Member Info for uncertain

CASP is probably fairly priced at the moment given the BNG charge, the export percentage, the price of Brent and the domestic price of oil and current output.
However two of these are about to change (export percentage and output as noted in the last RNS but without details) and Brent is also continuing to rise. The domestic price cannot stay at $6 for ever. The Yelemes licence must be granted before long. Granted, we can't tell what will happen to the BNG charge.

My point is that CASP is priced for current conditions, but the future is almost certainly going to get better. My spreadsheet simulation suggests that the sp should be particularly sensitive to output and the export %

Ade is right however. Until these bits of news materialise the sp will remain stodgy

I also have high ecpectations. I am forecasting a farthing dividend for 2021, rising to somewhere between a halfpenny and a penny in 2022. After that, the sky is the limit.

If we get to $80 for Brent, the sp might get to 6p at current output. The advantage of such a high price for Brent would be for us to be able to invest to increase output. Increased output is where the real gains in the sp will come.

Agreed Mr C, we need good news. However the next news will be bad as it will probably be the accounts for last year which are likely to disclose a sizeable loss. You could argue that if this loss is below expectations thenthe sp could rise. My view is that whatever the figure, there is likely to be attempt to milk the situation with some downward pressure on the price to allow re-entry at a lower price, as has occurred a few times now.

I have moved on from back of the envelope calculations and have now set up a spreadsheet to forecast the sp based on the variables which affect profitability. Cost per barrel is still a guess but the other inputs are more reliable - although bopd is known in arrears.

The model suggests that if the court case results in the BNG charge being dropped entirely, the sp would move to 3.4p
Of course in the real world the forces of irrational exuberance and speculation will move it somewhere else, but that is where my model says it should move!

Just for fun I ran the spreadsheet that I developed for the calculations I posted yesterday based on Brent at $70 (not unreasonable) 70% export percentage (maybe next year), 2500 bopd (entirely possible) $18 domestic price (eventually) $21 bopd costs (who knows?) P/E =10, and got a predicted share price of 15p

2p prices CASP at about £40m and at a P/E of 10 would imply a profit of £4m or about $5.5m
Given my calculation earlier in the day that revenue was about $20m at current prices and output, that would imply costs of $14.5m
Based on an output of 1500bopd that would equate to costs of about $26.5 per barrel.
If you include the BNG charge it would be $21 per barrel
All strictly back of the nevelope stuff of course
That would be the question to ask the BOD, because I don't actually know what the cost per barrel is and I am not sure we have had a straight answer on that from the board because of the accounting system they used before the export licence.

This is why I am interested to see the 2020 accounts which may be easier to interrogate than previous years.

Of course all the above calculations improve substantially with the Yelemes export licence, with a good court case outcome, with better export % and better domestic prices and with a successful MJF drilling campaign, which is why I remain optimistic even without the deeps.

Not sure about the current breakeven Tucson. About a year ago they said Brent at $35 allowed us to continue in business but that $40 fo rBrent we had enough to make progress, but at that time we were getting more for domestic.

Badgernator, this month we have to find our BNG charge for the quarter, so that will be the priority rather than MJF. We also haven't had the financials for 2020 so don't know the Balance Sheet position

Putting it simply, we are getting twice as much now per barrel on average than we were in the first half of 2019, even though the domestic price is now $6.

Hi Tucson, the problem is that there are so many different unknowns that the construction of scenarios with all the different combinations of outcomes would be a rather lengthy process! So I will just have a think around the domestic price problem.

The domestic price at $6 is a major problem for CASP because it affects cashflow but becomes less of an issue the higher Brent goes and the higher the export % goes. The domestic price has never been above $18 as far as I know so the daily loss compared to precovid levels at 1500 bopd and 55% export is 45% of 1500 x $12 = $8100 or about $3m a year.

Coincidentally this is about the same as the BNG charge! The question is when can we expect domestic prices to rise again. Domestic prices have been suppressed by a reduction in demand because of covid, but also by an increase in supply because of the reduction in the export % which diverts oil onto the domestic market. For this reason I would not expect a recovery in the domestic price until OPEC+ is able to relax its quotas. I would not expect this to happen until towards the end of the year at the earliest. There is also the issue of whether the money we owe the oil traders is affeting the price we can obtain.

Because we are making a substantial loss on each barrel of oil we produce for the domestic market, we have a disincentive to increase output. This will only be offset by a rise in Brent which fortunately is now materialising. We can construct a combined price per barrel for both domestic and export price by weighting each price using the export/import percentage.
e.g. using todays prices: $6 x 0.45 + $61 x 0.55 = $36.25.
At 1500 bopd this will give annual revenues of $19.85m. It will be a little less than this because we get less than Brent. This sounds like a lot of revenue because in 2019 we didn't get export prices most of the ,and in 2020 we had covid and Brent was on the floor much of the year.

My conclusion is that the domestic price issue is a medium term issue which has constrained our ability to invest but which no longer has that effect at these elevated Brent prices. There will be a transitional period while we deal with the cashflow issues of the covid period before we can move forward with the investment program on MJF and existing deeps perhaps in the summer.

https://longforecast.com/oil-price-today-forecast-2017-2018-2019-2020-2021-brent-wti

Here is an upbeat Brent forecast. They're not all this bullish!

.. and then another solid chunk of selling from 3.30 onwards to see the price down at then of the day/ week. Anybody else see a pattern here or is it just me, getting old and paranoid!

Have a good weekend everyone.
Be a holder, not a folder!

There was an interesting pattern of buys and sells during the day with selling between 8 and 9 and then a burst of buying between 9 and 9.30 followed by a chunk of selling up until 10.15 then a slightly mixed period followed by nearly all buys from 11 am onwards.

The early buys got on board in the 1.60s and the later ones up towards the 1.75 mark, all of them substantially lower than could heve been achieved recently. Was it a dump and pump? Who can say?

Any way that one is out of the way now. I'm looking forward to the next RNS which could bring us more relevant information, although I think it will be the spring before we get a clear picture of what is going on.

...and meanwhile this morning Brent has surged past $59 and is stretching up towards the magic $60.

Brent averaged about $45 in November $50 in December, $55 in January and is now looking good for $60 in February (all calculations done on the back of an envelope)

Does this mean $65 in March and $70 in April? Personally I would settle for a relaxation of OPEC+ quotas later in the year, with a flattening or small drop in Brent, if it means that CASP's export % goes up and Kazakhstan's domestic price gets up of the floor.

Just thought I would point out this small off RNS ground for optimism. Brent up, revenue up, BNG payment affordable, new MJF drills affordable, output up, revenue up, more MJF drills affordable, upward spiral.

Sorry about posting twice there. I lost connection and thought the first post had not been sent. As you can see I was more diplomatic with second version

Some posts this morning have been exaggerating the negative aspects the RNS, including some new posters who show a sudden interest and have got up very early this morning.

It's not a great RNS but there are few surprises here. The information we need are the Balance Sheet for last year and the outcome of the court case, both of which will be probably available towards the end of the month.

What I am waiting for are the results for last year which should give us some info about the cashflow situation.

There are some posts this morning which paint this as some terrible result. What exactly they were expecting at this stage is a bit of a mystery to me. The rise in export % is encouraging. The local price has been a problem for a long time and was not a surprise. The scheduling of the court case is good news as at least we will find out what we are dealing with there soon.

I was also slightly surprised to see some new posters coming in hard after the RNS at 7am as if they had been waiting on it with sudden interest. Perhaps a reversal of the usual tactics - a dump and pump?

The export % is up (55-60%) although output remains flat. The court case is scheduled for later this month. They have managed to continue some minor work on existing deep wells and some minor work over on shallow wells. No info on cash flow but they "are preparing" to make the February BNG quarterly payment, whatever that means.

Not a very exciting RNS but not a disaster either.

Thursdays come and Thursdays go
With no RNS
We really really want to know
Please don't make us guess

https://www.moneyhouse.ch/en/company/baverstock-gmbh-in-liquidation-4313715531

Daehan held its shares through Baverstock Gmbh but since that company is going into liquidation (see above link) the shares have been transferred back to Daehan. Simples.