Tethys Share Discussion Threads

[temporarily insane] 27/9/2016 11:19

And the court case outcome is.......................????

No doubt it will be another week just so Olisol can just drag things on a little more!

[hguess16] 26/9/2016 23:19

If Olisol is short of funds, could Pope step in and remove the uncertainty at TPL?.

While I accept that Pope have already been heavily invested in TPl, they now have a
local/influential partner in Olisol, who seem to be struggling to produce the cash,
perhaps because he has to cope with the funding of his his own transportation/refining empire.

Pope Asset Mgt have nearly $500m of assets under management and its largest client portfolio is $50m. I am assuming that TPL is not its largest holding.

Pope also has a set-up in China - Halter/Pope USX China Fund. Very interesting !!.

Pope could take up a majority stake in TPL at 5.4 C cents per share and become the senior partner in the deal. This would enable TPL to fund the drilling of the shallow wells into 2018 and ensure stability.
Wells would then be able to influence the new CEO appointment and take a more effective corporate governance role instead of the previous seemingly
semi-detached relationship of the past, when Robson and Hammond were running the ship that nearly SANK and which is currently showing a significant loss to Pope's original investment.

[hguess16] 24/9/2016 21:18

My view is that Olisol, as the "major" shareholder, has got to come up with the cash. They have been slow in doing so. That has created uncertainty. They started off by stating a $50m facility to finance the deal and then, lo and behold !, decided to fund the financing with a $10m o/d facility and $9.8 cash for the 181.2m shares, which still needs C$2.3m to conclude the deal. So the original deal has been revised down. While I accept that Olisol and Abramov have local connections in the region, which is essential in the KAZ regulatory environment, Abramov is faced with the responsibility of managing his own empire and TPL now. Can he do it?.
Pope and Wells have a responsibility to ensure that Olisol is able to deliver and so far, it seems that they have had to drag them along,cajoling, agreeing to revise the deal, in order to keep the TPL ship afloat !. Not a good start !.
I would forget about farm outs for the time being and focus on management using TPL's existing resources more effectively. Note that Kenneth May is a former sales director from Olisol and is an interim CEO. Oliosl/TPL need to appoint an effective and proven CEO to run the business more efficiently.
The key is to instill confidence and that comes from more effective management of TPL resources.
In my view, farm outs, should be considered from a position of strength, not weakness !.

[casual47] 24/9/2016 15:14

A thought. TPL's various assets are owned by different subsidiaries. Could a way forward be for TPL to find a JV/farm-out partner who e.g. will take up 50% of the Kaz gas assets only? I believe the subsidiary that holds those is Tethys Aral Gas LLP?

This would leave TPLs oil assets 100% theirs and allow for equity to be raised specifically for the gas drilling programmes. It will also limit the exposure of the JV partner to just the liabilities of the gas subsidiary.

[dorset64] 24/9/2016 08:46

Some good posts guys.

Thankfully we can now forget about Robson & his extravagances and more have a partner wishing to drill & thus, convert the Capex into profits going forward.

I will say guess that I think you are wrong regarding the remaining 25% holders wanting to burn TPL to the ground as that in turn would make absolutely no sense.

IMO Olisol will, once they've sorted their funds out, cough up the remaining monies and in turn complete on the deal. Olisol will not walk away from this as they, like TPL have everything to lose. If TPL fold then all of their monies to date goes with it, hey lose a partner as well as a business by where they have their hands not only on the oil & gas fields, but the equipment to drill it, the railway & transport system to ship it, the terminals to transfer it, access to increased prices to China and the pipelines to ship it there, not forgetting the contracts TPL already have.

If not for the money side of things TPL are in a very strong position with the 'business model' and why I'm still invested with a seven figure holding so, and again imo, once the financials are sorted and they turn positive cashflow in 2017, this company once again has the makings of a great investment. Obviously and up until the loans & future cashflow have been sorted, everything remains up in the air which in turn is why the share price is where it is today, and not back to the 40-50p region it could be within 12-18 months.

[seroserio] 24/9/2016 08:38

So, that's a seemingly well informed discussion gentlemen -thank you- but quite frankly, I'm none the wiser (and this sort of conjecture has been going on for years here). End of Sept maybe...limp along til 2018... debts.... nobody interested.... 25% unknown forces....How can anyone make an informed judgement.

Those hardy souls locked in just hang in there I suppose. Any new punters, it's a pure speculative pin money gamble.

[hguess16] 24/9/2016 08:12

Interesting analysis, Thanks.
I am aware that Abramov is not "THE", but I am hoping that the smaller Abramov might do a deal with the Assaubayev family of KAZ who have a hold of AGR Energy which lent $7.5m to TPL.
I doubt if SinoHan will come back to do a deal with TPL. You may be aware that SinoHan signed a deal to buy 50% of TPL's KAZ assets for $75m + bonuses in 2013, which was then unwound by TPL following the Macqaurie feasibility study, influenced by Pope. While the $75m figure was perhaps based on a $100pb oil price, even at the current $45pb level, the 100% valuation of those KAZ assets could be worth at least about $70m. Still I doubt if either SinoHan or CNPC would be interested in joining forces with TPL.
It would be up to Olisol/TPL to reorganise the distribution network to enable exports to China.
The further funding from outside sources, I hope, will come from confidence based on more efficient operations, resulting in higher output of gas and oil, a lower cost base and a clearly defined strategy to drill cost effective shallow wells.
Looking at Dr Robson's optimistic visionary summary of operations in 2013, the focus was clearly on expansion plans in KAZ, Taj, and Georgia. No mention of returns to shareholders even in the medium term. I hope the new Olisol/TPL team takes note and not fail the long suffering shareholders !!.

[casual47] 23/9/2016 22:41

Even with $2.5 million cost savings TPL will still be several millions in the red. TPL is not making a profit out of their gas/oil production at the moment. Just general G&A will still be at least 6 million USD after cost cutting.

Note that Olisol's Abramov is not THE Abramov. Olisol's Abramov will have no/little influence on AGR.

I think Pope refused the NOG offer because it was way too risky and provided no upside as it was an all-share offer. NOG wanted the emergency loan they'd give TPL secured against all TPL's assets and had huge hoops for TPL to jump through to complete the deal.

Olisol and Pope already have skin in the game. They are exposed by well over 30 million USD and stand to lose everything if TPL goes down.

The only sensible way forward for 2017, imo, is for TPL to find additional funding in the order of ~40 million USD and upwards -- and that is just for starters. In other words, a JV for e.g. 50% of the Kaz assets.

They can probably limp along into 2018 with smaller funding "top-ups", a bit like they have done since 2015, but it will be highly dilutive and won't help anybody.

[hguess16] 23/9/2016 22:31

Thanks,
My optimistic view is that with the new CEO, May in place, TPL cash flow from the integrated operations with Olisol should be more positive due to planned cost cuts ( US$2m), revenue to increase due to higher prices for gas and oil!.
I also think Pope might convince ALR to postpone its call until the market price picks up and then convert later on.
Remember that Pope wanted skin in the TPL game, hence the refusal to agree to the NOG deal.
It is also possible that Abramov may persuade AGR to hold off and wait to convert later on when the market price reflects TPL's future potential.
Note that AGR also wanted to acquire TPL, but they decided to reduce their offer,
following "due diligence". So they might decide to convert later if TPl recovers !.

The 25% shares held by hedge funds/ shorts/ doubters figure is based on the following:

Assuming Olisol takes 43%, Pope 12-15%, and the remaining institutional shareholders an estimated 8-10% of the enlarged diluted TPL shares of nearly 600m shares, what's left is about 25% for PI's which might incl some unknown big players with their own agendas !!.

[casual47] 23/9/2016 21:15

They will only have about $6 million in cash and that will need to be used to pay down debt/interest and to keep the business running for at least half a year or so until they can get more funding.

TPL's monthly expenditure is around half a million USD so only around $4 million of the actual cash resulting from the 1st placing will be left as a great deal of the Olisol loan has already been used up as working capital in the last 4 months, so when Olisol completes the placing quite a bit of those placing shares will be for money that TPL has already spent. The second placing will/should get them another US$2 million.

There won't be scope for restarting a drilling programme with just the placing funds as far as I can see (neither for the $7 million capex one or the $15 million capex one mentioned by Ken in the IG interview).

They have of course a $10 million Kaz bank loan facility of which only $1 million is used up but I don't think it makes sense to fully draw that for capex when they have around $30 million debt outstanding. IMO, this could be used to pay off the AGR loan and further working capital.

Only the Olisol working captial loan is convertable at 0.054 CAD. The AGR loan will not be converted as the conversion price is 10 US dollar cent, so 5 times higher than the current share price and nearly 3 times higher than what Olisol will convert their loan at. Same with the Pope/ALR loan and warrants, most of that converts at 19 CAD cents and I think the rest has 10 US cents conversion price. For sure Pope will be happy to postpone the maturation date if needed so that is not an issue.

The most pressing issue is the Cayman's loan as that one matures in March 2016 and is secured against TPL's gas assets in Kaz. The contract allows for specified down payments and has a phrase about the lender and borrower getting together in good spirits to then potentially discuss moving the maturity date to March 2018.

I think this is the primary objective of Olisol: Get Tethys out of A&E, reduce the debt mountain / push back loan maturity dates and then this will make TPL a much more attractive partner for e.g. a SinoHan to JV with and work on gassing all the way to China.

Not quite following/understanding you on the 25% story.

TPL's debts are:
$8.1m Caymans (6 + 2.1 warrants they surrendered), secured against Kaz gas assets
$1.7m Pope/ALR convertible debentures, unsecured, converts @0.10 USD
$3.5m Pope/ALR convertible loan, unsecured, converts @0.19 CAD
$4.5m rig loans, secured against the rigs and equipment
$5.7 Olisol working capital -- will be converted, unsecured
$7.5m AGR convertible loan, unsecured, converts @0.10 USD
$2.8m Kaz loan - I think this is with a company owned by new TPL director Skripka, who is also a director of Olisol, secured against certain property asssets
$1m Kaz bank loan, unsecured

Total (according to last known data): $34.8 million

So when placing occurs this will be: $29.1 million

[hguess16] 23/9/2016 20:24

Casual47,
I think that the funds provided to TPL are :
US$m
Cayman Is 8.1 Loan
ALR 3.5 linked to Pope and convertible
AGR 7.5 Convertible Debenture linked to Assabayev family in KAZ
Olisol 6.3 Converted to TPL shares
Olisol 7.4 to be converted to TPL shares
Bank O/D 1.0

Total 33.8
Based on the new CEO statement on planned cost reductions and the fact that most of the funds could be converted to TPL equity, the debt burden would be reduced and the additional cost of drilling the shallow wells could be started once the Olisol deal is concluded.
The concern is that the current low share price which is well below the 3p level agreed by Olisol is being influenced by those who hold over 25% of the shares, who in my view are hoping that TPL might collapse based on their past false promises and failures. Perhaps the short sellers and doubters who hold the 25% are also waiting for the Oct 28 deadline to be further extended due to possible mis-steps by Olisol in the volatile KAZ environment !.
Let's hope they are wrong !.

[temporarily insane] 23/9/2016 20:16

It would be interesting to know who is/was trying their luck.


The new BOD could at least RNS the outcome if its positive and name names.

[casual47] 23/9/2016 17:59

The appeal is Tuesday. I think. But in my mind it's so immaterial that I forgot about it.

[casual47] 23/9/2016 17:53

Must have been someone else. Before they announced the appeal date I assumed the appeal would be quick seeing as assets were frozen so they couldn't hang about with that.

Otherwise, I have no idea when something is going to happen. The outside date is something like 27 October but that can easily be postponed if they both agree.

The first priority is to at least partially pay off the Caymans loan. They can do that any time I suppose but in the contract it was tied to when the placing would happen: first tranche 8% of total placing value shortly after placing, a second and third 8% tranche after 30/60(?) days and after that they can renegotiate postponing maturity to 2018.

The Olisol funds won't pay for drilling as far as I can see so that's not a factor.

[seroserio] 23/9/2016 17:41

casual
Did you say it was end of sept before anything else likely to happen?

[temporarily insane] 23/9/2016 15:15

Pretty much valued on thin air!

[casual47] 23/9/2016 12:22

Oil should sort itself soon, but even at current prices there is scope for us to make a profit as long as we get better prices at the well. Hopefully Olisol can do that for us. As Olisol is our only oil customer and the oil gets shipped out via TPL and Olisol's joint ownership Oil Terminal and then onto Olisol's trucks you'd think there is quite a bit of potential on the upside there.

That said, I think TPL is currently effectively valued solely on its gas assets as the oil side of the business is seen as a liability? So once the oil comes back into play we might see a rerate?

[temporarily insane] 23/9/2016 11:30

Well I make that week 49 of sod all.

[temporarily insane] 22/9/2016 16:41

I make that no trades over on the manipulated exchange. No surprises there then now Olisol have had their fill of manipulated cheap shares.