Colter Drill, all approved or not?

Colter Drill, all approved or not?

It’s been approved, everything is fine and great, Colter will be drilled and will be a success….

Well, that’s one take on it, another take is that, yes the drill has been approved as per all the requirements up to this point. However the key approval has not be given. Let me explain.

The drill was always going to be approved in its current format. The approval that has not been obtained is an extension to the SAT Expiry date. This was, is and has always been the key part of the approval. Extending the Expiry date was always the get out of jail card, that the company could have used. This hasn’t occurred and more importantly can’t happen unless a new EIA is completed, this was confirmed to me in the various discussions I had with BEIS over the week.

Some kind of easy, quick, short cutted EIA could be used, however I would suggest that if this were the case they would have done that.

It has been suggested to me that Colter could just be over run by a few days, a small fine wouldn’t matter. This isn’t likely or possible. Ensco would not allow their rig to be used illegally outside of approved drill/operation dates. Insurance would not cover the rig or operation outside of the approved drill/operation dates. The companies reputation with BEIS would be trashed if they just ignored the dates. If they ignored the dates and an accident occurred the company would face serious criminal legal issues. Lets be clear about this, without an approved change in date, the date is like the Brexit date for the UK, set in stone, immoveable and the date after which the rig can no longer be in the bay and must be returned to its designated safe zone.

Let me explain why this is so important.

The drill according to the EIA, could take up to 45 days. The Drill according to the operator documentation is likely to be 30-45 days depending on wire logging, whether oil has been discovered etc.

As I write this on the 19^th of Jan, the rig is currently stationary of the coast of Scotland.

As from today the magic number of days left to the 28^th of Feb is 41 days.

As per the EIA, Kingfisher need to be made aware 14 days prior the rig arrival so that marine traffic in the bay can make plans. Assuming this was done on the 17^th (formal approval, it wasn’t done on the 16^th when I last checked). That means that the rig cannot even sit in position to start any kind of checks work etc until the 31^st of Jan.

This gives just 28 days for operations, hopefully folks can see that already we might have an issue.

As I said in my last blog, I have also been in contact with various groups in Dorset. There might or might not be various demonstrations, which would slow down operations. Anything such as a breakdown, accident, broken component would be a major problem.

Any winter storms would also cause a day or two of downtime.

Trying to fit a tricky drill into 28 days when you think it could take 30-45 days is not ideal, some might even say it would be insane to try.

The risks are far far higher that the drill might not complete, they might get close to the target but be unable to reach it, they might reach the target but run out of time to do wirelogging etc.

Why on earth would any reputable company take these risks? Why not just adjust the application to drill in November as per the original plan? If the drill has to be abandoned once started the total costs will almost double, having to come back in November 2019.

It seems insane to take these kinds of risks.

The purpose of this blog isn’t to try and deramp any shares, it’s not a comment on any of the AIM companies involved. If I am being generous it seems to be a problem that the AIM companies have been promised something by Corallian, Corallian have outsourced the operation to Fraser who have promised it will be drilled and nobody is prepared to go up the chain to say hang on a minute, probably due to legal contracts and promises.

I hope folks do their own research, everything I have mentioned above is in the public domain and fully checkable. At the end of the day this is just my own opinion, however always have your eyes wide open and don’t discount something, just because you don’t like it. This week’s news only reinforces my opinion of the drill. You never know the drill might go ahead, it might take place in record time, without any issues or they might get approval for an extension to the date. There are far too many "mights" in that statement for me though.

Colter good luck for 2020

Colter Oil Drill.

I’ve not been a fan of the Colter Drill. I think it’s the wrong drill in the wrong place. I’ve also been sceptical that the drill will happen in the next few weeks.

Well, I’ve been doing some digging, talking to people. Just investigating as I think the companies involved are being deliberately misleading in not releasing information concerning the potential abandonment of the drill for now.

For clarity, Colter has considerable local opposition, it lies only a few thousand metres away from a world heritage site and just outside one of the world’s largest natural harbours.

The EIS for the Colter drill is therefore considerable and complicated. It contains very specific information concerning the start date of the drill and conditions around it.

A main condition surrounds the timing of the drill and a commitment for drilling operations to take place in the winter months, with an anticipated start date in November.

It is thought now that the earliest the drill can start is Feb, with a required 2 weeks notice given in the EIS.

I have been contacting local organisations as well as the BEIS (regulatory sign off authority) to get a better handle on whether or not the drill might still go ahead.

Local organisations are adamant that the drill will no longer go ahead, the BEIS have said that they are currently in communication with the operator but haven’t yet been given a change of drill date. 

If/When they get a change of drill date they have said that a new Environmental Assessment will need to be undertaken.

Given all the above, my understanding is that Colter will no longer take place. Instead it will be postponed until 2019/2020 at the earliest. A plan B seems to be a small marine vehicle to undertake a VSP, this was submitted for BEIS approval on the 4^th of Jan 2019.

It is my opinion that an onshore development for oil extraction at Colter would take 3-4 years, if approved at all.

If your betting on Colter taking place then good luck.

#AAOG Recovery?

#AAOG Recovery?

I wasn’t going to do another blog on AAOG for awhile, but David and Co. seem intent on delivering 

continuous major news.

The placing…60m new shares at 10p taking the total shares in issue to 237m shares.

The affect…..the share price currently down to 9.5p as I write this.

https://icebergshares.blogspot.com/2019/01/aaog-rumour-rancour-and-raisings.html

In the above blog I discussed at length, the why of the placing. Now we know that the amount of shares on offer were 60m not 40m, things are pretty much the same.

In addition to the above, I will say that David, didn’t have debt capacity, we the shareholders and myself personally said we didn’t want Sandabel, I also said I didn’t want Jub Cap involved. It would have been nice for inst. Participants. There might be some we don’t know, nor do we know until the TR’s have been released whether any of the current major share holders partook.

If Djeno is successful we won’t need to drill Vanji or flow test R2, the new zones or Mengo. Everything will be far quicker and easier. Remember Djeno is an oil top layed gas zone. The higher chance of an oil top comes from a dip/fault structure. Prior drill the COS was 20%, largely as it was unknown whether the dip/fault existed. Other risks concerned the existence of Djeno in that region and operational risks around the drill. Given the findings so far and the dip/fault the COS is considerable above 20%, is this official? Of course not as that would require a new CPR.

Given the pre placing position Mengo, new zones etc gave imho a minimum SP of 20p. Post placing this will have reduced to 14p. Upside on this will be conditional on new factors and flow rates. A successful Djeno, with oil flow, I had as roughly 40-50p so reduced to 30-40p post placing as a minimum.

The current SP is far from this. I have a little prematurely picked up more shares at 10.25p post placing (I should have waited). However the error led me to examine more closely the effects of the 60m placing shares.

If we assume that only 5m of those shares are sticky (ie going to long term holders), then that’s still 55m shares that need to be cycled. In this kind of situation I would be tempted to apply a 4-1 rule. For every placing share, volume needs to be 4 times higher to discount its effect on the placing price.

So for the share to move convincing above 10p, roughly 200m shares need to reflect in volume. An assumption that the placing was first known and forward selling started last wed (was it only a week ago), gives us total volume so far by the end of today of around 130m shares. We still need a couple of days then to approach the 150-170m that will enable the first small climbs out of the placing price. 

Then a further 2-3 days before the effect of the placing on the SP will no longer be felt at 10p.

It will require a few recycles to leave the placing completely behind us, as a large percentage of those buying at 9-10p will be looking to sell for a 10-20% profit within a week and so on.

Obviously any news released by the company might well speed up this process considerably, as will, any of the existing major shareholders participating and the 4-1 rule is only a guideline.

It is good that the company is fully funded now to production of 103, production/revenue is the best way of increasing the SP long term (remember that the company will get 100% of the revenue until costs are recouped).

It is important that investors have a wide eye, honest approach though to the investment. If you don’t want to hold for a week or so then sell, if you want to hold until just prior Djeno, then I am sure it will be higher than now (hopefully approaching 14p). If you want to hold until post Djeno then the current fall is a pain but at least you know the company can produce from its oil without any more funds, hassle or pain.

#AAOG Rumour, Rancour and Raisings

#AAOG Rumour, Rancour and Raisings

The share price isn’t where we want it to be. As I’ve said in previous blogs even at the current level I am well up, but for many that invested (that haven’t sold out), the current share price is down.

If we start with the Monday RNS. Although it was very good, particularly the size of the immediate producer R2, the mysterious size of the new sandstones and the size of Mengo. It did not contain any pressure values, porosity values or API details. David did confirm that these exist internally but have not yet been released. David did confirm that these are all good and meet expectations.

Releasing this information, or not releasing it, was obviously a conscious decision. But it does pose the question why not?

The lack of information did contribute to some of the decline to 12p, however the real damage was done by TW. Almost every company on AIM raises money, all that’s happened is that some idiot has told TW and he’s used this to generate clicks for his website, not really caring what damage he’s done in the process. There is no public interest in this. Its about the cesspit of AIM, that TW not only inhabits but actively feeds off.

Regardless of this I have spent the day, contacting Nomads, Brokers, AAOG, St Brides, nobody is prepared to confirm or deny or respond in anyway. This tells me that there is obviously some truth in it, but how much? Who knows.

So as an investor what do I do?

Well I have stuck to my strategy, not sold a single share. I can’t affect what is happening so I need to try and understand its effects.

If the rumour of a placing in incorrect then the share price will quickly recover. I am happy.

Of more concern is what will happen if the rumour is real and we have 4m being raised by issuing 40m shares at 10p.

To start with I would be pissed. Why so low?, why so much?, why now? 10p is a stupidly low price etc. etc.

Then I would start thinking…..

Why so low? If the raising was being organised back on say Wed/Thur then the share price was 12-13p for most of that time so a raising at 10p for another 20% of the company would, in the current market, be quite a good price.

Why so much? My opinion was that 1m was needed to finish the drill. Then the company could decide next steps. Although I personally like this approach. If the company only raises 1m, then in 4-5 weeks time we would start to get more false stories about fund raising, this would hold the share back. After talking to folks today a collateralised debt facility would only be on offer after flow testing. So a none share issue for at least an initial raise was off the table. If I am being honest with myself, the idea of the company having a raise, even if painful, that enables drilling to Vanji, Simulation of Mengo, flow testing, and to get the oil flowing to production is probably a good thing.

Why now? This has been partly answered above, but let’s think a bit more. If they raise prior Djeno, then if Djeno is an oil hit, the share price will be massive and a share placing at 10p will be largely ignored. If Djeno is a failure (not what I am expected), then having the money in the bank to fund production from Mengo will be considered a master stroke.

If they raise post Djeno with a hit then yes fund raising will be easy, the share price will greatly increase. If they raise post Djeno without a hit, then it will be less than 10p imho in the current climate.

Given a bit more thought, I am actually starting to understand why AAOG might want to raise now and why at 10p.

Moving on from the rumour back to reality.

The share hasn’t changed, the potential hasn’t changed, the effects of a Djeno or Vanji hit haven’t changed. There is still a huge amount of net pay and a very successful drill. Volume has been close to 100m over the last 5 days. If the placing goes ahead most of the shares look to have already hit the market. At 11-12p we haven’t seen what I would consider placing shares. 

Regardless of a placing my strategy is fine and unaffected. There are good and bad points for any decision and I am happy with those. TW’s great expose is really irrelevant for most. Even with a placing, even with a Djeno miss, the money would provide enough production from the discovered net pay to give an SP higher than anybody has brought recently.

#AAOG – No Ramp intended.

Morning folks. An interesting week on AAOG, I thought a none ramp, hopefully realistic view was needed. Deliberately released at the weekend when the markets are closed and deliberately released before the wire logging news.

https://icebergshares.blogspot.com/2018/12/aaog-sigh-of-relief.html 6.9p

https://icebergshares.blogspot.com/2018/12/aaog-jump-for-joy.html 10.15p

https://icebergshares.blogspot.com/2019/01/aaog-understanding.html 15.2p

Current Price 16.55p

The above are the precursor blogs I’ve written and the SP when I wrote them.

I’ve been quite open that I think that AAOG has been, shall we say politely, a tool of the ramp and sell brigade. Those fine upstanding individuals who buy, ramp the hell for a few hours maybe even a day or so and then sell, rinse and repeat. It’s also been a target of the false news of placings, drill bits broken etc to try and buy back in cheaply. We have also the perpetual moaners who lost of a lot of money in 2018 and seem convinced that because they’ve invested in crap, everything on AIM is crap.

Because of all this it’s very important to get your research right with AAOG, say focused, not let others try and dictate things and stick to your strategy.

Strategy and being honest with yourself is important. Mine is simply to wait until Djeno results, wait for true value on this and re-assess. I might hold an extra few months to production if that’s needed I am not sure yet.

Whatever your strategy, stick to it.

De-risking, (I am writing this will a real sigh…and shake of the head). If you invest in an oil company for a drill, the drill hits oil but you sell out prior to how much oil, to de-risk and keep it in cash. Then that is de-risking. If you sell out to then invest in another oil company that is drilling, that’s not de-risking, that’s just transferring one risk to another, probably higher, risk.

It’s a mantra of many folk and pundits on AIM, profit is profit, de-risk, always take some capital off etc. etc. However unless your keeping it in cash, something many people seem to think is almost alien, this is all meaningless. Greed, constantly looking for the next big things will certainly whittle you away to nothing.

Back to AAOG, fundraising. This company has always been 100% open with regards to fundraising and 100% honest. As I am sure folks know, they had the Sandabel facility, which we were assured would be a long term investor. They were not and as soon as the company knew, they cancelled the facility. They have said that money will be needed to finish the current drill (probably for flow testing etc.) They have consistently denied the rumours that’s it happened, we’ve had this for weeks and they have been proven correct. A fundraise is by no means certain, being owed 10m is a nice position to be in. Having offers of debt (probably collateralised against assets or future production) is a possibility. Having interested long-term investors approach the company as strategic partners to inject is a nice position. If despite all this a further £1m is needed to finish the well to production then at say 20p that would be a small 5 million shares. I say small because the company has traded 47m shares in the last 2 days. We’ve seen sells of over 2m appear without any effect on the share price. On Twitter, I’ve seen mention of hundreds of millions of shares coming to market. This is wrong, not just wrong, but the company could not legally do this. It only has the authority from the shareholders to issue a small 5m worth of shares. It has the authority to issue less shares then yesterday’s volume at 20p. For me fundraising is pretty much a none issue.

Now that’s all the faff dealt with on to Wirelogging.

AAOG is not the first company to drill this area, into these targets. Its been drilled for the last 50 years so we have a pretty good idea. In my understanding blog I talked about the interconnectivity and how this should greatly help our targets. If we just examine some of the closest targets, then a few drills were undertaken nearby into the Mengo, some of these intersected 50m net pay of oil. Back in 2012 they tested at around 400-800bopd after simulation. Since this time simulation methods have increased. We’ve had the introduction of the fishbone technology 2013-2014 amongst others and multiple techniques to prevent the hole from silting up. With this if Wire logging confirms net pay (none water wet) then a min of 500bopd can be expected, however with this being a gravity fed area and newer tech 1000-1200 bopd is pretty likely. We know that hole 101 which wasn’t as good as 103 seems to be, had 200 bopd for the first couple of years average from R2. We have been given the nod by David that 2 of the 3 new sandstone zones are oil wet zones. I have a feeling that they might be high pressure oil pay zones and if so then I am sure the RNS will highlight this, but a low case scenario would be R2 equiv of 200bopd per a new zone. NZ1 and NZ2.

So given the expected wire logging I think I can safely say that we have R2 200bopd, NZ1 200bopd, NZ2 200bopd and Mengo 800bopd. Giving 1400bopd in total as a very conservative value imho. The hole is a production hole, with well site capacity to handle 2000bopd.

I am sure under the David Lenigas approach to flow testing we could see figures of 3000-4000bopd touted, but the above is long-term production value. The value of the above is $400k per week, easily $15m a year given 2-3 months a year downtime. More than enough to sustain a 20p share price and probably enough to support 30-40p.

Djeno with its 4000+bopd potential, as per my strategy is my real minimum hold. But I really can’t see much risk, accepting for operational mishaps at the current share price.

So the wire logging is the next step, it will likely not be understood by the market look out for mention of future increases in production capacity at the well head for a hint that production will be above 2000bopd, look out for higher than expect porosity figures for Mengo and the new sandstone layers and for higher than expected pressure expectations.

Mostly though, have your own strategy, be honest and don’t believe everything you hear.

#AAOG – Understanding….

#AAOG – Understanding….

Sorry, I’ve had a cold and its taken me a little while to understand and join the dots between the interview and this mornings RNS.

However its important enough for me to put together this very quick Blog.

For clarity I do hold, three positions taken at 8p 8.1p and 7.23p all mentioned on my feed.

So. I mentioned on the forums a few days ago about the piece of paper. I.E imagine holding a piece of paper now pushing it together, it bends in the middle, sometimes up and sometimes down.

The goal is find such a fault/fold geologically and find one in a down dip. In this fold will be a larger oil source.

All well and good.

However Davids talk of interconnected reservoirs confirms something much bigger. Oil migrates, this means that in an interconnected reservoir the oil will be migrated via gravity over time…Guess where….Yep that’s right into the fault/fold.

So not only do you end up with more net pay, but you end up with much thicker pay, more free flowing and far easier to get.

Hopefully this will be supported by the wirelogging now, but my smile is now as big as David’s…

I have a feeling that a new 5000bopd tank will need to be installed just to allow a proper flow test.

Anyway after all this we have Djeno and I honestly believe that my face might split in half from the smile that producers.