gone through its machinations in this forming stage, a backdrop of a 1 Billion barrels and JV discussions, with a market that does not trust the CEO, company poor comms , short trading and paid detractors, bond funding impacts and share ownership positioning - a perfect storm.
But now COPL are entering the storming stage - with production into profit coming, JV inbound, drill campaign and confidential wells disclosed - and with that evidenced comes a different market perception and so change of tack - as Stas outlined very clearly:
"With any good news the supply / demand challenges change, risk appetite increases as does demand thus price increases, JBER has little control over demand at times of high volatility"
More realistic market cap based on asset fair value, WTI price, a P/E ratio are coming with proof of concept and profitability - path towards mid cap is reasonably assured once the trajectory is established 100% - within the next 1-7 weeks imo.
The calculations of what the market cap may be can then be re examined - based on the fundamentals of the delineated Fed Deep/CC and a solid BFU production base/reserves - rather than the day to day SP movements of a micro cap under sustained siege, subject to CEO machinations to keep the lights on during its formative stage, small Bond holder dilution, poor sentiment and trading impacts - with no apparent marketing campaign to offset, an out of date website and old school comms.
All to play for.
Production reaching profit territory timeframe is shorter with WTI increase.
WTI was at $62/b in June, now at $85 just as the GGS is doing its work,
additional $23/b revenue.
At 1800 bpd = additional $800k net profit per month - services all O&A and SL debt interest
At 3000 bopd coming with GGS and increase MF rate = additional $1.3m net profit p/m
WTI increase is material now as it has never been before - its didnt impact SP previously as too many other factors, but now it brings COPL to financial safe harbour earlier with increasing profit, rising further towards the 5000 - 7000 bpd plateau.
Earlier proof of sustainable profitable operations then enables RBL, SL debt retirement, with RBL capital delayed payback revolver terms and increase of revenue in field investment, cumulative growth is coming.
August and September production will show the way, expect AM to move quickly given funds and asset, with JV in place far easier to gain good terms RBL as by association he has a Major as partner, with wider revenue stream coming through their Frontier delineation investment.
Good data Eazy
BFU 41-30v long /lat as per the operator production excel download from WOGCC ,
columns N and O :
42.979502, -106.009229
which is bang on the nodding donkey
new H well long/ lat
42.979175, -106.010571
to the left of this BFU shannon well, some signs of ground worked just adjacent aswell - so have to ask why not same long/lat as the BFU 41-30v pad if intent was to drill from the same pad instead of new? surely would be in the APD description, so plugging Shannon etc if success but description doesnt say this:
"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. "
Need to check latest satellite imagery.
Equally on confidential wells, they dont need to declare anything beyond intent to drill by permit according to WOGCC policy:
"If a well is marked “confidential”, all records concerning the well, including production, will be withheld from public view except for the Form 1, Permit to Drill and the survey plat until the well is released from confidential status."
The timing of the H wells and funds available at the time make sense, also the contribution in finances add to around the 15% cost for CNOCCC well provision.
maybe nothing yet - but drill success would have been known and allow statement made
in April
"substantial additional technical evaluation has been undertaken during this period, which has led to a better understanding, and increased confidence, of this resource."
Two confidential wells listed on WOGCC, drilled in Jan/Feb
Http://pipeline.wyo.gov/OperatorsFrame.cfm?Oops=1
Select southwestern production corporation
select current wells
then at bottom WC, select display wells
shows two confidential wells logged on WOGCC
Second well is 49-009-49002, click on file image to left
downloads the APD file
This drill:
"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. "
page 4 - long/lat
42.979175, -106.010571
copy the above and paste into google maps search
Shows a well in production with nodding donkey in place , oil storage tanks built with an oil tanker parked next to them in the image.
WOGCC confidential well policy:
"If a well is marked “confidential”, all records concerning the well, including production, will be withheld from public view except for the Form 1, Permit to Drill and the survey plat until the well is released from confidential status."
I do not need to see the full sun on the horizon to know that dawn is rising - whilst COPL may not be in profit as of today, all the blockages to that occurring have now been resolved - its just takes time for the field to respond and increase flow safely, with higher MF injection rate.
But until confirmed COPL remain :
1 - High debt, which is not believed to be 100% faithfully serviced - AM has defaulted in the past when expedient and paid for it with retirement terms increases.
2 - Toxic impact of the smaller BH dilution and drip fed dilutive bonds impacts stunting any sentiment growth based on fundamentals.
3 - An unprofitable field with negative cash flow of c $700k a month due to low production
4 - The JV is not signed and in place.
5 - Communications are old school - just key progress and regulatory requirements with minimal finesse displayed or advantage sought to increase sentiment with new flow that could be released.
As the market has not assigned any value to "potential" for COPL, the SP rise from 1.5p is encouraging to see, albeit a long way to go after the going concern crash.
In terms of solutions:
1 - Debt is fully serviced - despite the market retaining doubts - now at $37m - soon is RBL possible and the SL will be retired for much better offset terms
2 - Smaller BH has completed selling according to calcs posted by LLP and others - Anavio is holding for greater prize
3 - Prod is rising, just not reported yet and will continue to do so as the MF tech is proven.
4 - LOI signed, commercial term discussions since April - JV may reasonably be expected in this Quarter - fatc remains you do not bother signing an LOI if intent to complete is not there - it secures the position from competition gazumping whilst legals complete - refer to Stas post on benchmarks on LOI to JV signed.
Address items 1-4 - within weeks now IMO - and item 5 takes care of itself - monthly operations comms default to rising production and JV delineation plans.
Profit territory =risk of going under is removed
COPL have turned a corner, now have no need for further dilutive BH funding, its done its job to get to this point, albeit at exorbitant cost.
Equally, with the proof of concept of the field the reserves again become valuable leverage which allows RBL on far better terms, deferred payment of capital, SL retirement and funds for BFU drilling as required once net positive revenue line fully established.
Its cumulative growth to look forward to now.
The JV is the bonus top but not required for them to do well now, great position to be in and for sure a compelling negotiating position for AM enabled.
Https://www.canoverseas.com/wp-content/uploads/2023/08/COPL-Q2-2023-FS-_Aug14-FINAL.pdf
Senior lender debt now at $37m, table page 2
Q2 Net petroleum sales top of summary table page 3 = $5.6m
So average $1.8m net revenue incoming
Expenses were $8.1m in 3 month period
Overall net loss in 3 months was $2.1m - loss per month even if no increase in production was average $700k
With $5.2m on account as of end June 30th, with low sales due to GGS works starting end April and wells taken off line - now installed as of July.
So burn rate with cash on account allows for 6 months before other funding required, however production is increasing month on month, as is revenue so COPL are in a much better place financially and soon into profit territory
Dusty
I posted this Aug 1st on 2 H wells - prod is confidential.
Two Horizontal wells completed in 2023
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.
It was difficult to believe COPL could do well with the SP decimated.
Production stalled due to pressure issues
low revenue
default on SL payments
going concern standard disclaimer poorly done
smaller BH deal was toxic, and should just have been with Anavio for a lesser amount if need be to pay for GGS.
This also had a further negative overtones, that good news on progress was ignored/not believed as so many targets missed - but this progress was real despite the naysayers fanning the negativity to help drive the SP to 1.5p - it was then self reinforcing as difficult to argue positives with this poor value evidence - yet argue some did and rightly so.
However - as outlined, it appears that two confidential H wells may have been drilled by COPL in Q1 using all funds at their disposal whilst also delivering the GGS.
Massive leverage gained by COPL funding these drills and not the JVP - as they can partner with any Major they wish - and the JVCo sure knows it - it would have had a substantial impact on the commercial terms and so for eventual sale value gained by COPL for the delineated asset Working interest % , by stages.
It also also looks to have secured the JV with the compelling data gained:
RNS on JV:
"Substantial additional technical evaluation has been undertaken during this period, which has led to a better understanding, and increased confidence, of this resource."
"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."
"The Joint Venture discussions continue to move forward and we are encouraged by their recent progress."
"We are active on all fronts and will continue to update the market."
"COPL America Inc.... 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 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."
Onwards.
SP was trashed with indecent haste in a a few weeks following going concern comms - fast money exiting and Bond impacts.
Now however the smaller BH has exited , the main BH appears to be holding, , GGS installed, production rise is coming and LOI signed - SP rise has nothing to hold it back now, risks substantially reduced and so with that comes interest from the next tier of investors.
Drive towards simplicity, mid cap corporate comms
Production rose in month to xx BPD
Revenue is $XX with cash on account stated
Drills planned, drill results.
Debt status - RBL drawdown in time for flexibility
JV actions are just reporting of plans - confidential status wont be the case for long term, their drill campaign will be logged with WOGCC by SWP, permits granted , drill results, prod per well all in public domain following JV secured.
Mr S,
not saying I agree with the intent, even if it was true, just an interpretation of the rebranding and his history offshore.
He should focus on Wyoming and will do im sure - last chance for glory at his age, then he should hang it up.
Mr S
Thats new I think your right , v interesting.
To me its a positive sign that the JV deal is happening and COPL are setting up the next play.
AM may be thinking of coming back to North sea given the resurgence - there was a licence bid round recently BOIL went for as u know.
https://www.lse.co.uk/rns/BOIL/uk-33rd-offshore-licensing-round-and-asset-update-zgfh6fkyodvdozr.html
AM will prob want another project once he sells the delineated Wyoming asset in say 2 years, leaving his daughter in charge of BFU with its 7000 bpd by then - then use the expected $ xxx million sale value of the discovery to secure a North sea position and develop it - he sure has the experience and obviously enjoys the offshore challenge.
This SP has indeed been HEAVILY manipulated , combined with box trading, all the games.
SP is low as there is no growth in production RNS yet , debt is high and no JV is signed yet -but that wont be the case very soon.
It doesnt make PI making statements of the fundamentals "rampers" or creating an echo chamber to evaluate what could be once the oil starts to flow - as the discovery is indeed in place, flows and a JV is in last stages of negotiation - however repeat this reality enough times and it may seem like an echo to some.