Price of oil unreasonably low apparently. Demand increasing and supply starting to level off and shortly decline, leaving a draw on oil stocks. Saw a feature on Bloomberg (?) where oil expert expecting average of $60/65 pb in 2018 with oil rising to $60 end of 2017. We will see.
Certainly poo around $60 + pb would see JPRL obtaining around $20 pb at the well head.
If poo stays low, even if permitted to produce would it be profitable to to start to produce. Perhaps production in Q4 2017?
And what happened to simple economics, supply and demand, low prices supposed to increase demand and price?
IMHO DYOR NAI
Jupiter Energy website updated and new corporate presentation out. Still waiting for Kazakh ministry go ahead to start producing again, plus no indication as to where the money is coming from to do the five well workovers prior to production startup. But after so long at least the tone is more upbeat. There is even a timetable for more appraisal drilling and export of production.
We have of course been here before.
Would really hope for a takeover, but with near $40 million (?) debt, and main stakeholders expecting at least 50p per share, a takeover looks a long way away.
I sense corporate action brewing here at long last. However, I suspect JPRL will need to have the northern field reserves dispute resolved and the exploration licence extended to 2018 before confirmation.
RNS today, Well A19 has been successfully drilled and located nearly 100m of net pay over two zones. Good quality oil, and reinforces my view that JPRL will end up with 200 million barrels 2P reserves over the licence area. JPRL strapped for cash and domestic prices currently make production uneconomic, so well to be shut in after short test. When POO improves A19 will go straight into trial production.
Trial production licences for two wells on another field are expected shortly.
JPRL now in a good position to benefit from any rise in price of oil.
Shares currently up 10% at 16p
JPRL is shutting in the only two currently producing wells as being uneconomic at current oil prices. Looks a good decision to me, keep the oil in the ground until the POO recovers.
Keep working on the admin side to obtain the TPL for West Zhetybai wells, and resolve the reserves issue regarding J50. Obtain a least one licence area extension to investigate the potential new oil field. Raising funds in current climate not easy.
Well 19 drilling result likely within three weeks.
Predictions of POO going back down to $50 brent look likely to me so best to bunker down and try to survive until Q4 2015 when hopefully oil price will rise above $70.
RNS today, JPRL has taken an unsecured loan for US $5 million from Waterford. This will allow JPRL to fit some new electric pumps to existing wells and do work overs where required. Additionally appraisal/production well A19 can be drilled at Akkar East field. A19 will then go straight onto trial production early in 2015 if successful. With TPL status for West Zhetybai field expected in early 2015, production, and revenue should ramp up next year.
Further fund raising news awaited.
IMHO DYOR NAI
Final results out today, sp currently 22p. Looks like exploration drilling starting before the end of the year. But still no sign of substantive funding to build the processing facility to move to FFD status for Akkar East field.
Worth a read, but so far lots of unfulfilled potential.
theCK, I am no technical expert but can answer your questions with reasonable accuracy.
Of the three WZ wells, J58 produced the most during test up to an average of about 1000bpd , J59 was not fully tested but did produce nearly as much as J58. J55 was the first well on the field and may be close to the edge of the field, and there may be some technical problems with the well. So I anticipate TPL being granted for WZ in late November or December, and would expect JPRL to try for 750 bpd from J58 and after further testing about 600 bpd from J58. Anything from J55 will be a bonus.
It was the "authorities" who revised down the estimates for the reserves of WZ, the reasons are given in the relevant quarterly updates and RNS`s. Two reports were obtained; one from the Kazakh official institute and one from a western company. The Kazakh ministry revised down its own organisations estimates of reserves.
Regarding AE, it appears any new wells drilled will go straight on to trial production, but only one well A19 is planned for this year. It will be drilled as a producer so we may get up to 1000bpd from it? But yes, TPLs for the current 4 AE wells will expire in 2015 (afaik) having been granted in 2012.
Continuing production will come from J55, J58 and J59, A19, and potentially J 54 for the duration of any 90 day test if the well hits oil.
If the company obtains finance you can expect infill drilling (two wells) at WZ, more producers at AE and potentially two wildcats on the two prospects JPRL are hoping to get licence extensions for. JPRL have never been able to average production in excess of 1000 bpd, they may have not even have touched 1000 bpd. Therefore for calendar 2015 anything over 1500 bpd average would be a good result in my book.
Perhaps 2000 bpd is possible. With around 64 million barrels 2p or 2C (and probably a lot more to be confirmed) JPRL should open up next year and get the cash flowing.
Perhaps LOTM can give his views?
IMHO DYOR NAI
I'm not sure your right on Soyuzneftegas having sold out.
The UK announcement doesn't give the same info as the ASX announcement which includes a 3B form, when you look at it in detail you'll see that the other 2 company's have the same address as Soyuzneftegas !!
The cornerstone investors in JPRL are Waterford Group and Soyuzneftegas. AB is their man on the JPRL board. Soyuzneftegas have sold their holdings to Arrow Business and another company. I wonder if that now leaves Soyuz clear to re-invest in Jupiter by putting money in to a new share issue round by taking placing shares in a capital raising exercise. Soyuz will in fact be funding the exploration side of the business, initially by funding J54 exploration well to establish a new north eastern oil field on the block. Jupiter will seek funding from the banks via a credit facility to fund the appraisal and development of the Akkar East and West Zhetybai oilfields. Cashflow will have to be ramped up via extra production from both fields as development wells are drilled and TPLs are obtained.
It looks to me as if things are at last starting to happen.
RNS today paves the way for Trial Production Licence application to be made in the next few months with the TPL likely to be granted in December 2014. This will bring three additional wells on production from the new West Zhetybai oilfield.
All being well JPRL can now obtain bank finance for the appraisal programme for WZ.
The Preliminary Reserves Report for West Zhetybai by the state approval body has downgraded the C2 numbers reported by RES. The understandable reasons for the downgrade are a lack of production data from the existing wells, leading to anticipated lower recovery factors and lower pressure volumes. However these numbers could easily increase when a Final Reserves Report is obtained prior to the full field development application. The longer term production and data figures from the existing wells and at least two further infill appraisal wells to establish 2km between producing wells could lead to a sharp upward revision.
Current reserves C1: 4 mmbls C2: 23 mmbls with 27 mmbls combined.
The Final Reserves Report for Akkar East is still awaited. However I note that the TPLs for J50 and J52 seem to expire end of April 2015 and J51 and J53 around October/November 2015. So Akkar East production will be lost unless new appraisal wells are drilled with FFD status and export prices now looking like 2017 at the earliest.
The company really does need to raise the finance it needs now, and inject some momentum into the development of Block 31
Can penny shares be 'shorted' ?
....Yes , all the time...but the mm's need to 'borrow' your shares to enable the 'bet' to be transacted. IT's a bet rather than an investment and CANNOT 'win' for the 'shorter' unless the price falls.!
IF the stock looks healthy and unlikely to fall, then the shorter will almost certainly 'lose'.....unless he can 'help' the stock down....Now how the hell can he possibly do that ?
* OFF TOPIC but important that all AIM investors understand the pitfalls of investing in stocks that are being shorted down to rock-bottom levels?
So you think that is 'cute', now you can buy at the lowest sp for months?.........you've gotta be kidding...read on:-
~ *3,999 voted so far ~THEY CAN'T ALL BE WRONG?
(That's a lot of irate investors?)
# Thanks to all those that have supported this HMGovt epetition !
Many pi's are questioning the validity of 'short selling' and are voting in their thousands....the people have spoken, they are feeling hurt and disenfranchised.
The 'not so quick' and 'unsavvy' cannot be blamed for having their life's savings 'shorted' away just because they cannot spend hours on end glued to their computer screens. Having to work during trading hours, investors cannot keep in touch with hourly movements on stocks that they have chosen for their retirement and had them locked into ISA's. What gives shorters the given right to play down stocks at their own leisure thus profiting at everyone else's loss....on perfectly good stocks with sound fundamentals?
..campaign heading for 4,000 !
HMGovt epitition to make short-selling illegal (or better regulated?)
LOTM, I also note that two licence area extension requests have been submitted or in preparation. The January presentation clearly shows two prospects to the south of the licence but there is no outline of a prospect to the north east (other than J54). There is lots of oil in and around this licence and it is good to see that JPRL are keen to exploit all the potential in the area.
Progress is so frustratingly slow, but this investment must (?) bring big rewards in 2 to 3 years time.
As I have stated before the capacity of the oil processing facility will be telling as to the potential of JPRL. It may well be that the facility will be scalable to meet production from these potential new fields.
In many ways the reluctance of the Board to keep issuing shares means each share should be worth a lot of money in the end, but finding finance at present appears to be a problem.
IMHO DYOR NAI
I think the 2 main points to take from the report are that J-53 is now producing 100 bopd with a much reduced water cut at @ 30%, which could drop further. Thus making it commercially viable, which should mean the next time a Western style reserve report is done, a few million barrels will be moved into the P1/P2 classification.
Secondly they are about to test J-59, as they didn't get much work done the last time because of the overlap with J-58 testing. They are trying to get the Jurassic section producing this time, which if successful would open up a whole new horizon and again increase producible reserves.
They seem very keen now on drilling J-54.
Still waiting on funding news, hopefully that will come soon
RNS today, share price down 0.5p to 24.5p
Update for last quarter also gives update on 2014 to date. There are now four wells producing around 1000 bpd all have trial production licences. The company receives $33 per barrel at the well head.
So cashflow of $33000 per day is sufficient to fund day to day operations. Further testing of recent successful well likely to bring additional decent production. Its a test so production will be variable.
Appears additional finance talks going well, so I expect news before the end of this quarter.
Company has cash of A$2.2 million. Exploration drilling likely in 2014.
Share looks undervalued to me.
IMHO DYOR NAI
I have bought more recently, (not the 25 shares) in anticipation of a good share price performance in 2014.
JPRL has over 100 mmbl of C2 reserves, potential to increase production from 650 bpd now to over 4000 bpd by end of 2014. Less than 160 million shares in issue. Smallish licence area with lots of good quality oil close to export pipeline. Only one large central process facility needed with all wells to be tied by pipelines to it (?). Exploration and both appraisal and development drilling in 2014. Work to start on the FFD process facility in 2014, expect 20000 bpd capacity for a 25 year life of fields. At least two fields discovered the third via J54 looks a good bet, with a least two other fields possible seen on presentation slides. Supportive key shareholders who have their own experienced director in place (AB) to ensure they get a good return on their investment when the company is taken over, likely within four years.
Holding JPRL back is the slow pace of Kaz govt process, as bemoaned by MXP today, and a lack of confirmation of a revolving debt facility.
I am looking for an early confirmation of up to $40 million debt facility, then I think its all systems go for JPRL.
Thanks for the link, but I think the value of block 31 will prove to be many multiples of that valuation.
Apart from any risks (perceived or actual) of doing business in Kaz. there is a 10 or even a 20 bagger from the current 26p share price to be had within 5 years.
C2 reserves already over 100 million barrels, expect that to be 150 million barrels P2 within 5 years. All Block 31 wells, from at least 3 fields, to be tied in to a single process facility and piped to main export pipeline. Should see 20,000 bpd production from the block.
Quarterly report today no news of how credit facility negotiations are going, credit facility of around $40 million (to exclude exploration drilling) urgently needed. Hope this is sorted before AGM.
Lets hope today`s fundraising leads to improved cashflow in calendar Q4 via a 90 day test and production from J59, which could be significant.
The further remedial work and expenditure on J53 could be the last on the Triassic if unsuccessful. They may write off the Triassic and test the Z sands for commerciality. Given the G&G schematic, J53 may be used as an injector well if all else fails?
If all goes well JPRL will be able to produce continuously in early 2014 from J50,51,52 and 53 under TPP, to be joined in May (?) by J55,J58 and J59. By the time of the start of JPRLs new financial year in July 2014 they could be producing in excess of 4000 bopd.
I note the company are talking about a single storage and process facility for the production of the whole Block. This is good news to me, they may have a process facility designed to scale up as new fields start to produce. So start with say a 10k bbl facility and add extra capacity as needed. Final quarter financial update by end October closely followed by final results awaited with interest.
Jupiter Energy Limited ("Jupiter" or the "Company")
New Funding Arrangement: $US6.5m Convertible Notes issued
The Board of Jupiter Energy Limited, the Kazakhstan-focused oil exploration and production company, trading on AIM ("JPRL"), ASX ("JPR") and KASE ("AU_JPRL"), announces that, as part of its plans for funding the future development of the business, the Company has, as at 20 September 2013 committed to issue $US6.5 million of Convertible Notes ("the Convertible Notes").
$US6.5m Convertible Notes (Series B):
The key terms of the Convertible Notes are as follows:
· Term: 3 years
· Conversion Price: $US1.25 per share (maximum of 5.2 million shares may be issued)
· Coupon Rate: 12% per annum, with the interest accruing from and including the Issue Date until the earlier of the Conversion Date, Redemption Date or Maturity Date of the Note.
· The Convertible Notes may be redeemed by Jupiter at any time with a minimum of 12
months interest payable if the Convertible Notes are redeemed within the 1st 12 months of their Term
· The issue of the Convertible Notes is carried out under Jupiter's 15% capacity in
accordance with ASX Listing Rule 7.1
The breakdown of subscriptions for the Convertible Notes is as follows:
· Waterford Petroleum Limited: $US1.5m
· Mid Ocean Limited $US0.5m
· Mobile Energy Limited: $US4m
· Other Private Investors: $US0.5m
The net cash proceeds of the fundraising will be $US3.305m, following the repayment of $US3m of Promissory Notes held by Mobile Energy Limited and the payment of a fee of 3% of the proceeds of the raising ($US195,000) by the Company to Waterford Petroleum Limited for its role in arranging the funding.
The net cash proceeds of the fundraising will be used for the following purposes:
· Remedial work on the J-53 well: ~$US150,000;
· Further testing of the J-59 well: ~$US350,000 and
· General working capital: ~$US2.805m.
The holders of Series A Convertible Notes issued on 31 May 2013 have also agreed to convert their notes to Series B Convertible Notes, effective from 20 September 2013.
This means that all interest payable on the entire $US15.5m Convertible Notes now outstanding will be deferred and accrue from and including the Issue Date of the Series B Convertible Notes until the earlier of the Conversion Date, Redemption Date or Maturity Date of the Note.
In light of the quantum of the shareholding of Waterford Petroleum Limited (29.5%) in Jupiter, Waterford Petroleum Limited is deemed to be a related party for the purposes of AIM Rule 13. The participation in the fundraising and the fee payable to Waterford Petroleum Limited are related party transactions pursuant to the AIM Rules (the "Related Party Transactions").
The Directors of Jupiter consider, having consulted with finnCap, the Company's Nominated Adviser, that the terms of the Related Party Transactions are fair and reasonable insofar as Jupiter's shareholders are concerned.
Since Alastair Beardsall is the appointed Jupiter Board representative of Waterford Petroleum Limited, he did not take part in the discussions of the Jupiter Board of Directors in relation to the Board agreement to the terms of the related party transaction with Waterford Petroleum Limited.
Ecologist, No new shares, just the same shares traded in more than one place. I guess the Kazakh market makers will have to buy shares in order to make sales? Its highly likely there will be Kazakh holders of the stock already, so they can sell them locally instead of going via the UK or Australian exchanges.
I think it was Max Petroleum that announced a listing on the Kazakh stock exchange prior to announcing it had secured a $90 million credit facility from the Kazakh unit of the Russian Sberbank. I think the local law/rules are that if a foreign company lends from a Kazakh bank it needs to be listed on the Kaz stock exchange.
So this RNS is saying to me that JPRL have obtained a loan or credit agreement with a Kazakh bank. Now we need to know how much and on what terms?
I would want to see a $60 million facility, with repayment of capital to start in Jan 2016, and interest monthly once drawdown commences. The facility needs scope for exploration, appraisal and development costs. The capacity of the oil processing facility, and whether it is to be a hub for all Block 31 production, will be telling. If it has a capacity of around 20,000 bpd, then you can assume the block will have between 120 and 130 million recoverable reserves, to be produced over the 25 year life of the licence.
The company should be taken over in 2016/17 for £2.50 to £3.50 a share?
IMHO DYOR etc
While it is common for UK-listed companies to seek a secondary listing in their country/countries of operation (Tullow in Ghana for example), how does this function in reality? Where do the shares listed "come from"? Are additional shares created and floated (thus potentially reducing the value of existing shares on the UK market) or are shares from treasury used or do some major shareholders float off some of their holdings? Can someone educate me please?
I have been trying to get my head round why the sp fell after what I consider to be a good report showing GOST classification C1+C2 reserves of 102.5 million barrels.
The reason is that 2P reserves under the PRMS classification have fallen. In 2011 Synergy gave 24 mmbbl 2P reserves based on Akkar East J50 and J52 only. Today we have McDaniels supplying a CPR of 2P reserves at 19.2 mmbbl for J53 (Akkar East) and J55 (West Zhetybai) Therefore the 2P reserves can be considered to have halved since 2011.
This report appears wrong given the 102.5 mmbbl under the GOST classification.
I expect JPRL are seething at the McDaniels report, and I would guess it will be the last report they do for our company.
JPRL are now left to raise finance on a poor CPR and that cannot help negotiations, I just hope the lenders can see the massive potential here.
The value will be realised, and I look forward to the next RNS from the company. The processing facility is likely to have a capacity of 20000 bpd and I hope it will be used as a hub for the entire production of the block.
I would now expect JPRL to be taken over in 2016 for at least £2.50 a share.
I look forward to Dr O and LOTMs considered opinion on todays report.
Sorry not been paying as much attention as I should have. To answer your question, no I don't think anything has really changed, other than them not getting as much testing done as we would have liked.
Todays announcement is mixed because the CPR number is not as high as many would have liked, whereas the RES C1+C2 number is right up there, topping the 100 million mark, which to me is very significant going forward.
New company presentation on the website as August 2013.
The southern extension now known as West Zhetybai, and licence area now shows more new leads. Company refer to extending licence in north which I take to be the second two year extension into 2016. The new prospects shown to the south of the licence will need a further enlargement of the licence area.
Look forward to details of fundraising and independent CPR reserves report within next four weeks.
I think progress has been a lot slower than we would have liked, but the fundamental picture remains the same, under valued, below the radar, low profile company. We await news of further funding and the CPR in relation to current reserves. You have both given your views as to possible valuations (LOTM comprehensive report on another BB), has anything changed in the last five months to make either of you alter your views?
I am obviously hoping that this is another Providence type situation, where the company announced an oil strike and there was not much sp reaction. Then a couple of months later put out a mega reserve estimate and the sp trebled in days. As far as JPRL are concerned I would be looking for a treble from around the year high of 50p.
IMHO DYOR etc
Report published today. Need to wait until September for independent reserves report, but company states negotiations regarding further finance will not be affected by the delay. Therefore I would expect the reserves report to be good with potential lenders happy with JPRLs own estimates of reserves. As with all Kazakh oilers, the slow wheels of government bureaucracy are something we have to live with.
Looks like the exceeding of gas limits by J50 (?) was an admin error.
Good news that J54 potential new northern field will be drilled next. Just hope the excellent track record of JPRL finding oil continues.
All in all happy with progress to date, JPRL is well below the radar at present but hopefully that will change in the next 12 months.
Thanks for your views Dr O. There appears a lot riding on the upcoming Competent Persons Report which hopefully will give independent verification of a big boost to the 2p reserves of the company. The prospective financiers may part with their cash a little more easily if we have 50/60/70 or 80 million barrels of reserves.
The funding to do the preparation of FFD facility also shows JPRL are determined to proceed to FFD asap. The RNS also points to the current risk averse nature of the equity/loan market for pure exploration work, which should be noted on other oilies bbs.
Good that there will be exploration drilling in 2013, personally I would like to see J54 drilled and the Z (?) sands tested, they may be suitable for hydraulic fracturing if not conventionally and could add significant further 2p reserves. Although these may well be further down the pecking order.
IMHO DYOR etc
Nice to hear something from JPRL again. After a quick read, on balance I think this looks OK. The forward dilution of max 7.2m shares is pretty minimal and the 12% coupon rate is appreciably better than the 15% rates given to Mobile in the recent loan notes. The conversion price of US$1.25 (>80p) is considerably above the current sp (as youd expect given that its currently in bargain basement territory), and youd hope that conversion would be achieved substantially within 3 years. Its also encouraging to see both Waterfords and SNGs continued backing, and also that Mobile clearly has faith in further supporting JPRL going forward. Mobile appears to have swapped a $3m loan note for $3m worth of future shares at $1.25, and at a lower coupon rate than for the previous loan note. The additional debt burden is actually pretty modest given that $3m of the $6m presently outstanding to Mobile is being repaid out of these $9m of funds. GGs comments are also suggestive that therell be more than simply steady-Eddie progress towards full field development (FFD) at Akkar East going on in the near- & medium-term. The suggestion of more exploration drilling to come sounds promising (Akkar East extension? J54 sub-crop? New acreage?); I assume this will be in addition to any development drilling on Akkar East.
I guess its always unwise to infer too much from anything like this RNS. However, if theres any sort of imminent additional funding deal covering the field development, whether by debt or a placing (or both), then looking at the terms of this funding Im certainly not inclined to think that well see big dilution at a low sp, as I imagine that those subscribing to this deal have a more than reasonable idea of what might be coming in terms of the CPR & production potential etc
Thanks TC and DO (especially for making an exception on the recommending front - 'fortunately', this board isn't likely to be clogged up with off topic postings anytime soon). I agree with the focussing of exposure to 'a' really strong prospect, but it looks like that prospect is bigger than JPRL ie Kaz itself. This article, and other recent news, has highlighted just how ambitious the country is going forward. Whether their plans can be realised (in specified time frames / at all) needs to be considered but as my retirement age is close to 2050 (coincides with GDP estimates), investing in Kaz over time could be very beneficial
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