Civitas Social Housing Share Discussion Threads

[scsw] 01/12/2006 17:47

Bada

Thanks, interesting discussion. Certainly the market seems to have decided they aren't worth much but the contrarian stance is appealing here for me because I know that they are producing...the only question is how much? If I wait for an update, I expect the share price to be marked up if it's +. If it's - how much downside is not already priced in ?

The latest quarterly figures work out to 200 bopd, can they get enough wells into operation again to make a significant improvement in that figure....do I feel lucky... ?

[badabing] 01/12/2006 16:52

scsw....well that's me done for the day....I'm sure on the pro CSH gang will be along at some point to shoot down all my arguments here.....but the one thing that really matters is the share price and you have to ask yourself why is it trading at 10p again?

[badabing] 01/12/2006 16:49

"I don't see that the lack of quoted reserves is too much of an issue (short term) because the market seems to be (IMO) ignoring pie in the sky potential estimates from minnows and going more on revenue for production."....

well you're probably right on both counts but unfortuntately that's where CSH have screwed up royally...both their potential reserves and production capacity were both wildy over optimistic....since then their actual production levels have been 50% down on their own expectations and there has been little evidence they have managed to get this up to target......I think the company is priced on its history now rather than its potential...it's up to Caspian to prove it can deliver 300-400 barrels a day before this will get any re-rating...imo of course......

[badabing] 01/12/2006 16:43

Caspian Holdings "High - Low - Last - Volume"
Month HI LO LS VO(U)
DEC-06 9.75 9.25 9.50 551904
NOV-06 11.25 9.25 9.25 1743294
OCT-06 13.25 10.50 11.25 3783714
SEP-06 17.25 12.25 12.50 4592747
AUG-06 16.50 12.75 15.00 2699570
JUL-06 18.75 15.25 16.00 5378781
JUN-06 28.75 15.75 16.00 8018380
MAY-06 27.00 20.75 24.00 12825690
APR-06 31.25 22.50 22.50 7810033
MAR-06 32.00 24.00 26.50 15663830
FEB-06 34.00 23.75 28.13 23442480
JAN-06 27.88 7.50 25.88 35931440
DEC-05 9.00 7.13 7.50 5272280
NOV-05 18.00 6.25 9.00 17083300
OCT-05 21.00 13.50 18.00 7599916
SEP-05 26.00 19.00 21.00 3580851
AUG-05 31.50 23.50 25.50 3027552
JUL-05 39.00 20.50 29.50 8452622
JUN-05 35.00 22.50 23.00 4546461
MAY-05 33.50 21.00 25.50 4236101
APR-05 46.00 30.50 33.50 9851982

[tosta3] 01/12/2006 16:39

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[badabing] 01/12/2006 16:39

Here's the news that broke the camels back here previously....note the number of time that the CPR or Competent Persons Report is referenced here and the date when it was produced (1945)...and they used that as their AIM submission of future production estimates !!!

RNS Number:6451T
Caspian Holdings plc
04 November 2005

Production Capacity

Based on the reservoir model, the history of oil production from the field and
implementation of the proposed production improvement programme, SCA has made an assessment of the production rate that could be achieved from the six existing production wells once the previously shut in wells are brought back into production (106, 107, 111, 112, 113, and 114) and the proposed five new wells. No production estimate has been made for wells 116, 115 and 123 which have the potential to yield results.

It is estimated that following the proposed workover programme, the six existing production wells, could produce on average 25-35 barrels a day for a total estimated rate of 150-210 barrels a day by the end of December 2005. Subject to the normal risks associated with oil and gas exploration, it is estimated that the five new wells, properly cemented and completed, could produce on a most probable estimate basis 60 barrels a day for a total estimated rate of 300 barrels a day for five wells. In total this programme brings the improvement in production to 450-510 barrels a day.

This rate of production is significantly lower than the rate of production
estimated by the "Competent Person Report ("CPR")" in the Company's AIM admission document of 4 November 2005. On the basis of the original Soviet geological model and the log results from the old production wells drilled between 1934 and 1945, the "competent person" estimated that the first stage of development of Zhengeldy could produce at a rate of 1,400 to 2,100 barrels a day from five successful wells. The competent person further estimated that if the first stage were successful, production could be increased further to around 4,300 barrels a day from investment in a further 10 wells.

With the benefit of 12 months operating history and the modern log results of
nine new wells it is now clear that the daily production rates per well
indicated in the "CPR" were too high and cannot be realised. There are a number of
reasons for this variance:

* Production management.
The SCA review has identified up to eight oil bearing levels in the
Zhengeldy oil field. The levels are thinner than the 4 levels analysed in
the CPR. Current production techniques allow for production from one level
at a time. We are exploring how production from multiple levels can be
achieved cost effectively.


* Sand/Shale changes within levels.
The CPR was based on the assumption of homogeneous sand levels - the
operating experience has been that there are material changes in the shale
sand mix within productive levels limiting rates;


* Limited drilling success in the deeper "Triassic" levels.
The deeper higher pressure levels (400-800m) were expected to produce higher
daily rates than the shallower levels. Caspian has had limited success in
the Triassic level and the carboniferous nature of the deeper levels has to
date not produced good flow rates. A reserve update will be provided at the
conclusion of the SCA review following assessment of the workover programme
results. The company, based on this advice, will continue to investigate the
Triassic level but in the interim it is prudent to downgrade the Triassic
reserves to probable

Michael Masterman, Executive Chairman of Caspian, commented: "In the current 1.5 sq km licence area, we have a solid operating oil field which, subject to the successful workovers, should provide steady cash flows to allow the Company to further develop the field whilst pursuing other opportunities in the region. The field is not the low capital-high production rate that was indicated in the "competent persons report". Instead we have a field similar to the shallow Western Siberian oil fields, which can generate healthy overall production rates from a large number of low capital cost shallow wells.

[scsw] 01/12/2006 16:39

Bada

Indeed but what is the normal PE for a junior producer ? At least then I could make a call on whether the market cap at £8 million is cheap or not, using an average bopd figure at a known revenue. It seems to be valued as though it makes no profits right now but that is surely not correct (IMO of course).

Even if it could be expected (theoretically at least) to be valued at say £16 million at the next set of figures, it might give a reasonable risk/reward at sub 10p. However, that depends on what is an accepted PE for the sector. I don't see that the lack of quoted reserves is too much of an issue (short term) because the market seems to be (IMO) ignoring pie in the sky potential estimates from minnows and going more on revenue for production.

[badabing] 01/12/2006 16:27

scsw...and that's been the overall thing holding these back and why the share price has see-sawed up to to 50p to 7p to 30p to 10p........the company seems to have lots of potential but the reality has never quite meets the expectations...then of course there was the killer report some time ago where the company finally admitted that estimates used in the floatation were based on a report produced during Communist control era decades ago and that they were way off the mark in reality......teh company now has a reputation it really doesn't want....promising much more than it actually delivers.....

[scsw] 01/12/2006 16:21

Bada

Thanks for the figures. So the last set of results would have taken into account a period where they were only producing about 9k in Q1 2006, so already there should be an additional $400k extra revenue in H2 if they only kept going at 19k per quarter, as they were doing at Q2 2006.

Reading back about the wells being taken offline for workovers is interesting ans I can see that you wonder about their reliability. I see that there was a slight decline in production in Q3...what will it be in Q4 ? Also in the news from 24/10/2006 there is mention of sales to different places, so perhaps stefield is right that not all is sent to export and therefore some is at a lower price ?

Interesting .....it seems to me that there is potential for increased production (103 producing at 120 bopd on test...but later, off for a workover) but at the same time if the wells have to be dropped out frequently for workovers, maybe no dramatic increase ?

[badabing] 01/12/2006 15:28

.....the cost of transporting the oil is around $20 per barrel (i.e @30%).....incomes after transportation costs = $40 per barrel or $3m p.a on 200 barrels a day, every day.......but what we don't know is how reliable 200 bopd is and what other costs truely will be....and obviously neither does the market or these wouldn't be trading at 10p as producer of oil.......

CSH announcement from January 2006

The commencement of exports will lead to a significant increase in the gross and net well head price received by the company for its oil. At current oil prices, the sale price should increase from approximately USD20/barrel for current sales at the wellhead to approximately USD60/barrel at the export point. Taking account estimated transport costs the net wellhead price should increase from USD20/barrel to over USD40/barrel.

[scsw] 01/12/2006 15:00

Looking at the previous news, they produced nearly 19k barrels in Q2 2006. With no increase at all on that (which seems very unlikely with more wells being sunk), that would give revenue of $4.25 million annually.

Now you say 'plus a lot of admin costs', they would really need some plush offices to rack up that sort of overhead annually? Once each well becomes profitable, its cost is virtually zero unless it needs remedial action.

Why do you think that not all oil is sold to export/ Their tanks have the capacity to hold all of their production I believe.

[badabing] 01/12/2006 14:55

Stefield,

I think this is one of circular arguments that could run and run until CSH release their next news update on production levels and of course how much they are making/(losing) now.....scsm has his firm views that CSH is a money making machine that on his etsimates inder valued by around a factor at least 7x and possibly alot more.....we on the other hand take the view that CSH's production is not as reliable as it needs to be, that the wells cost a lot to maintain production and that the retained profits on oil sales/costs would not be 75%......should interesting to see if this recent small bounce in the share price can be sustained.......

[stefield] 01/12/2006 14:50

the wells are averaging about 30bpd, but even then, they cant sustain it and have to keep doing workovers.
not all the oil is exported, plus a lot of admin costs.
at 1.5km, the field is tiny ! they cant drill many more wells !

[scsw] 01/12/2006 14:45

stefield

Why do you think that ? I would need to trawl back through this thread but like I said before, their costs here are very low indeed. I think about $250K per well and they are able to sell at international rates now that they have their storage tanks in operation and are exporters. When they first started they only got a tiny revenue from selling to local markets.

I cannot produce figures at the moment but I see that there is a gulf between what you and I think which might explain the sentiment difference. Why do you think that have ongoing yearly costs of more than $3.3 million ???

By my reckoning (on rough figures I seem to remember from months back), each well will be profitable after only 6 months or so. Once they are, where is the substantial ongoing cost you are assuming ?

We'll know for sure at the next set of results though.

Again, only my opinion

[stefield] 01/12/2006 14:44

the interims showed an average of about 150bpd
and anoperating LOSS of about 500k !

[badabing] 01/12/2006 14:38

Hard to see how 200 BOPD at $56 = @$4m p.a can = profits of $3.3m......

[stefield] 01/12/2006 14:35

SCSW
can you show some detailed calculations ? i think you are way off and i doubt they even break even at 200bpd

[scsw] 01/12/2006 14:31

I don't get that Bada....

Market cap is £8 million now. At 200 barrels per day my guess is about $3.3 million profit per year (only allowing 11 months production). So it will have a PE of less than 3 ???? What do you think most junior oilers (those that actually produce anything at all) trade on ?

At 300 bopd they will trade (IMO) on a PE od less than 2. What do you want from a 'risky' AIM minnow ?

What if they managed over time to creep over 400 bopd...a PE of less than 1, do you think if that were the production, the share price would be less than 10p per share ?

edit:

apologies, I have used profit in $'s against the market cap in £'s so not quite right on the potential PE figures but still extremely low.

Only my opinion

[stefield] 01/12/2006 14:26

what are the current reserves ?
we dont know cos they aren t telling us !
WHY ???

[badabing] 01/12/2006 13:53

I look at the market cap and cannot relate that to the current or potential production here.......

[scsw] 01/12/2006 13:40

Bada

with oil at $60 plus dollars a barrel, I am quite confident that even the relatively small amount that they do produce is meaningful. What are you comparing them to ? They are onshore, cheap, shallow wells that produce almost 100% strike rate. What other minnow oiler do you know that can claim that ?

Everybody knows they only produce small amounts but that's all there is down there and this is clearly not what what they were advised when they bought rights to the acreage. It's all about profit per barrel and it seems to me that they have a very good margin here.

Simple question, do you think they will reports decent profits at the next set of results?

I do think they are quite profitable and the cheaper these get the better the reward on this apparently low risk company.

Only my opinion

[btut] 01/12/2006 13:35

I see the drilling report has been updated..

[ariesr] 01/12/2006 12:38

Think I'll wait longer ;-)

Off to bed.

[nilli] 01/12/2006 12:02

My broker suggested to me that he was encouraged that the news flow would be positive and therefore I have decided to add to my holdings

[badabing] 01/12/2006 11:59

Nilli,

The newsflow is not a problem here really...the problem is that the company can't produce a meaningful amount of the black stuff....they can drill away til cows come home but until they can deliver a decent volume the price is stuck......