Sirius Petroleum Share Discussion Threads

[htrocka2] 08/1/2018 11:34

From the AD

8. Current trading and prospects for the Group Assuming that the Proposals are approved at the General Meeting and completion of the Placing is by no later than mid December 2017, the Directors expect to immediately instruct the commencement of technical services , with rig mobilisation expected approximately within one month from Admission and the start of the drilling of the well expected within approximately two months from Admission. Assuming that the results of the drilling programme are as expected, then the Directors anticipate production commencing in March 2018, with cash flows from production anticipated to be realised by the Company shortly thereafter


I expect the rig mobilisation confirmation to reverse the decline in the share price

March 18th is NOT the drill date...but the date of anticipated production with cash flows there after.......they expect to start drilling by the end of February.(within approximately two months from Admission as stated in the above AD extract))...we may get rig mobilisation news next week.

[openfield68] 08/1/2018 11:25

Great post Sherlock that all hinges on the 'if we can deliver' in the final paragraph.

[aventador] 08/1/2018 11:10

Be a relief to see this downtrend reverse that's for sure seemingly the bottom hasn't been hit yet.

[drrichard] 08/1/2018 10:22

Realinvesor, you are correct re Sherlock's excellent summary of where we are and where we might be.
In your first paragraph you ponder asset revelation might be contingent upon Ororo drilling? I think that you are correct. Given the history of Nigerian OPLs acquisitions being left upon the shelf, rather than being developed, it would seem reasonable for any entrant into the new bidding round, or indeed being given clearance to declare other assets, might be contingent upon Ororo drilling.
Ororo is the key to the cupboard IMHO.

[wiserthanyou] 08/1/2018 10:15

Carry on ramping gazzillionairres @)

[dr rosso] 07/1/2018 17:20

Long run of continuous work, on multiple assets. Those who have piled in on the bonanza 1p placing will be in little doubt as to how things are going to be progressed. Meanwhile the market is kept in a state of uncertainty.

[aventador] 07/1/2018 15:43

Ororo is just the starter, the pipeline of assets is what will be transformational here and where we will surely see further value might be longer down the line but will be worth the wait.I haven't invested to see 2.3p cash back I'm here for more like 23p and seeing multiple assets producing.

[htrocka2] 07/1/2018 15:19

With ref to the above, with five major global contractors in tow I can only conclude that they would not have signed up unless they were guaranteed a long run of continuos work...that may require additional unforeseen funding, hence the inclusion as a precaution against unexpected costs and or oil price fluctuations.

[sherl0ck] 07/1/2018 14:03

Theoretically there’s nothing to say we can’t announce another asset at any time prior to Ororo drilling. Note that the $12m LOG convertible loan has been available since early November and intriguingly a drawdown notice can be actioned against “the Company’s future oil revenue receipts from the Ororo Field OR OTHER ASSETS, as will be acceptable to LOG” (AD p.183).

If the loan is really only earmarked against getting to first oil on Ororo in the short term, why has this additional flexibility been agreed?

[htrocka2] 07/1/2018 12:59

A couple of years ago Bobo did mention that when they were up and running, eventually, RBL would be the way forward so that the projects would become self funded.

[astralvision] 07/1/2018 12:37

Excellent post Sherl0ck, you have summed up the current situation very well.

[sherl0ck] 07/1/2018 12:25

Our recent investor presentation was titled ‘Unlocking Proven Opportunities through INNOVATIVE DEVELOPMENT FINANCE’ and at GM it was mentioned that the Ororo financing model could potentially be replicated.

At our disposal we have:
1) strategic partners signed up to fixed price, deferred invoicing terms
2) equity capital
3) LOG convertible loan (only 15% of which is actually convertible to shares)
4) future cash flow from production sales / a revolving $10m facility via the BP prepayment & offtake (note the focus on extended well tests to effectively deliver early production benefits)
5) REYL, the Swiss private bank (UK arm is also based in Berkeley Square) who will structure a $100m Contingent Liquidity Facility (CLF), which is secured against the BP deal and which we’re told would be used for full field development.

With regards to Ororo it appears the onus is on Sirius to fund O-2 via equity & LOG CL and then BP & REYL can kick in thereafter. It’s not clear whether the LOG CL is purely a one-off or not, but regardless, for future assets one assumes that if we ourselves need to similarly fund the first drill to get oil flowing again (seems fair to me as it balances financier’s risks), we’ll be able to issue any needed equity at higher, less dilutive prices, or more ideally, rely on our own cash flow/BP prepayment.

It would be intriguing to imagine that the CLF could be replicated and ring-fenced for each additional asset, either via REYL as key advisor in structuring these for us with their affiliates, or with their consent, possibly even a multiplicity of financiers (“the Company will require further funds and is in discussions with VARIOUS FINANCE PARTNERS” - AD p19).

As per typical project financing we’ll be establishing a SPV (special purpose vehicle) for Ororo within which the CLF sits, meaning that we don’t carry the debt on the general Company balance sheet and lenders only have recourse to a specific project asset.

The CLF is only drawn as & when required and one imagines that over time we could rely more and more on our own cash flow resources to fund field development across the portfolio. One of Mark Henderson’s critical jobs will be judging and maximising the most efficient deployment of various forms of financing.

I find it exciting that not only do we have the potential to rapidly expand in terms of acquiring other assets (“The Board will seek to farm into or acquire high quality assets.....in active discussions to farm into A NUMBER of near term production opportunities” - AD p.14-15), but critically we appear to have been very smart in already lining up the requisite financing to meaningfully develop them. There’s no point in farming into/acquiring assets that just sit idle.

So in 2018 we should begin to see 1) a growing portfolio of near term production assets 2) the benefits of world-class technical/operational partners that can accelerate asset exploitation 3) funding aligned with each asset SPV, which enables full field development.

The combination of 1, 2 & 3 is exactly how a currently tiny O&G company will undoubtedly become a very large entity, fully “leveraging on the commercial arrangements with its partners” (AD p.15).

No wonder one of the risks highlighted in the AD is growth (“The Directors intend that the Group will experience significant growth following its transition to an operating company and commencement of commercial oil and gas production. Management of that growth..... the Group’s expected growth..... such rapid growth...” - AD p.43).

For a variety of reasons it’s admittedly taken a long time (and more recently favourable market conditions) to finally construct the “optimum financing and long term strategy for developing those assets” (29/6/17) but we now appear to be primed & ready to execute on our strategy of unlocking proven Nigerian assets.

Naturally the current share price only factors in pre-drill Ororo and since I’d wager that even relatively few long term holders have really studied the AD in detail, you can bet that the wider market is either still blissfully unaware or sceptical of our true expansion potential. With the building blocks in place, if we can deliver on our possibilities this year, Bobo will be worth every single one of his 180m options.

[dr rosso] 06/1/2018 22:51

The 2.3p that Cantor continues to push? With 3.5bn shares, that makes for a £80m mcap having drilled O2 by April. That sounds about right for Phase 1 initial production + test data on D-H sands. The starter platform for more serious growth and revelation of this fabled pipeline of assets.

[drrichard] 06/1/2018 19:36

And, Vatna, between rig mobilisation and arrival we will have news of the various support activities and subsurface plant necessary for rig arrival and spudding

[astralvision] 06/1/2018 19:13

don't forget to add further assets to that list!

[vatnabrekk] 06/1/2018 18:49

Although I am quite sure that confirmation of the rig mobilisation will have a positive impact on the SP, I'm not convinced that the movement will be massive at this stage because I suspect that most people now accept that this is going to happen. However, my opinion, for what it's worth, is that the share price will rise at various stages over the next six months or so as SRSP announces meeting each its targets:

- mobilisation of rig (before end of January)
- arrival of rig on location (End Feb - early March)
- spud (during March)
- first oil (April?)
- confirmation of flow rate (April?)
- delivery of first load (?)

But at the moment I'm not going to try to guess the level of the share price by that time!

[1sonic] 06/1/2018 18:49

Shame they didn’t stick to H1 last year. All would be very good now.

I do think though this is our year.

Rig news will come soon.

[deadly nightshade] 06/1/2018 17:38

The main issue here at the moment concerns rig news and hoping that it is forth coming by the end of january. If share price was 1.5p today we would still need that rig news to drop. If rig news drops 0.85 will be a distant memory

[dr rosso] 06/1/2018 14:26

Midcase Sirius net present valuation of Ororo leaps from $57m (based on poo $50pb) to $122m (based on $75pb).

[htrocka2] 06/1/2018 10:49

'Why would BP secure a loan for a company like sirius????'

A loan AFTER SRSP is pumping oil out of the ground...hardly 'the deal of the century'...especially as our COO (also the ADD Energy COO) together with the Managing Director of Owena Oil and Gas(our partner) have both been involved with BP in a previous life. So BP are no strangers to them.