Sefton Resources Share Discussion Threads

[yas0] 08/2/2008 13:16

Dear NewReaders,

As the number of wells increases, it becomes more of a self financing operation, with less need to resort to debt.

I would like to see a jv on cbm, but the ser board are not that efficient. Hence let them do one job at a time.

Here is what I am hoping for by the end of the first quarter:

a) 4 wells drilled with indications of stabilised flow rates
b) A schedule of planned activity for quarter 2.
c) Any update on the pilot test would be useful.

CBM and Eureka can be put on the back burner for now, since we are dealing with the board of Sefton.

[yas0] 08/2/2008 13:12

Rel,

RE 12668 -

The first two lines are right.

Do not focus on delays in steaming as long as wells are being drilled. If wells were oin hold, and steaming was delayed, it would be time to run for the hills.

That is not the case. I think readers can safely ignore morris.

[deanroberthunt] 08/2/2008 13:11

We can only confirm that with hindsight....

[relishing] 08/2/2008 13:09

dean,

Yes, but mine is correct :)

[yas0] 08/2/2008 13:08

Matador writes: ''any finance agreement would be based on their ability to repay it'', which means generating sufficient cashflow.

For the first time, Sefton, with a plan to drill up to 4 wells in the 1st quarter, are showing clear signs they are committed to so doing.

Now is not the time to be bearish - oil tiddlers run up prior to any drilling.

[deanroberthunt] 08/2/2008 13:08

Blimey, its...dare I say it, almost turning into a proper thread.

[california joe] 08/2/2008 13:07

Another point being that they will need a range of wells to be able to keep the steamer going and production maintained.

Based on 5 wells, if they steamed one, then left it to settle and started steaming the next, they would in effect have two wells down.

They can, with an increased number of wells, keep that steamer going and remain consistent with their production as they move it around!

[relishing] 08/2/2008 13:05

The simple fact is that drilling increases cashflow much more quickly in the short term than steaming. Steaming will give great benefits for longer term production rates and reserves, but in the shorter term it is of little material benefit in terms of cashflow. Which is why the short-term timing of the steaming is of little importance compared to the fact they are getting more wells drilled.

[california joe] 08/2/2008 13:01

My opinion is that any finance agreement would be based on their ability to repay it, plain and simple.

As this agreement was guaranteed against the assets, I believe the drilling has to be, and was in the view of the board, priority as the steaming would not do this in the early stages.

Whilst the reserve estimate rising will do wonders for the shareprice/investors, this would not help with repaying any drawdown.

As per the RNS, cash flow is positive, this is what the bank will want to see, just the same as any bank who are lending money.

If they drew down 1.5 million and were still faffing about with the steamer, this would not impress the bank and thus restrict funds.

If I was their bank manager, I would prefer to be saying "great news on the drilling Jim, nice to see the cash rolling in" than "Blimey Jim, you've drawn down a wedge of cash, hows the steam problems coming along? Have you booked the rig yet? You need more money? HOW MUCH? What, with your income?????"

[relishing] 08/2/2008 13:00

Well for once I agree with yas on this one (no, not the deramping bit).

"Morris is simply speculating when he states that further drawdowns are subject to enhancement of production from steaming specifically. He has no evidence for this, since in my view there is no such proviso. More likely it is the case that it is directly correlated to actual improvements in production, irrespective of how they arrive at it. You see, what the bank is interested in, is not technicalities of steaming, or the number of wells drilled etc. They are interested in cash flow -period.

Now, it is my view that new wells shall generate increased production, and hence cashflow. That is exactly what Sefton stated in their rns, so your misguided speculation is just that."

Furthermore, MT's conspiracy theory rests on the fact that they have 'changed direction' in stating they will use revenues as well as drawdowns to fund capex. But this has always been the intention, so there is no 'change in direction'.

[murrayteller] 08/2/2008 12:59

Yas0, now that you have predictably gone long, would you care to declare what kind of a stake you have in SER? Oh and thanks for keeping the price subdued for so long and enabling me to buy cheap. You are indeed the most gracious of all fellows

[mickey take] 08/2/2008 12:53

I don't deramp I state my honest opinion – can you claim to say the same?

[yas0] 08/2/2008 12:49

Morris is simply speculating when he states that further drawdowns are subject to enhancement of production from steaming specifically. He has no evidence for this, since in my view there is no such proviso. More likely it is the case that it is directly correlated to actual improvements in production, irrespective of how they arrive at it. You see, what the bank is interested in, is not technicalities of steaming, or the number of wells drilled etc. They are interested in cash flow -period.

Now, it is my view that new wells shall generate increased production, and hence cashflow. That is exactly what Sefton stated in their rns,hence my recent bullishness so your misguided speculation is just that.

I suggest readers leave it to me to address this fools deramping.

[deanroberthunt] 08/2/2008 12:42

Its a case of the bank saying "Show me the money"....still speculation, but plausible....time will tell.

[mickey take] 08/2/2008 12:39

Dean - Yep

[mickey take] 08/2/2008 12:39

Dean – I accept that, but what I don't like and wont tolerate is spin either one way or the other.

And I think that's what the company are doing in order to cover up their mistakes

[deanroberthunt] 08/2/2008 12:38

Mickey...I think I'm getting what your alluding to now.....your point is that the bank won't agree to further drawdowns because steaming (up till now) has been erroneous...thus they will need to fund certain activities (maybe) from cashflow in the short-term until they can instill confidence and/or prove up another 3-4 wells (hence the focus/fastracking on drilling)....so, operating costs will increase reducing profits..

thats your general jist.

[mickey take] 08/2/2008 12:35

Rel – They would have put a business case to the bank that would have included the early use of steaming imo – This is why they were granted such good terms

They would have cited the case and results from the other operator as an example of potential output.

The thing to remember and I am sure the bank will.. is they have not demonstrated their ability at project management of such ventures to the bank. this is not good

[deanroberthunt] 08/2/2008 12:33

Mickey.....lol, being in the process engineering industry you should be fully aware that every single project in the history of the universe never finishes on schedule or budget....the reason being is that initial plans are based on 100% success and the human trait for being over optimistic, and/or constrained by external limits.

[relishing] 08/2/2008 12:26

MT,

The balanced use of both drawdown and revenues to fund capital expenditure was mentioned in the Hardman report in early November, and indeed the first report.

So it is not a change in direction, as you put it, but has always been the intention.

[california joe] 08/2/2008 12:24

Looking forward to an imminent RNS then Mickey, stating permit signed off, steam test commenced!