Hephaestus Share Discussion Threads

[lmhardy01] 14/10/2006 12:01

Cofor started drilling in August and took 60 days to drill a hole straight down that should have taken 10-14 days max. This has put the whole project for drilling the production wells from late 2006 to end first quarter 2007. Time is money and these guys are then be asked to drill horizontal wells!!! I sincerely hope not or we will be here until 2010 with 30 holes to drill.

07/08/2006 09:18 Heritage Petroleum plc - Spudding of Well First
09/10/2006 08:42 Heritage Petroleum plc - Drilling Report Last

To compare you need to look at the or to see what experienced management can do. This is an issue for EPG to sort out.

[drago] 14/10/2006 11:06

when i bought into hep, it was my understanding that to exploit any cbm deposits a tiny co like hep would have to issue equity, hence dilution.

it looks like the dilution has come early but the extra coal beds give an unknown balance. so i'm not going to lose sleep over it.

also lots of resource stocks have gotten a right old clobbering since march,
this one is up for me so another thing to not be unhappy for me.

[rapier686] 14/10/2006 10:04

hedgehunter - Action group is overdoing it. Just a focus for discontent with the proposed deal so that if we do represent a material force then the matter can be brought to the surface to be addressed.

Anyhow, as of yet there's no sign that we do represent a material shareholding who's particularly bothered and in any case I'm rethinking whether I might have underestimated the potential of Lons le Saunier and the proposed deal might not be quite as bad as I thought. In anycase it's in about the historic share price ratios, so really it amounts to choosing to buy HEP over EPG wasn't as smart as I thought it was.

lmhardy - what makes you think Cofor are incompetent? So long as it doesn't compromise the project, I imagine there's wisdom in using a French contractor. Remember EPG are angling at gov.fr grants of up to 1/3 of the capital cost. And the stratigrapic wells are not the critical component - that'll be the completions.

Regarding the board, their CV's read ok to me. This task has been a focus for some time - I'd only maybe feel they seem a bit laid back about actually getting on with things. But not messing up's more important than speed.

[buffin] 14/10/2006 07:45

Looking at EPG from a distance I hadn't realised that the board was no good? Flavelle is surely experienced. and on the financial side they got the recent issue away with a good slug from Fidelity.

You really think they don't know what they're doing? Why then did Fidelity put their money in?

[lmhardy01] 14/10/2006 07:34

Their is I am sure a master plan and we need to find out the timetable and plan. More inportantly we need to make sure that the EPG board has experienced personel on it. (This is certainly not the case currently) These leaders will certainly need to drive the drilling effort better than this last disaster. Cofor are incompetent and need sacking, we need experienced managers who know what they are doing.
Wait and see EPG /HEP has a lot of releases up their sleeves but they could happen a lot quicker if they knew what they were doing.

1) Porosity & Permability tests Fract & Cleating etc
2) New reserve statement inc p2 & P3 reserves
2) EPG Aim Listing & prospectus

[buffin] 14/10/2006 06:24

It seems plausible (though far from certain) that the potential here might actually account for the directors provisional acceptance. But if it does, then EPG will have to tell us of its prospectivity.

Which - to state the obvious - should boost EPG's share price and therefore our effective take-out price if it is new news.

[hedgehunter] 14/10/2006 02:00

An 'action Group' now come on stop talking silly we dont stand a sniff of a chance, its a complete waste of good and much productive time , we have been well and trully shafted.

Surely Buyers of the stock knew the risks they were about to enter into, when they purchased the stock, if they didnt, they need to give up glue sniffing whatever etc.

[rapier686] 13/10/2006 14:34

Hmmm, yes Lons le Saunier is potentially impressive.

The several hundred million tonnes is just the mapped out area which is only a fraction of the basin. This bears a lot more investigation - although high rank coals a kilometer down sounds a fearsome obstacle for actually extracting said gas.

It seems plausible (though far from certain) that the potential here might actually account for the directors provisional acceptance. But if it does, then EPG will have to tell us of its prospectivity.

[rapier686] 13/10/2006 08:55

Valempoulières isn't described quite so impressively in


"In spite of the large number of wells realized, since the discovery of the tiny and now abandoned gas fields in the Jura (Valempoulières, Lons-le-Saulnier, Vaux-en-Bugey) which were producing in Triassic, no commercial accumulation has ever been found"

Still, looking back, I see the several hundred million tonnes is just what's been delineated by coal explo wells, there may be plenty more as yet unmapped resource. But a lot of what this seems to be about is piggybacking on coal explo results, not doing the explo at your own expense.

And however prospective Lons-le-Saunier looks, it's quite a bit behind Lorraine in the path to development.

Good point about IRG - though it's not obvious that they'd have the resources to mount a competing bid. They do seem to have lots of get-up-and-go though, they haven't hung about getting a stratigraphic well spudded on their property.

[sranmal] 13/10/2006 07:46

Rapier - re. Lons le Saunier - from the EPG presentation at the OilBarrel conference in the summer (on OilBarrel website) there was a well already drilled on this acreage with a very impressive flowrate of 3.5 mmcfpd (nearly 600 boepd), hence my interest in exchanging my shareholding in HEP for EPG.

[lmhardy01] 13/10/2006 07:37

Very true but perhaps we should notify say Independent Resources plc LSE:IRG who could also make a competing bid who are involved with CBM in Italy next to HEP. The notice in the Uk was put up after hours and would not have come to anyones attention unless they were looking
The other issue everyone else has forgotten is that EPG has not secured 75% of the italian projects yet. Ie they have not spent the 200K euro or done any resevoir studies yet.

[buffin] 13/10/2006 07:19

They also struck the proposal just at a point where the disparity between the share prices had widened quite suddenly. It seems Malcolm Burne is looking for a continuing relationship with EPG through Ambrian. Thus he may be less concerned to screw out the best terms for his HEP investment.

I hope lmhardy is right that the proposed deal is being watched. Maybe that's another reason for EPG's timing, to wrap it up before (hopefully good) numbers appear.

There doesn't seem to be any market reaction in Australia, even though this deal would give existing EPG shareholders a bigger slice of the cake.

[lmhardy01] 12/10/2006 23:35

Guys based on todays closing price of EPG .82 the offer is worth 19.5p per share. The issue here is the ratio of EPG shares offered. The other major issue is the exchange rate ie 2.5 to 1 Pound this also changes the price quite at todays ex rate at .82 per EPG share this makes it worth 19.7p per share.

I fully believe that this whole deal is being watched by others in the industry. Once the porosity and permeability numbers become known then the lorraine project becomes bankable (These are not my words! but someone else very much in the know)

I believe that EPG will try to wrap this up V quickly as others may look at Heritage as a cheap way in to the deal.

[rapier686] 12/10/2006 23:30

Merging won't solve dilution - the merged EPG would still have to raise funds, which is what I always understood EPG's proposed AIM listing to be about.

Of course merging makes sense so there's only one set of fees rather than a set each, that's not under dispute. Just the terms.

[lmhardy01] 12/10/2006 23:09

About 5 Million Euro over the next 6 months.

[buffin] 12/10/2006 23:05

How heavily would HEP have to dilute to get to production?

[rapier686] 12/10/2006 22:46

A better deal may not be offered. But it certainly won't be unless a competing offer turns up or it's clear this one's set to fail. And the directors' acceptance of the draft terms suggests failure is unlikely.

Hence the point of mobilising an opposition and keeping the directors informed so everybody knows the deal needs improving (if indeed it does) before too much gets paid to the lawyers.

About the only reason I can come up for the deal being ok is if Lons le Saunier (100% EPG) is an absolute stunner. But my notes say several 100m tonnes of gassy Tertiary coal. 300m tonnes x 300scf/tonne ~= 100Bcf gas in place so it doesn't look plausible. And of course even if there's extensive coal exploration and a promising resevoir study in place it's some way behind Lorraine as a project.

[robin_of_loxley] 12/10/2006 22:19

If I was asked to vote, I would vote for a better deal, but I dont have a huge pile of shares in HEP

[rapier686] 12/10/2006 22:13

Well I suggested replying to author on a TMF post and I gave a link.
I was a bit concerned about spam from publishing my email address.
But I suppose that's what hotmail accounts are for, so I've now set one up.

Rapier686 at hotmail.co.uk

Now for a manifesto!

I'm not in principle opposed to the takeover, and would accept a deal that pretty much preserved the interest in the Lorraine project. Also I hold out some hope that the directors' acceptances (albeit conditional) might mean there's some important aspect that escapes us and makes it a decent deal.

But for the moment I see no reason why we should accept dilution of one third in the project and would like to assemble a sufficiently big group to get the deal improved or rejected.

[lmhardy01] 12/10/2006 21:06

Rapier how do I contact you have you got an email add?

[rapier686] 12/10/2006 21:02

I've let the directors know that it looks a bad deal to me on the face of it and I'd be opposed unless persuaded otherwise. Apparently a confidentiality agreement precludes any such persuasion.

Regarding a group, I only speak for myself - nobody's contacted me. 1% won't come near blocking anything!

Did you get to chat to City Natural or GOL? Do we have a C.Rowan, R.Price or N.Adam posting here?

I presume the expected AIM listing for EPG is still on the cards, but it does seem very strange that the announcement didn't promise it.

[fredling] 12/10/2006 20:51

Interesting that Ambrian are acting for EPG when they are part of GOL who I think still have a shareholding in HEP.


Fredling

[wassapper] 12/10/2006 20:23

An AIM listing for EPG is essential. Is there a group yet opposed to this takeover move? We should make out feelings known.

[wassapper] 12/10/2006 20:23

An AIM listing for EPG is essential. Is there a group yet opposed to this move? We should make out feelings known.

[rapier686] 12/10/2006 19:50

Negligable, these directors' interests lie largely in their direct shareholdings.

500k 5p options each at last AR so not material enough for the favourable treatment of in the money options to influence the matter.

And Mr Ray's paid his 5p in respect of 135k of those on May 2.

The puzzle remains - and not even the carrot of an AIM listing for EPG at the same time that Mr McClure's talked about in his presentations.