Member Info for uncertain

All methods of peering into the future have their drawbacks. The NPV of an oilfield based on CPR for instance has the drawback that oil prices decades into the future need to be estimated and there is the added assumption that current interest and inflation rates will persist. As BP are now finding, there is the added uncertainty about whether some of the oil will have to be left in the ground

While it is true that the city is impressed with such estimates, PIs tend to have a more speculative and imaginative turn of mind. We are a long way off institutional investment here. Do you really think that Clive would be satisfied with pie in the sky? He wants pie here and now, and a good supply of pie into the near future. I am backing his appetite.

Agreed CC, which is why I have done the current analysis on actual output, and the future analysis on MJF projected output based on their well drilling programme and not the estimates of oil in the ground. Of course the 6000 bopd for MJF is an estimate and it does depend on current successes being replicated elsewhere in the structure. However that does look like an increasingly reasonable projection given recent performance.

Perhaps a better way of putting my argument is to say that there is a strong likelihood of multi-bagging here, and here is some analysis on entirely reasonable and quite conservative assumptions (in that it does not include the deeps) that puts the bag number at 6. I am not forecasting that it will be 6. I am saying that this would be a not unreasonable or unexpected outcome. It could be lower and it could be higher, but I am forecasting that it will be substantial

I should just add that the assumption of a P/E ratio of 10 might be considered high for a company like CASP which has failed to deliver for so long. On the other hand when such a company does start to deliver, which will happen soon, at least in relation to the MJF structure, then the P/E ratioi can suddenly flip and become greater than 10 as future income starts to be anticipated in the share price

I have been modelling the share price recently on a variety of assumptions and at the most recent output levels (1700 bopd) and a P/E of 10, the share price is justified with a net profit of $17 per barrel. Given current oil prices and what we think might be the cost per barrel (under $20) this doesn't seem too wide of the mark. This means that the current share price is entirely backward looking and doesn't anticipate any improvement in either the output of CASP nor the price of oil. Any reasonable expectation based on the available evidence would suggest that both of these two variables are likely to move up fairly soon and fairly fast (see Richy's post)

Of course the profit doesn'tcurrently end up in divdends but gets drilled back into the ground. Because exploration costs seem to be included in cost of sales in the CASP accounts, making them more like Income and Expenditure accounts, there doesn't appear to be any profit at all. I would anticipate a small loss when the accounts come out next week.

The underlying profitability is still there, and with a fully functioning MJF field output of 6000 bopd and a net profit of $30 per barrel at international prices I get a share price of 26p. This is of course some way into the future, but on the other hand it doesn't take into account the possibility from the deeps at all.

The Kazakhstan over-run on its quota is likely to be shouldered by the oil majors according to previous reports. An RNS tomorrow seems unlikely to me. I am expecting the RNS next Thursday now (they have to file accounts beofre the end of the month).

The RNS will report good progress on MJF and good news short of oil actually flowing on the deeps. Probably.

The end is in sight. Coffee Cups has agreed to leave this board once we get to 6p.

Sometimes the coffee is hot. Sometimes it grows cold. Sometimes it gets reheated. New readers may think that the coffee is fresh, but old readers know that it is the same old coffee. Truth, Belles? Now there is an interesting idea. I wonder if it will ever catch on!

Another news vacuum

Did they also conspire to release the virus in Wuhan to ensure the collapse of the oil price? Perhaps they orchestrated the fall out between the Russians and the Saudis? OK Adrianz, just pulling your leg. No doubt they are manipulating things to some extent and there probably is a long term gameplan that we can only guess at, but sometimes a black swan really is a black swan.

Perhaps someone with a serious cashflow problem. Or else someone who does not understand CASP at all?

Both oil and the oilies are falling back a little today after their climb at the end of last week and yesterday. CASP didn't benefit very much from the rally but may fall back nevertheless with the sector as a whole, unless a few speculators decide to get back in there in time for an RNS on Thursday. Unfortunately the seller seems to be back.

The oil market seems happy with the OPEC+ meeting at the weekend and has continued its steady rise this morning. 5p seems entirely possible today even without an RNS. Looking forward to Thursday.

Apparently OPEC+ new strategy is backwardation. Should be interesting to watch.

https://finance.yahoo.com/news/opec-meets-extend-cuts-trump-230100419.html

I believe the OPEC+ meeting is happening as I write. The link above lists Kazakhstan as one of the countries which has not met its cuts obligationis and will have to make compensating cuts later in the summer.

The recent oil price rally is partly in anticipation of today's meeting successfully coming up with an agreement to hold back production. Any signs that the agreement isn't working may result in a drop in Brent.

Kumkuat, rather than guess the NAV, what would the dividend be on a fully developed MJF field? Taking the midpoint of 7000bopd and assuming a profit of $20 per barrel at current oil prices (conservatively based on previous guesses by CASP), that's $140k per day which comes in at around $50 million profit p.a. and an addition of $2.5 million per dollar rise in the POO after that. Taxes are structured to come in at higher POO levels than this. If half is distributed in dividend this would come out at about 1p, which would easily justify 10p per share without the deeps, Yelemes, 3AB, or whatever they plan to do with Boaty McDrillface. If the POO rose to $60, the pofit and divi would double putting us up at 20p minimum.

Of course all this is predicated upoon the full MJF being developed so wouldn't happen all at once, but MJF seems pretty nailed on now. Throw in a few deeps and 40p doesn't seem unreasonable. DYOC

Brent rising strongly above $40 again this morning and other oilies all responding well. We are on a good run of purchases in CASP since yesterday at 9.30, but no movement on price as yet. Please give us an RNS Clive.

And also usually on a Thursday, so I suppose we will all have to wait until the 11th now!

Other oilies are rising strongly for the third day in a row, while CASP stagnates. If this is because people are waiting for the RNS then anything mildly resembling good news should see a very good rise here.

For consistency of posting I should just mention that Brent has just hit $39

And solidly over $38 this evening.