Zoltav Resources Share Discussion Threads

[xenawarriorprincess] 26/5/2014 19:00

Yes I saw that figure also and thought it might be a typo.

They produced less than 300,000 barrels of oil last year.

The plant was second hand (bought from Chevron, I think), so maybe it was designed that way, and they couldn't alter that aspect of capacity without incurring further expenditure.

But 958Mb seems incredible, or a typo.

[t 34] 26/5/2014 18:44

Western Plant
If you think about full gas annual capacity then the numbers are so so,but this plant can work through 950 million barrel of oil per year and that is staggering amount.There must have been a reason to built plant with such huge oil capacity.In Soviet times all activity was set on oil but then the shift happened towards gas due to the rising gas prices and simply because these projects required less capital.Soviet era was about central planning which often was not very efficient and was directed from Moscow so maybe switch to oil was a blunder of Moscow officials and now we can see slow back to oil exploration because this plant has oil capacity of 950 mln barrel(unless it is printing mistake).

[xenawarriorprincess] 26/5/2014 18:22

The $1.876Bn is over the lifetime of the project - for the present estimated reserves (bearing in mind much of the fields have not been properly mapped) - the circular is quite clear. This is based on a gas price of $194 t/m3, and an oil price of $106/b

I also think we have got to be realistic about revenues - in 2011 revenues were $34M, the plant was at 72% capacity, in 2012 $48M, 95% capacity, 2013 $47M 84% capacity.

Sales were made domestically at much lower prices (2014 $86 t/m3 less 24% discount) than the international price which I think Zoltav hopes to export at (export licence no doubt required) and of course this asset is located much closer to Western Europe than Koltogor.

I guess if the plant is at 100% capacity and with sales at somewhere close to the international price then revenues will show a big jump, but we are some way off that yet.

But I suspect once all the fields are properly explored (which will take years), then it will be clear that we will have a very large asset indeed.

What puzzles me is the strategy once an asset is acquired.

A bit of tinkering with the gas plant, drill the odd well (one a year), open up half a dozen old wells.

Similar with Koltogor, seismic, open up a well, review seismic, then drill 4 wells - all over a period of 3-4 years.

Not exactly fast. I'm not being critical - there is presumably a much bigger strategy going on here - the names on the shareholder register attest to how valuable these assets are - if they weren't valuable then the names wouldn't be there.

Perhaps the strategy is simply to prove up that the assets are indeed very valuable - via seismic, bit of drilling, obtaining export licences etc, and then after a few years bring in the big hitters in terms of Western oil companies BP, Shell, Chevron etc, at much higher prices, and they will then have the many hundreds of millions $(if not billions $) available needed to develop these assets.

Mr Stobie hinted about major new Western shareholders in the presentation immediately prior to suspension.

I wonder what acquisition number 3 will be and when - late 2014/early 2015 maybe?

[noirua] 26/5/2014 08:34

In horse racing terms, Zoltav is a very big strong horse but weighted down by worries over Putin and the rest of the world's reactions to him. Like Russian based stocks in general Zoltav may remain at a bargain price for a while yet - will update header shortly.

[t 34] 25/5/2014 22:34

Seems wierd.Are their revenues per year or over the life-time of the project??

[doughty9] 25/5/2014 22:11

Further to the gas revenues of $200 million / year, there was 0.3 million bbls of oil produced last year which roughly equates to $25 million / year. Total of $225 million.

Still don't see how they get base case future revenue of $1.876Bn unless Zol are proposing to ramp output up 8 times which could take years.

[t 34] 25/5/2014 21:40

So if we take zol's figure $1.87 bln and yours profit rate then we get circa $374 mln profit.

[doughty9] 25/5/2014 21:22

Not sure how they got that figure of $1.87 bn.

ZOL's strategy is initially to get the Western Plant up to full capacity (500 million cubic metres/year) by 2015. Taking the recently agreed gas prices with China I estimate a round figure of $0.4/cubic metre giving an annual revenue of $200 million.

Taking a conservative profit of 20% suggests $40 million / year for gas. With efficiencies etc and possible tax changes in Russia the return could greater,

[t 34] 25/5/2014 18:57

Well that is closer what i was thinking about.

[xenawarriorprincess] 25/5/2014 18:50

Well on p82 of the circular it gives a figure of base case future revenue of $1.876Bn, as well as various other projections.

I guess anyone can interpret the figures as they wish.

Hopefully we should have a good week coming up, notwithstanding the present international situation and the fact that oil stocks are generally out of favour.

[t 34] 25/5/2014 18:40

That is ok.
But what about the gas reserves ???

[xenawarriorprincess] 25/5/2014 18:37

Where else would you take the figures from?

I take it "crude accountancy" isn't intended to be a pun.

However the initial reaction from the market was positive.

And if Abramovich and his dad's pals are putting money in at 100p, then 111p should represent good value.

[t 34] 25/5/2014 18:32

This valuation is crude accountancy taken from the books.

How would you value the gas reserves ,then ????

[xenawarriorprincess] 25/5/2014 18:27

T34

p256 of the circular

Consideration US$180.0 million
Less net assets acquired of Royal Atlantic Group US$247.4 million
Goodwill (negative) US$(67.4 million)

[trymybest] 25/5/2014 17:58

Hello X

Great research, this is a strong company with solid foundations with the personnel around .The critics from Tom w to investers chronicle,are very short sighted IMHO, I believe if you look 5 years ahead this will be Tullow Oil type of share and hopefully same price .

Keep up the good work X ,surprised about not much press comment ?

T

[t 34] 25/5/2014 17:55

Xiena

How did you get this that zol has bought assets worth $246mln for $180 mln ???

[xenawarriorprincess] 25/5/2014 17:41

"O IS FOR OIF

Of all the oligarchs, Valery Oif, a close associate and friend of Roman Abramovich's, is the most mysterious. According to Forbes, he is worth around £500m, making him Russia's 52nd-wealthiest individual. Yet there is precious little information on him, apart from the fact that he is 42 years old and married with one son. This is all the more surprising given that he is a senator representing a Siberian constituency in Russia's Federation Council. By all accounts when he gets publicity he hates it - when his name was published on Forbes' first Russian rich list in 2004 he was reportedly "furious". The source of his wealth is oil - he had a senior management position and minority stake in Sibneft. Oif is a Muscovite and was friendly with Abramovich as a student when the two travelled round Russia with other friends. He was among those who set up a company with Abramovich making plastic toys, and he appears to have been one of his most important lieutenants ever since."

Those ducks keep turning up!



Dates from 2006

[xenawarriorprincess] 25/5/2014 17:13

Just a few further points I've picked out at random from the circular - all 350 pages of it, although much of it is standard, and quite a bit we know already.

After the acquisition Zoltav will have $27.2m in cash using accounts dated at 31.12.13.

3 wells on Zhdanovskoye will be connected to the Western plant by end 2014, together with Well 100, to bring it to full capacity.

The Sherbank facility carries interest at 10.98%, total facility is $69.6M, most of which, but not all is being used in the acquisition.

After completion ARA and Bandbear will each hold 39.83%

The four wells at Koltogor for 2015/6 will require raising of further funds.

Our two new investors are Valery Oyf (Crediton) and Michail Uris (Matteson) .

Valery Oyf is CEO of Highland Gold and General Director of Millhouse (that fits), and a former director of Gazprom, VP of Sibneft, and Head of Exports Rosneft - a bit of a theme running there.

Can't find out much about Michail Uris - in any event they will each hold 4.5% after completion.

[xenawarriorprincess] 25/5/2014 13:43

Yes, a very large amount of data to wade through, but I too am surprised by the lack of comment.

It looks like we have bought an asset valued at $264m (edit - actually $246m) for $180M.

The thing that strikes me though is the sheer amount of work (and money) which will be required to bring this asset to fruition, and, as you say, the sheer scale of the ambition which is apparent here.

Maybe that is why the shares rose.

But they will need quite a bit of cash. Royal Atlantic had $7M approx. at the end of 2013, they're raising about another $7m, so that's $14m. They have revenue of $47M, and profits of $6.2m, but that is based on 2013 production of 7,671 boepd, of which oil was 821bpd. In January 2014 oil production was 591bpd, due to problems with falling production, so that may hit revenue and wipe out much of the profit.

So certainly I think they will have to borrow a significant amount more or raise this from shareholders.

Bortovoy appears to be an asset which has been much mismanaged over the years. Of the 130 wells drilled all but around 15 gas wells and 4 oil wells have been either abandoned or are presently suspended.

And whereas Koltogor appears to be mainly oil 75mb, Bortovoy appears mainly gas (4mb proved and probable oil, 750 billion cuft proved and probable gas.

As with Koltogor it seems that Zoltav will move cautiously (possibly constrained by lack of cash).

Well 100 on Karpenskoye, location of all presently producing wells, will spud May 2014, and the wells on Zhdanovskoye (RNS doesn't say how many - implication is it will be just one well) will be hooked up to to the Western plant by end 2014. A second well will be drilled on Zhdanovskoye in 2015.

The Western plant will be improved and a feasibility study conducted on an Eastern plant by end 2015.

Other than that, not much will happen, all very cautious, similar to Koltogor, where seismic appraisal is ongoing, prior to exploratory drilling in 2015-16.

I suspect therefore that the main activity will continue to be corporate -

"The Board's strategy is for the Enlarged Group to become a significant oil and gas exploration and production company through the acquisition of a portfolio of oil and gas properties in the CIS. The Directors plan that over time the Company will acquire a portfolio that will include assets at various stages of development....and developing partnerships to develop the Bazhenov discovery on the Koltogor Exploration Licence No. 10"

The new directors certainly seem to know their onions - so I'm sure we are in safe hands.

[doughty9] 25/5/2014 12:44

Strangely quiet on here given the news. I expect peeps are still wading though the enormous amount of inforation in the Acquistion RNS.

What has struck me so far is the very large annual capacity the Western Plant.
0.5 billion cu metres/yr of gas is 500 millon cu metres/yr. Not sure what the net back on gas is in this part of Russia, but doesn't need a genius to see that the profit could be huge if they approach capacity. In addition the oil capacity is 958 million barrels of oil/year, way beyond the current proven and probable stated for this acquisition. Very ambitious project, which makes one wonder what thr fields intend acquiring in this area.

"The annual design capacity of the plant is 0.5 bcm (17.65 bcf) of gas, 146 million barrels of condensate, and 958.1 million barrels of oil. The plant is currently operating below capacity. Once on production, the Zhdanovskoye, Krasnokutskoye, East Karpenskoye, and Mokrousovskoye fields will also contribute to filling the Western Gas Plant's total capacity."

[t 34] 24/5/2014 09:43

Great news , enormous resources , 130 wells drilled in the past , just now unplug them , no risk in exploration then , Western Plant with huge capacity - but not at full now ,after 2015 feasibility study possible built second plant in the East.
2P - proven and probable 137.4 mmboe and more potential.Soon money will be flowing from production , which will be springboard for further acquisition.
There is plenty to read through ,investors have 3 days so market should wake up on Monday.

[grannyboy] 23/5/2014 19:38

Well you'd better hope there's not to many more takeovers, what with the resultant 6+ months of been suspended and only a slight rise in the share price when suspension is lifted....

[thelung] 23/5/2014 15:53

alamaison 23 May'14 - 15:29 - 4764 of 4764 0 0 (Filtered)

For the unaware, check out its posting history on BLVN

[alamaison] 23/5/2014 15:29

alamaison 22 May'14 - 20:27 - 6385 of 6392 0 0 edit

Forget ZOL for a minute and start making some real money, lol.
Buy TUNG!
xxx

CHECK THE CHART KIDS.
225P CLEARED!!!

[waldof] 23/5/2014 15:28

They will be looking to leave AIM behind as soon as pos', so i gather.