Bayfield Share Discussion Threads

[luminoso] 03/10/2012 11:30

euclid5

The funding shortfall is, IMO, all in the price. It is the reason for the share price falling from 40p ish to 14p ish at its lowest. Since the bottom was reached we have had news of increasing production and now of a better price for that oil.
So even though this could yet fall further and offer a better buying opportunity than this, there is also a chance that some corporate news is released soonish which propels the share price upwards. I am now sorely tempted to buy back the ones I sold, as insurance, before the Interims. The rns about an increased price for BEH oil provided a great trading opportunity as the interims were always likely to disappoint the market, which was only interested in corporate action at the time.
No advice given, of course.

[ultrapunch] 03/10/2012 10:08

My apologies euclid. I'm getting rather forgetful. lol

There was a link to a broker note posted on here a week or 2 ago. Seymour Pierce. I'll try and find it.

[ultrapunch] 02/10/2012 22:46

Hi euclid. I've never seen a broker note for BEH.

Hi stef77. Sorry about that. I didn't see it. I was going solely by their admissions document. Makes a mockery of their statement in the admissions document that the 7 well Galeota exploration program would cost US$87m. Hopefully there must be some one off costs associated with EG7 otherwise the cost of those 7 wells will be circa US$150m instead of US$87m!!!! That's almost double the original contract price!!

I'm inclined to think that the US$21.9m write off includes a "book" write off as well as the actual cost of the well. On second thoughts I think that must be right. I can't see that they would have under estimated the well cost by such a large amount as around US$10m. I reckon they have reduced the "book" asset value of Galeota by US$10m seeing that one of the 7 planned wells has been a duster.

[euclid5] 02/10/2012 21:32

ohch nearly $22m write off on this well!!

Ultrapunch Bn is short for Broker Note - not sure this will fly on the basis on a funding sf of £30m before YE

[stef77] 02/10/2012 21:29

And you've no idea how much I wish I was wrong, I bought most of my shares at 60p, it's a long term for me.

[stef77] 02/10/2012 21:26

ultrapunch, ref post 1039 regarding the cost of the expl wells.
in my defence, the half year results state:
"Exploration write off- well EG7 ... the decision was made to plug and abandon the well and the associated costs totalling $21.9 millions have been written off"
I'm only reading what they wrote mate.

[ultrapunch] 02/10/2012 17:40

Over 1000bopd potential, Mojomonkey. Though the oil potential extends into the neighbouring Repsol licence area. Almost all of the potential gas is within BEH's licence area.

Here's the link to the relevant RNS.



They are talking with Repsol.

[mojomonkey] 02/10/2012 17:29

Any idea what the successful drill at EG8, which turned out to have reservoirs of oil that strayed into Repsols license area might be worth if they decided to sell that area to Repsol?

Is that something that happens in O&G company circles? I know there is industry norm, ways of sharing a well like that but I wonder if there are also industry norm, ways of valuing something like that for a straight sale from one party to the other?

Ultra, do you know what bopd they attributed to EG8 and its reservoir size? I cant find the RNS now, all these dam Form 8.5s!!!

That well alone with Repsol having platforms and pipework close-by must be something that they would be interested in? Or not? GLA

[ultrapunch] 02/10/2012 17:10

"do you have a recent BN please I can read up on" Sorry, euclid, BN?

They could, I suppose, get away with raising less than US$50m the longer they can leave it since the change from WTI-17.5% to BRENT-9.5% will make them profitable at an operating level and hence will do wonders for their cashflow. Presumably it all depends on their creditors and debtors? How long they can drag out the time to re-pay their creditors (rig operators) and how quickly their debtors (those buying the oil) pay them.

I must admit they look cheap bearing in mind their potential cashflow from 1st August onwards.

I should think they have enough cash to last until the end of the year otherwise the latest interim accounts would have definitely had a "going concern" query inserted instead of the rather vague "going concern" statement. I remember MTA back in 2009 the auditors stated in the accounts that the company would run out of money by November 2009 so issued a "going concern" warning.

I'm sure the probable US$9-12m operating profit I outlined they will make since the change from WTI to BRENT from 1st August will provide the cashflow necessary to enable them keep their head above water for the rest of the year. Luckily BEH have no debt.

[euclid5] 02/10/2012 16:16

is it, with them requiring £30m fund raise!

[cockney sparrow] 02/10/2012 16:16

looking more attractive to buy each day.

[euclid5] 02/10/2012 16:13

ok thanks Ultrapunch for the above figures - so around $50m / £30m quite a few quid to raise

Pre tax of $50m in 2013 is very impressive but they will need to raise the bal of Capex soon & that is causing a negative on the price

do you have a recent BN please I can read up on

Thanks

[ultrapunch] 02/10/2012 16:09

Hi euclid5. I've just bought a tad over 11000 shares in 2 lots. Paid just over 20p per share. Luckily I sold most of mine on friday having paid 15-17p for them. Wish I had sold the lot on thursday!!!!!!

Well they raised US$81m net of expenses at last years flotation. They estimated CAPEX of US$87m for Galeota and US$70m for Trintes. They had to increase that US$70m for Trintes by up to US$15m because of the bad state of one of the platforms. So total CAPEX of up to US$172m.

They have spent US$25m on the 2 wells so far drilled on Galeota. We don't know if they have had to make a financial contribution to the 3rd party for taking the Gorilla 111 rig off their hands so will ignore that. That means we can subtract US$62m from the US$172m required in the short term to fund the Trintes CAPEX. That leaves US$110m. Subtract the cash raised at the IPO and that leaves US$30m

They had a bit of cash before the IPO, but they have been loss making since the IPO. Their cost of sales has exceeded the revenue earned. There are also the circa US$12m admin exepenses incurred since the IPO, plus other expenses.

I reckon they might need to raise around US$50m otherwise they will soon run out of cash. The change from WTI-17.5% to BRENT-9.5% from the 1st August will mean they are making a profit from that date (revenue-cost of sales) so that will help, but it's plain to me that there will be a complete takeover of BEH, or sales of assets, or a farm out, or a placing to raise the necessary cash. I suppose debt is another option now they are making a profit and by my figures yesterday they could post pre-tax profits of over US$50m for 2013 after subtracting admin expenses based on their likely production figures.

The change from WTI-17.5% to BRENT-9.5% has no doubt given BEH extra breathing space in which to choose the best option for raising cash. No doubt the Trinidadian authorities have been helpful to BEH. It's in their best interests to be so since they are getting free carry on all the CAPEX for their 35% of Trintes and Galeota. I don't think they want BEH to drown under the weight of it's future commitments.

[euclid5] 02/10/2012 15:20

Hi Ultrapunch

thanks for your comments above - shame this has not taken off after touching the 30p area - but I think the cash raise issue is the main reason for the sell off

how much do you think they may need to raise?

Thanks
Mr E

[ultrapunch] 02/10/2012 15:16

Sub 20p. I think you spoke to soon there mdw1. lol.

It looks cheap. Could be a good time to top up. Watch the Bollinger Bands.

[mdw1] 02/10/2012 10:43

some reasonable buying this morning; these should be back to where they were before the results in no time at all.

[ultrapunch] 01/10/2012 22:27

"Prospects and outlook

-- Five development wells are expected to be completed in the Trintes field during the fourth quarter targeting net production in excess of 1,950 bopd (gross 3,000 bopd) by the end of the year.

-- The Company is evaluating a range of financing and strategic alternatives. Cost control and working capital optimization remain priorities.

Executive Chairman, Finian O'Sullivan, commented:

"Stabilised gross production in excess of 2,000 bopd and substantially better pricing for our oil provides improved cash flow and a solid foundation from which to fund growth potential and follow through on previously announced strategic initiatives. ""


Mojomonkey, why do BEH need another Gorilla 111 rig well this year to generate any excitement for the BEH sp? Believe me 5 development wells on the Trintes field before the year end and a likely funding solution as well is surely enough news to go on in the remaining 3 months of the year. How much excitement do you want?! I guarantee one thing. The BEH share price wont drift aimlessly during the next 3 months!! There is an awful lot going to be happening to BEH over the next 3 months even without another Galeota exploration well.

The Exec Chairman's statement seems quite bullish, but there will remain a question mark over the company until they sort out the future liability problem by raising some cash and pronto.

EDIT. I think the reaction of investors to the results has been irrational, but let's be fair the "going concern" comment didn't exactly help investors nerves though basically the same comment was made back in the summer. Nothing has changed on that front. They need to raise cash to carry on with their development program otherwise O'Sullivan will never get a good price for the company when he comes to sell it.

[spacecake] 01/10/2012 22:04

The company will have to improve the current assets if they want any chance of recovering what they spent in a sale, farm out or take over. That means (just like Burren) more production.

[mojomonkey] 01/10/2012 17:07

Thanks for posting that Ultra' and I agree BEH is very cheap ATM. When I said its heading to 15p again, that was not what I think its worth, just how I could see it going between now and the end of the year because we wont have any RNS about what Gorilla III has done, this year anyway.

I may be being pessimistic but I can see this just drifting away again but having said that we dont have a "7 million plus sell at any cost" trade going on this time. Well I hope not anyway.

If there is an offer for the full company how soon do they have to announce it? If at all? Its been open to offers so long now I dont know what to make of that side of it.

If they cant get what they want/need for a sale then it would be better if the company announced its no longer open to offers and quickly followed that with some substantial director buys. That might boost confidence at least.

This share price and what it has been at in the near past only values this at around the same price as some really poor little AIM oilers, we all know this is the real McCoy, pity the share price does not reflect that at this time...................

[ultrapunch] 01/10/2012 17:01

The BEH results haven't changed anything. They still need to raise a lot of cash to continue developing Trintes to boost production. If they don't spend the CAPEX necessary to sidetrack existing wells and develop new wells on Trintes then the current circa 1430bopd NET will not grow and will probably gradually decline, IMO.

To continue to spend at the current level on Trintes they are going to have to raise cash and soon. If they had to pull a placing in the summer because of lack of institutional interest then a farm out of existing assets, a sale of existing assets or a full takeover are the only available options IMO.

Those 8.5 forms keep coming!! Perhaps due diligence is being done as I post!!

[ultrapunch] 01/10/2012 15:15

Mkt Cap circa £45m. 2P of 19MMbbls. 2P oil in the ground valued at circa US£3.75 per bbl in the ground. BEH profitable from the 1st August.

I reckon they have had revenues of around 1430 x US$98 = US$140000 per day since the 1st August (BRENT - 9.5%).

Cost of sales I estimate at US$80000 per day based on the cost of sales in H1 2012.

That leaves a gross profit of US$60000 per day since 1st August.

If they carried on like that to the end of the year I estimate a gross profit of US$9m for the year since I reckon they would have broken even in July.

However that US$9m is before admin expenses and taxes.

But BEH do reckon they will be producing 1950bopd NET by the end of the year.

If we assume an average production of 1700bopd for the remaining 3 months of the year that would increase the gross profit by around (1700 - 1430) x 3 x 30 x US$98 = US$2.4m since the cost of sales would likely stay roughly the same.

So profits for H2 2012, before admin expenses and taxes, are likely to be in the order of US$11.5m if they achieve their production target. It's in BEH interests to cut admin expenses which they say they are doing otherwise if the admin expenses for H1 are anything to go by they will eat up around half the H2 profit!!

BEH are going to have to raise funds soon otherwise they wont be able to fund their ambitious CAPEX program.

EDIT: If BEH averaged 2500bopd for 2013 they could have revenues of 2500 x 365 x 98 = US$90m for 2013 assuming BRENT stayed at it's current level.

If cost of sales were around $US30m that gives a gross profit of US$60m before admin expenses and taxes. That would be roughly equal to the current Mkt Cap. On the face of it BEH looks very cheap!!!!

[luminoso] 01/10/2012 14:13

It would seem to be a good buy at these levels, in as much as Trintes production stabilised at around 2000+ bopd gross and due to increase with work in q4 2012.
Corporate situation remains the same as before interims. BEH are no less likely to find suitable funding solutions, possibly more likely as production increases.

[ultrapunch] 01/10/2012 14:02

I don't think it will drop back that far, Mojomonkey, but sub 20p seems possible.