Member Info for uncertain

KK I may be being a bit dense here, but could you give me a definition of what netbacks actually means in practice (i.e. which categories of cost are being covered). Thanks for looking out the tax transportation stuff for me

CC I agree 100% with your proposed strategy below. MJF ought to be their focus this year with a better financed renewed attempt on the deeps next year. Unfortunately their track record suggests they may be tempted to get back on the deeps strategy earlier than they should.

KK, I have a longstanding problem with the opacity of the accounts and the meaning of costs (fixed, variable etc) in response to shareholder questions. The basis of my calculation is an output of 2000 bopd which is composed of 1350 from the old wells and 650 from the new well. I have assumed an export price of $70 and a domestic price of $18.

I have no reason to suppose that we are not getting near to the 70:30 export domestic split but perhaps I am being a little optimistic there. My spreadsheet simulation is based on their latest breakeven figure which I have used to infer possible variable cost / fixed cost combinations which I then plug into the new output and price figures to generate a profit figure.

I usually refer to this as my "dodgy spreadsheet" as I am aware that it is not based on full information . In particular I am aware that I don't really understand the tax regime so if anyone out there does, I would appreciate their advice.

Having brought quite a lot of staff inhouse recently, I suspect that most of their costs are fairly fixed in the medium term, and that therefore the additional costs per barrel are pretty low. I will concede that my estimates may be at the optimistic end, but I think we are in solid profitable territory going forward.

KK, I think they probably do have the financial resources to go 50:50 on a deep. I estimate their monthly profits at around $1.2m pcm, so depending on the schedule of payments they could afford that before xmas. I'm not saying they should do that, just that they could.

Brent is retesting $70 this morning. It previously fell after the OPEC announcement of increased output but then bounced back. We are however in the silly season over the summer, and I expect the direction for Brent to be properly sorted out in September

I think you are just going to have to come to terms with the fact that your sale just wasn't as important to the MMs

The unknown one was very close in price to the two sales, so it could be a buy cancelling out the morning sale. They were only two minutes apart and the buy came first so that may have been the error The afternoon sale of exactly the same number of shares at exactly the same price could then just be a director paid in shares cashing in as the price rises.

The price has stood up extremely well in the face of a run of sales, albeit with a very wide spread, so I think there must also be a buyer out there with a large order.

I did a little back of the envelope calculation today, and I think revenue for the remaining 5 months of the year could be about $18m based on current output, oil prices and an export licence for Yelemes from October. Obviously it would be more with further successful drills, and less if the latest 650 bopd well didn't maintain its flow rate

The first 7 months of the year are a little more difficult to calculate as we have limited knowledge about when and how fast the domestic price went up, and how the export percentage was adjusted on a monthly basis. An optimistic figure would be $10m

Sorry about my use of a tla there Rhertig

But the trouble is Clive keeps going for the deep pies before he has shown mastery of the shallow ones. If he's going to earn his crust, he needs to stop getting stuck in the filling.

Well you could say the same of the shallows, but Mr Shin seems to have made a difference there.

I haven't got a technical answer to your question as my geophysical knowledge is about as deep as that of the pieman

Another couple of horizontal shallow drills like the last one would put our revenue over $5m pcm, each one worth a million a month, and paying for themselves within two months each. Develop MJF and use the same strategy for Yelemes when it becomes available and we will be able to finance some more deep attempts next year.

With the increased output they should be clearing $3m revenue pcm from now on. Until we get the H1 data ( and maybe not even then !) we don't know what their cashflow position is, and how much of that is needed to continue to get them out the pandemic hole, but there should be room for a fair amount of drilling expenditure in the second half of the year. We have some info on the cost of a new shalow drill (about $1.5m) but the horizontal technology may be costlier. I can't remember the cost of a new deep drill, but they will be doing remedial work on their old attempts first.

I am anticipating a fair amount of activity before the winter sets in and some intersting RNSs during the autumn. The answers to questions, when they come, may give more info. It would be good to know their drilling schedule for the rest of the year.

Brent back at $76 this evening

Well I have to concede that my 5p forecast for July is unlikely to prove correct with just a day and a half to run!

We clearly need at least one more good bit of news to get things moving. A Yelemes licence should push us well over 3p, and a second horizontal well ( providing the first one is still running smoothly) would move us up substantially.

Until then CASP will retain its tantalising cuspiness. Should be an interesting autumn

Does anyone remember at what output they said they would need to invest in a pipeline?

I have always thought, given the catalogue of bad news and bad communications, that it would take more than one piece of good news to get this share going. The earlier news about the boat and 3AB seem to have been enough to stabilise the price and yesterdays news seems to have given us a lift, but for serious progress the market needs more confirmation that CASP has turned to corner.

CASP is still on the cusp, but its getting cuspier.

Thanks for the TA stuff CC. At this point that is what a lot of new investors will be looking at.

I think KK was suggesting $45 pb netback, rather than $45 price which would be very low. They have previously said that they get a bit less than Brent, possibly in the $65-70 region as a guesstimate

On the other hand the shallows are low sulfur which is good. I think the price is already accounted for in their breakeven estimates but it would be good to know what price they are actually getting for their exports from MJF