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[turbotrader2] 16/10/2007 23:19

not a bad post yourself zengas

well done!!


see it aint over

[zengas] 16/10/2007 22:49

Excellent post Xena.

The thing is Silverpoint know with another 3-6 months leeway, Cardinal would turn it around - particularly and presumably as gas caps should be lifted - hence no attempt by Cardinal as a last resort to run and sell stored gas for instant, though greatly reduced cash, which would keep them going 3 months+.

I still beleive SVP are seriously peeved about the handling of the cost overruns on the GGF as one issue - it's still too high for something that was done and dusted within 12 months. SVP may have been approached and told - look take the assets and we'll pay you XYZ amount. At the minute I can't see SVP losing no matter what option they take, though taking the CDL assets would mean they don't have to wait or trust in Cardinal management for the next 3-6 months to turn things around - based on past performance.

If price caps are lifted and a few million $ available to tie the other 2 wells in, it would push CDL performance up a big notch and make any longer term restructuring plan easier imho.

Cardinal are so close - yet I can see SVP being torn and thinking they could get a lot of cash for those PRODUCING assets now - and why they are doing their utmost to back CDL into a corner.

At $4+/1,000 cu-ft and long term oil/condensate even in the range of $60+ is a no brainer from 32 mboe P2 with a GGF in place. 2-3k boepd starting base should see no problem growing to 7- 10k boepd from development drilling only. It makes the whole asset package and company that much more attractive.

QVT last year (September) said the NAV was 45p share. Even taking into account cost over-runs, share dilution to SVP warrants - there has to be something like 15-20p value here minimum especially if you add in the value of the paid for GGF, hence the dismissal of such a seemingly ridiculous offer so far.

[turbotrader2] 16/10/2007 22:16

absolutely amzing post Xena

what a tonic

[xenawarriorprincess] 16/10/2007 21:37

Todays RNS certainly indicates that Cardinal faces serious and ongoing difficulties - but we knew that already.

As far as I'm concerned Cardinal's goose is not yet cooked, and I don't expect that long term it ever will be. I expect that Cardinal will overcome these difficulties and eventually prosper.

Some may accuse me of being blind to reality (maybe I am - but I don't think so) but having bought and held JKX in 2002 and thereafter, and Regal in 2005/6/7 I've seen it all before - Nomads jumping ship, no cash, loss of licences etc. This is simply doing business in Ukraine.

Whilst todays RNS was disappointing in certain respects I think it is important to note what it didn't say.

It didn't say Cardinal was bust, it didn't say SPC were calling in the loan, it didn't say the GGF was still on hold.

Refinancing - nothing new here - I think there is a good chance SPC do want the assets, but are not sure exactly how best to get them. Whilst they have got to be paid by 28th March 2008, they seem reluctant to call in the loan. I suspect RB has quite a lot of wriggle room here and SPC may well have fluffed their best chance of getting them which was (IMHO) at the end of September.

Nomad - certainly disappointing - but I've seen it all before, and usually either they agree to stay on, or a new Nomad is appointed.

GGF - well, confirmation that it is up and running - which is after all what people wanted. It looks like they're producing on average 176b/d gas, 48b/d condensate. The well tested at 675b/d so its not exactly clear why that target is not yet met. I did speak to Natalia yesterday and she said the well was being brought on stream slowly, with firstly a 3mm choke, now a 6mm choke and they will move to a 9mm choke shortly. To bring it on quicker could damage the well. Also 221b/d is an average for the first 2 weeks of October so presumably if production is increasing they are doing somewhat better on a daily basis than that now.

The gas sales agreement seems to provide for the delivery of 413b/d gas over a 3 month period. Clearly if production doesn't increase then there may be significant penalties to pay, but presumably these would be paid from the gas and condensate which they do sell. Or Cardinal could cover the shortfall by buying gas in the market and then selling it to the buyer under the gas sales agreement. They might buy at a slightly higher price and sell for slightly less but the contract would be fulfilled. Someone said a few days ago that payments for this gas (and therefore presumably penalties) would be paid monthly. Hopefully by the end of the month in any event we might not be far short of 400b/d.

Cost Overruns - well we knew most of this before. And it isn't exactly unheard of in the oil and gas industry. I think the budget for Sakhalin2 doubled from $10Bn to $20Bn over a couple of years and (I think) Eni has big problems in some dusty Central asian country over massive cost overruns. Inflation in Ukraine is presently running at 12%pa in any event - so a fair proportion of the overruns are accounted for by this alone. It also looks like the contractors have somewhat held Cardinal to ransom - but again oil and gas contractor inflation worldwide is running at a high rate.

JAA sales - Cardinal has repeated the mid 2007 figures of 117k boe in storage. No figure is given for end September gas in storage, but presumably a further 58.5K boe was stored making a total of 175.5K boe. At the State price of $9b this would result in receipt of $1.58M. Cardinal could have sold all this gas just before the end of September and received immediate payment. I would suggest that if they felt the company was about to go under prior to the end of December then that sale would have been made, so as to keep the company operating. Cash shortfall (as secured by the Hares letter is (or was) running at $400K per month, so $1.58M would have more than covered 3 months. This suggests to me that there is enough cash available to keep going until the end of December - I infact worked out in a post a few weeks ago that they could keep going to at least mid/late November.

Work Programme - it is clear that all expenditure has been stopped, so as to conserve cash. This is the right move to make in the circumstances.

The key things for me are to ramp up Well #3A production and also to resolve the JAA issue.

This story today



effectively confirms that Tymoshenko will be the next Prime Minister. She will also appoint the new Energy Minister and the head of Naftogas. It is her party election policy to allow JAA gas sales at free market prices. Present prices (about $23b) would give Cardinal cash, based on an end September 175.5K stored of $4M, next years likely prices of $34-$45 would give $5.9M-$7.9M. Whilst the gas is likely to be sold as soon as the price caps come off (likely I feel sometime in November), the higher gas prices next year will give Cardinal a major cash boost from JAA gas sales alone.

The importance of Tymoshenko as PM to Cardinal cannot be over emphasised. RB and Tymoshenko's inner circle are close. SPC and any subsequent purchaser of any of Cardinal's assets will know this. SPC might be too big to care, but any regional oil and gas company buying Cardinal assets as a result of them being initially seized by SPC could find themselves having serious problems in doing any meaningful future business in Ukraine. I'm sure SPC know this. They haven't called in the loan.

Robert Bensh and his team will be working flat out to try to resolve matters in a satisfactory manner. Oil/gas prices are at record levels. Russia will punish Ukraine severely next year in terms of gas prices. Cardinal will benefit.

Ukraine isn't for widows or orphans - but then it never was.

So, just as Mark Twain once telegraphed to an editor of a newspaper which had published his obituary - "Reports of my death have been greatly exaggerated" - I feel that reports of Cardinal's imminent demise have also been greatly exaggerated.

Regards,

Xena

[turbotrader2] 16/10/2007 21:01

xena, you working overtime tonight?

[zengas] 16/10/2007 20:10

KIEV, Oct 16 (Prime-Tass)
Yulia Timoshenko, a contender for the position of Ukrainian prime minister, reiterated Tuesday her calls for buying gas directly from Russian gas giant Gazprom.

"We'll make sure that there are no intermediaries," she said at a news conference.

At present, Gazprom Export, Gazprom's export arm, supplies gas, mostly of Turkmen origin, to RosUkrEnergo, a Swiss-based intermediary controlled on a parity basis by Gazprom and Ukrainian businessman Dmitry Firtash. RosUkrEnergo in turn sells the gas to Ukrgaz-Energo, a gas utility co-owned by RosUkrEnergo and Ukraine's state-owned oil and gas monopoly Naftogaz Ukrainy. Ukrgaz-Energo then supplies the gas to Ukrainian consumers.

Meanwhile, Ukrainian Economy Minister Anatoly Kinakh said Tuesday that he expected the price of RosUkrEnergo's gas supplies to rise to up to U.S. $145 per 1,000 cubic meters in 2008 from the current $130 per 1,000 cubic meters.

Ukraine has often been in political turmoil since the so-called Orange Revolution in 2004. In the recent election, the pro-Western parties headed by Timoshenko and President Viktor Yushchenko got the largest share of the vote combined, beating out Prime Minister Viktor Yanukovich's party. On Monday, the Yulia Timoshenko Bloc and Yushchenko's Our Ukraine party signed an agreement to form a coalition government.

[crazy russian] 16/10/2007 18:52

the bottom line is that 'Natalia' is not ahout to offer info or advice that in any way predudices her position for the future

and I dont for one moment blame her

but the bottom line is what is the future

as I see it SVP have a huge gain in prospect if they can block all 'rescues'
incl any addtl fund raisings

I would................wouldnt you?

[turbotrader2] 16/10/2007 18:32

omelette

I echo all your points. I too as said had a decent conversation with Natalia and she was blatantly ADAMANT that SPC would not see CDL bankrupt

fair enough they may offer say 5-10p a share so all is not lost

[omellete] 16/10/2007 17:43

David - My point is just that the last 2 RNS's point to Silverpoint having made a derisory offer.

Now whilst holders from higher will find it unacceptable the main thing is that if these are accepted by CDL then one will not lose ALL your cash - hopefully.

If Natalia is telling the truth then Silverpoint are not trying to foreclose, but obviously discussions continue - as per the RNS.

There were no mentions of breaches of covenants either in this RNS.

Anyway - nothing to do but wait it out.

[jumbo66] 16/10/2007 16:46

just hold on all, we are all big boys and girls hear so im sure we all knew what we were buying and knew the risks involved i hope! and i for one would just like to thank those who put there time and effort into this bb chears jumbo[hd]

[david brent] 16/10/2007 16:07

No point omellate. I contact her regularly by mail and that is enough for me.

[omellete] 16/10/2007 15:58

David - Why don't you call Natalia and put your point across?

The RNS still mentions an unacceptable offer for the company. Try and find out how much it is.

[david brent] 16/10/2007 15:54

Just read the rns again. It's a complete disater, SPC have them by the short and curlys and will drive them to the wall and pick the lot up for nought. Its so blindingly obvious what is going to happen. Anybody who thinks there is anything positive to be taken from that rns is a fool. I hope i'm wrong but i doubt it.

[ridgeback] 16/10/2007 15:34

Thanks for your post omellette, its more positive than I was thats for sure. I dont think you could have read a more negative rns than that posted today. Even the GGF news was a negative.

Anyway my question is if silverpoint can make CDL go to the wall and have first call on the assets at knockdown prices why would they offer 7-10p?

[pomp circumstance] 16/10/2007 15:34

An unfortunate combination ;)


It aint over till the fat lady sings

cant wait for Xenas views

[turbotrader2] 16/10/2007 15:25

basically Natalia confirmed and stressed very heavily that it is not in SPCs interests whatsoever to put the company into administration. She confirmed that the production rates were purely because of the need for cash to gain more gas from the well.

I kept saying that SPC could put us out of business and she continued to stress at the highest level that THAT WOULD NOT HAPPEN. Ibelieve that they have an agreement that that wont happen from SPC but the issue is clearly the silly interest rates they want for the funding would not be viable for CDL either.

There is something else happening, its as simple as that and she also confirmed that talks continue with other parties.

Commenting on shareholders she basically insisted that R Bensh was certainly in our camp given that his purchase prices in the past have been far higher than these levels and he too stands to lose more than us I would guess

It aint over till the fat lady sings

cant wait for Xenas views

[pomp circumstance] 16/10/2007 15:05

Schmoked her out like a goodun. ;) Works every time.

Look forward to you posting Xena!! Thanks for obliging!! :))

[xenawarriorprincess] 16/10/2007 14:59

I'm currently at work analysing the Human Tissue Act.

I've spent all my lunch hour studying the RNS and my opinion is at odds with everyone on this thread.

I have an idea what may be going on and I hope to do a post later on this evening.

Regards,

Xena

[theshareguru] 16/10/2007 14:50

turbo
what did natalie have to say

[zengas] 16/10/2007 14:47

agreed omellete and thanks for the post.

Pomp - thought you would know better with that kind of comment - as you know, your more likely to see X posting in the evening as she's tied up with her own work.

[turbotrader2] 16/10/2007 14:44

I think it is unfair too

interestingly I have just come off the phone to Natalia and I feel somewhat calmer now

[omellete] 16/10/2007 14:27

Pomp - Thats unfair - I think she works dilligently on her day job during the day.

Unlike the rest of us full time workers who spend the whole day on ADVFN!!!!