Caza Oil & Gas Share Discussion Threads

[sleveen] 19/8/2015 08:00

So long, farewell, auf Wiedersehen, good night

I hate to go and leave this pretty sight


So long, farewell, auf Wiedersehen, adieu

Adieu, adieu, to yieu and yieu and yieu


So long, farewell, au revoir, auf wiedersehen

I'd like to stay and taste my first champagne


So long, farewell, auf Wiedersehen, goodbye


So long, farewell, auf Wiedersehen, goodbye
Goodbye, goodbye, goodbye

[lazarus2010] 19/8/2015 07:47

this might be of interest to some. Contains some info on drilling in the Wolfcamp and other oil plays in US

[pavey ark] 17/8/2015 18:30

DH this is not a popularity contest and I think you will find that any post that puts either myself or Caza down will get a certain level of support.As you can see these posts don't need to be factually correct or even contain any insight or information.

shawzie, LG, I haven't dealt in Caza shares for a few weeks but it comes as no surprise that the market in them is weak and rather wobbly.

Even as blinkered, ubber bull and peering through my rose tinted specs I find myself saying FFS get on with it but as the company has pointed out to me I don't have all the bits of the puzzle.

As recently as last week MF said he is looking for a knockout deal ie big money,better terms and buy out Apollo and YA.

At the other end of the scale is perhaps $10m, pay off YA and drill on and meet the drilling covenants at Apollo.
$10m would frac. Lennox, drill at MRE drill a commitment well (possibly Jazzmaster) pay off YA and have a $1m/$2m left over

A number of random scenarios play through my mind from time to time but again I don't have all the info.

I'm quite sure management have not reached the point of piecemeal solutions yet but I would have thought it only prudent to have a few lined up.

Caza bought the MRE lease and drilled the first Igloo well with its own money (nothing to do with Apollo). After excellent (very excellent) results from the well, oil at every level and the property surrounded by fantastically good wells the initial $4m investment must be worth over $10m so why not use this as security on a loan, even if they only drilled one more well at MRE ($1.5m to Caza)then the lender would be very well covered.Throw in another lease if necessary.

Property sales could be done and cash raised but I certainly don't think the management are up for that but who knows......and that's the problem, we don't know and the door is open for people to put forward the most negative possible outcome without considering any of the many other possible outcomes.

One final point is that Caza are NOT behaving differently from ANY US oil producer in stopping drilling but the decision that Caza made caused them to come in conflict with the terms of the Apollo agreement.
Apollo has a vested interest in Caza continuing to prosper and has an interest in some of Caza's earlier properties, as the company has said to me "they have skin in the game" as have management who invested personal equity to start up the company and own 11%.

Unfortunately the very low oil price comes at a bad time for doing a deal but should make the oil export ban removal more likely ....every cloud and all that !!

[lord gnome] 17/8/2015 17:14

I certainly hope he does, valentine. In the meantime, we have just one MM left on the bid at 1.5p so I wouldn't be against another drop tomorrow.

[valentine] 17/8/2015 13:54

The same could be said for dozens of small shares at the mo. I'd put money on it that Mr Ford will find a solution, sooner rather than later. He is of s different to the likes of RMP & RRL.

[shawzie] 17/8/2015 08:35

I could not get a sell quote for Caza shares, but was asked what I would accept for them.
Does this indicate that Caza is now dead, but will not lie down?

[pavey ark] 16/8/2015 20:31

Good news on its own and very good for the Permian producers but it does look like the oil export ban is certainly crumbling and that could add quite a bit to net back WITHOUT an increase in world oil price.

[gkp heros] 16/8/2015 20:09

The money was short in March 2015 when they approached YV for $5 million. The price of crude falling and expected to go below $40 next week. This is looking grim now, please don't lose everything if your heavily invested here.

[gkp heros] 16/8/2015 20:05

I'm sorry but I wouldn't touch this stock with a barge pole. And it's better to walk away with something rather than nothing Huge stockpiles are also causing a headache, and in Oklahoma, stocks rose by more than 1.3 million barrels last week.Globally, a weaker Chinese yuan has been causing pressure on all commodity markets – and analysts fear the price of US crude could fall further.ANZ Bank said: "The lowest crude prices in six years might not be enough to put the brakes on the US supply growth."US shale players are actively cutting cost and some players are profitable at less than $30 (£19.21) a barrel."

[dynamohum] 16/8/2015 10:06

Try and think more before talking,
the Trade Union bit is a worthy riposte, shows a glimmer of humour

Pavey Ark 15 Aug'15 - 15:58 - 6141 of 6161 0 0

as being popular at school, well I don't think I was any more or less popular than the others but I did run with a very good bunch of guys and I did have fun.
I still receive plenty of invites to meet up so I must have been OK.

Bit light on the irony I should say, I see the edit in the post above, you cheat at school as well ?

[pavey ark] 16/8/2015 09:54

You read like a 1970s trade union representative reading a prepared statement with words he feels must impress.

[dynamohum] 16/8/2015 09:36

PA can't do irony , but he has an abundance of Hubris which means extreme pride or self-confidence.

Hubris is usually perceived as a characteristic of an individual rather than a group, although the group the offender belongs to may suffer consequences from the wrongful act. Hubris often indicates a loss of contact with reality and an overestimation of one's own competence, accomplishments or capabilities, especially when the person exhibiting it is in a position of power.


A lack of perception also clearly apparent , I mean why would you lend $ to buy assets that with a little patience will be available for cents on the $.

What is interesting however is the slow, yet inexorable pace of realisation of the actuality to which the self appointed omnipotent one "finally grasps the straw"

As a study in psychology the unfolding scenario should be mandatory reading for all .

[1628386] 16/8/2015 09:35

We've done this to death now.

We've both put our cases forward and to be fair we managed to keep 'fairly' amicable

Let's see what the finance update looks like and no doubt we'll debate it.

[pavey ark] 16/8/2015 09:16

How does paying down debt weaken the balance sheet ?

Heading out but talk of what may or may not happen in a refinancing deal where no information is given is rather futile.

From the results I see that the net back was $29.2 and the price received for a boe was $43.46.
These are fantastic figure with a production cost of c. $14.

What caught my eye was that Caza received $50.36 per bo but I had calculated the average wti price over the period to be c. $58 so it would appear that the good old differential is alive and kicking.
Caza has a hedge in place at $4 which should mitigate some of the effect but it is always a danger as MF said at Oilbarrel.

If you add in the wti/brent spread of c. $6 this add up to a tidy sum.

My earlier point about the removal of the export ban must be factored into calculations very soon, certainly looking at these figures.

With exports to Mexico and the Gulf ports (for export,not refining) and the new pipelines the competition for permian oil must rise and the differential will fall.

$6 + $8 is a lot to play with and could see a significant rise in net back without any great increase in the world oil price.

Old T.Boone is insisting that oil will be $70 by the year end, I'm not sure he's a financial expert but he did mention the little point of decline curves and the fact that production is in decline in all the major oil fields.
NB Saudi managed to boost production by bringing on some previously shut down wells but their existing wells are certainly in decline, as are all the major fields.
To paraphrase Clinton "it's the oil price stupid"
Caza is as tied to the oil price as any other oil company large or small that is why I have always been amazed when people rubbish Caza then buy or continue to hold other oil companies.

Caza has debt but very low production cost, reasonable differential , no currency problems, stable tax regime and very little or NO exploration risk.

I note that shareholders of some favoured shares have felt the force of some of the above very recently.

[1628386] 16/8/2015 09:01

Blimey PA, you have a habit of distorting what I am saying.

You said:

"The point is that you don't get it or choose to see the matter from the point that they have taken the cash and greatly reduced the current debt yet you still want them to have cash at hand."

When did I ever allude to wanting them them to pay down debt AND still have the cash with the same money??

To say I don't 'get it' about the working capital deficit is laughable.

You didn't even know it was there until yesterday!! You have been working out the free cash being generated plus adding it to the Dec 2014 end bank balance and converting it to how many drills CAZA could fund. You have been saying this for 6 MONTHS!!! Read your post history. So don't tell me 'I don't get it'

I've said this many times and I'll repeat it to you....

You are great on the operational side and your research is second to none. Your financial knowledge is hopeless and that is where you mislead people.

The problem has been that because you are great on the ops side and very technical, people assume that you are correct when you talk about the financials and that's dangerous.

Yesterday morning you were saying they had a strong balance sheet!! OMG

[pavey ark] 16/8/2015 07:51

I would be absolutely delighted if your figures were correct but I doubt if they could realise the full difference at this stage.
What you are saying is that Caza has taken ALL the gain on these swaps and pocketed the money now.
My calculation was closer to $1.5m based on the figures in the accounts and the cash generated from current swaps.
But no matter they have the cash.

The point is that you don't get it or choose to see the matter from the point that they have taken the cash and greatly reduced the current debt yet you still want them to have cash at hand.


Since the oil price collapse they have been chasing their tail due to the large sum ($12m)spent in Q4 ( I bet you that if you gave them $12m today and the same opportunities they had in Q4 they would still go for them or a least be very,very tempted, they were that good !!)

As far as drilling from cash,I did underestimate the scale of their debt reduction programme but was aware that a well could be drilled at MRE for $1.5m to Caza (or less)

It looks to me that the paying down of short term debt was necessary and gave them the opportunity to continue negotiations on the financing.
This short term debt was a one off spike caused by external circumstance and the management have used every tool at their disposal to bring it under control.

As far as Apollo's involvement in the swap sale is concerned it is laughable to suggest that Caza did this on some technicality ,some fine print in the agreement.
Caza is working very closely with Apollo and things are going well so it is inconceivable that Caza would do anything of this nature without first running it past Apollo.

Edit: Sorry I really should read all of your posts .
Obviously these preference shares have to find buyers but the original Apollo loan was based on a company with much less in the way of assets and very little production (mainly gas).
Apollo is in for $43m (originally $50m with an option for a second $50m and Caza was a VERY small company at the time)) so easy to explain their reluctance but even the most sceptical can see that there is plenty of asset backing for further, albeit comparatively small addition to borrowing.

Any large scale sale could simply replace all or part of the Apollo loan with drilling funds remaining

[1628386] 16/8/2015 07:02

Sorry, can't help but comment on what you said about the preference share route...

You said....

"The preference share route is interesting and if you did get a large enough sale this money would buy out Apollo and therefore these shares would go to the head of the asset queue. With a an interest rate less than Apollo these would still be attractive and could contain a stepped conversion to soften the dilution but get the deal going."

Have you studied how preference shares work?

CAZA would have to sell them to investors. They don't simply 'issue them'.

By saying the interest rate would be lower than Apollo is making one hell of an assumption .... That investors would accept a lower yield than Apollo for less security (Apollo enjoy a 1st charge on the companies assets)

If investors were willing to take that on, financiers such as Apollo etc would surely see it as a good deal too?.... So why aren't they?? Think about it...

[1628386] 15/8/2015 22:43

PA

You need to study the components of working capital and understand the cash flow cycle of a company. It's not...

"Accounts payable - Accounts receivable"

It's more than that.

Oh well, at least you are grasping the nettle now and not misleading people that CAZA has a 'strong balance sheet' and plenty of cash generated in H1 that could be invested in drilling.

Edit: The calculations on the hedge swaps are fairly easy to calculate...

They cashed in 95,000bbls at $80 and replaced them with 95,000bbls at $60

The cash generated for CAZA would be around the difference ... $20 x 95000bbls ($1.9m)

Without that the bank balance would be virtually zero. That's how desperate things are

[pavey ark] 15/8/2015 20:54

Wait a minute. It seems like I've stepped through the looking glass here.
At the year end Caza found themselves short of cash and all the financial experts jumped up and down.
OK cash is quite important but I did point out that, Caza had just paid out $12m in the previous quarter in order to secure MRE and drill wells.

Oil drops and Caza is caught short so they take on a YA loan to tide them over.
They have reduced the Accounts payable - Accounts receivable by over $8.5m in six months.
If we take away the outstanding YA loan of $3.5m we get a reduction of $5m in six months.
If they had the cash in the first place they wouldn't have taken the YA loan !!

As far as selling the swap contracts it's rather difficult to work out what that brought in but with the higher price of oil in the second quarter I would think that the current hedges would bring in c. $1.1m last quarter (unfortunately it looks like more this quarter !!)

I wasn't happy with this sale but given the negotiations that were/are underway it would probably be best to keep things rolling along and continue to pay down the bills.

I agree with the financial experts on one point that drilling looks unlikely from this cash position but they should still generate cash in H2 and have only one commitment well and I put that at $1.2m to Caza

Outlook/Prospects.

Obviously the oil price is important but the export ban removal would be a nice little boost.
Plenty of very excellent/ proven wells to drill and these would generate cash.

Funding: Get the big one sorted and pay off Apollo and everything in the garden is rosy but this is not, in my opinion, a binary win lose situation as there are other options.
1. Issue some preference shares ,perhaps with a higher interest rate than you would want but they would sit behind Apollo so would have a healthy asset backing and you could sweeten these with some sort of conversion further down the line.
2 Sell some assets, as I said,there are companies out there with properties next to Caza that would gain much from being able to drill a large number of long lateral wells one after another.
3 Farm out part of their larger wi holdings like Forehand and get a well drilled now at little cost to Caza in return for a share of the remaining property. Caza would still retain enough to remain as operator.

The preference share route is interesting and if you did get a large enough sale this money would buy out Apollo and therefore these shares would go to the head of the asset queue. With a an interest rate less than Apollo these would still be attractive and could contain a stepped conversion to soften the dilution but get the deal going.

Random thought but these should be considered along side the darker predictions.

[gkp heros] 15/8/2015 20:31

PA's constant ramping has become very dangerous and if it wasn't for the 1628 post at around 7p I wouldn't have never started to make my exit and reinvested in JLP. I stood up for PA and slated 1628 for deramping at 15p a few months prior. I now take that back I hope 1628 can forgive me. The guy is a investor genius and investors should listen to him. I wish him all the best with his investments in the future and would love for him the keep us in the know with his future investments.GLAP.S one thing I disagree with. I wouldn't invest at 1p now this share is going one way. It was always going to be the most vulnerable in oil, look at Afren and that's just the start. Even if the oil price recovers the damage has been done with many juniors.