Zephyr Energy Share Discussion Threads

[molatovkid] 13/10/2024 12:40

If it was a bad deal then I don't see Zephyr borrowing the full $7m. They are going to have a good chunk of cash themselves (once the well control insurance monies are received) that could have co-financed it.

[cat33] 13/10/2024 12:12

Nice Sunday Zephyr write up from Jim https://oilman.beehiiv.com/p/oilman-jim-s-letter-october-13-2024Worth reading

[tag57] 13/10/2024 08:59

Loglorry, if the returns on the 36 well are based on cost recovery then I would have thought Zephyr would get the original cost of the drill recovered first before paying anything to the farm in partner. There are plenty of scenarios on how the split will be managed so it is all theoretical until we see the details.

[loglorry1] 13/10/2024 07:40

Not at all Assagai - in fact if the deal really is just straight 50/50 without any subordination of potential cashflows I promise to concede that ZPHR might have something in the Paradox.

Sadly, I don't expect CH to be clear on the potential deal structure which so far is at the LoI stage.

[jaknife] 13/10/2024 00:31

And also this is a poor proposition from a dilution perspective. In this instance shareholders are diluted directly at the asset level and subordinated in their claim on both future and current cash flows.

It's a perfect example of how debt can also be dilutive as well as a share issuance, which is how shareholders typically think of "dilution".

[obmuj] 12/10/2024 22:13

With thanks to investing.com Francesco Casarella.

Some thoughts for the weekend.

“In the investment world, a popular saying goes,
"Bearish people look smarter, but bullish people make money."
Despite this evidence, many investors unwittingly sabotage their portfolios by heeding the doom prophets who, year after year, forecast impending catastrophes.

While these naysayers occasionally hit the mark, their success rate is akin to a broken clock. I.e correct only twice a day.
Yes, challenging periods will arise and corrections are inevitable.

However, if you fail to harness the market’s natural ebb and flow, you’ll continue to fall prey to fear. Embrace the journey, and let time work in your favour.”

Well, many of us have certainly waited a long time but a few more months and we shall see if the ZPHR bulls were right.

[assagai] 12/10/2024 21:47

Hope you don't mind loglorry but i have screenshot copied your above to CH. I'll let you know his thoughts.

[loglorry1] 12/10/2024 21:11

I think with 99% certainty that the farm-in party has a 100% cost recovery (or more) before Zephyr gets any share of revenue. I also think this applies to the recovery on production from the original well (this is very important), from where they will side-track the lateral section. In the RNS they talk about that the upcoming program also includes work-over of the existing well which support this (“including the workover preparations on the existing well). If the investor has recovery on investment from the existing well it makes this a very different proposition. Based on what production test result they have reported so far and the comment in the last RNS that the lateral well has the potential of 2mmboe total recovery “substantially higher than recoveries that could be achieved from producing from the well in its current form”. I think a fair guestimate is that the current well expected recovery at this time is probably around 0.2-0.4mm boe. The blended realized price for this production is around $40/boe, so if we assume that Zephyr and its new partner thinks that the current well can recover 0.3 (0.2-0.4) mmboe. The current well should be able to produce $12m of gross revenue. If the investor has full cost recovery from this pool, the new investor in the well is not taking much risk at all. If lateral well fails, they can still produce the vertical.

This doesn't make the vertical a commercial success or justify further explo on the Paradox but it does derisk a partner spending $7m.

[jaknife] 12/10/2024 17:32

Assagai,

"My research was up close and personal.
My post of Sep 11th was correct then and is now. If you can't see the nuance that's your shortcoming."

I note your abject failure to show that 1 + 3 is greater than 7. I am not surprised.

JakNife

[assagai] 12/10/2024 17:00

Last post to you Jaknife.

My research was up close and personal.
My post of Sep 11th was correct then and is now. If you can't see the nuance that's your shortcoming.

If you remain short you will lose money.

[jaknife] 12/10/2024 15:30

Assagai,

"I'm sure he believed he was right but similarly several folk who have chosen to invest in the £x00,000s actually do proper research."

Could you do some "proper research" for 2 Solaris and show him that Zephyr doesn't have the necessary $7m to drill the mile long lateral that they've now determined that they need?

And what proper research did you do before you told the world that

=====================================
Assagai, 11 Sep '24 - 17:17 - 12,966

They are fully funded for the lateral. Fact

Wow the whole team has come out to bat 🤣

=====================================

It's almost as if there's a whole classroom full of children learning oil & gas investing for the first time. Look at the numbers! Zephyr doesn't generate positive cash flow! The only reason that it's debt has reduced is because of a debt for equity swap!

JakNife

[jaknife] 12/10/2024 15:26

2 Solaris,

"JakNife is desperate because he was the one who suggested there would be a placing and so Zephyr should be shorted down to 2p. He got it wrong but cannot accept that fact."

FWIW I had a target price of 2.5p, it was loglorry1 who was less generous and thought 2p was more likely. I still have an equity raise of some description factored in because the fundamental nature of Zephyr's business is that it doesn't generate any cash. And, as we all know: Cash is King.

"Added to that now we know the cost of the lateral we also know Zephyr could pay for it on their own. However, they are looking to accelerate bringing the Paradox project into fruition." [my bold]

Oh, apparently we don't all know!

Once again, here are Zephyr's interims:



"Cash and cash equivalents" as at 30 June 2024 was $1.1m, down from $3.6m at 31 Dec 2023, which in turn was down from $6.2m as at 30 June 2023.

And, whilst we expect some cash to be collected from insurance in the next few days/weeks/months, there is not enough to get Zephyr up to the cash balance of $7m that it has told the market the lateral will cost.

How can you get something as simple as the amount of cash available so wrong?

JakNife

[greengold58] 12/10/2024 12:12

Desperation has obviously set in. Maybe facing potential massive losses.

[assagai] 12/10/2024 12:09

2 Solaris,yes i know all about the team short/placing scenario,just being ironic really. The money is coming from a non opp funding operation rather than a producer so rather much as ZPHR at Williston.

A brilliant negotiation just to have limited it to 36-2r. There is much going on I perceive.

Jaknife's error was being too ballsy broadcasting his short. I'm sure he believed he was right but similarly several folk who have chosen to invest in the £x00,000s actually do proper research.

[2 solaris] 12/10/2024 11:28

Assagai. JakNife is desperate because he was the one who suggested there would be a placing and so Zephyr should be shorted down to 2p. He got it wrong but cannot accept that fact.
What is hard to understand is that he fails to note that an oil and gas producer has been through all the figures and wishes to invest in the lateral drill. Not only that, but other industry investors are likely to add their weight behind this project as well. If he, fenners and others think they know better than the oil and gas industry professionals so be it, time will tell, but I wouldn't bet on a handful of shorters knowing more than those in the know.
Added to that now we know the cost of the lateral we also know Zephyr could pay for it on their own. However, they are looking to accelerate bringing the Paradox project into fruition.
Oh, is anyone starving? What an idiotic thing to write! More clutching at straws.

[assagai] 12/10/2024 11:14

Just trying to save you some money laddie but have it your way.
We'll continue the discussion in 3 months. Oh, wait a minute! You won't be here.

[jaknife] 12/10/2024 10:30

molatovkid,

I note your inability to demonstrate ANY reasonable progress. Hence we will agree that Zephyr have made zero progress and indeed are going backwards in certain areas.

JakNife

[molatovkid] 12/10/2024 09:24

Well said Assagai....Jak under pressure it seems.

He misses out....

We've liased with Dominion, now have a pipeline to connect to....quite important I would venture
36-2R is a producer
We have finance for the lateral

Sounds like progress to me.

(To be honest, I knew using the world 'progress' would wind some people up. LOL! I never claimed it was fast progress and we have encountered some significant issues)

[saint in exile] 12/10/2024 08:10

Glad irony isn't lost on you Lauder.Itd been a tough week for the doomsters!7

[lauders] 12/10/2024 04:34

Do these people know anything about investing,?I mean do they have a track record?Are they perhaps more astute than the doomsayers on here.Are they investing if indeed they are 7 million without DD??

Well..... From the text below, taken from the last RNS, you would hope that they have the experience at least!

While there is no guarantee that this funding path will be successful, the Board is optimistic of closing on the LOI by progressing to full binding documentation, particularly as the wellbore investor has a long track record related to the successful closing of similar investments.



The big question is "just how successful have these "similar investments" been? You would think they haven't done too badly if they want more! Will be interesting to see if we get more detail on this eventually.

[saint in exile] 11/10/2024 21:40

Well if someone wants to throw away 7 million,if it's confirmed ofcourse that's alright by me.Its better than the placing the shorters predicted and hoped for.Apparentely its just an IOU and may never be honoured.How perplexing,I shan't sleep a wink until its signed,sealed and delivered!

[greengold58] 11/10/2024 21:24

Let the trend be your friend