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Another month goes by and yet again I ask “should you believe a word that AIM listed Sefton Resources (LSE:SER) says“?” Data out tonight makes me certain that there is a major issue here and thus, unless Sefton can show that the State of California is inventing production data, I regard the shares, at 1.5p, as a slam dunk sell.
My problem (actually it is a problem for shareholders, I have no position here) is that what Sefton says about production from its California oilfield does not tally with official data from the State of California body that supervises oil production: DOGGR. The latest DOGGR data for August is now out and can be found HERE.
If you need a look at Sefton’s dismal history of disclosing what is going on I refer you to my piece of September 13th HERE.
On September 11th Sefton announced its results for the half calendar year and stated that:
“Although oil production for the first half of 2012 at 21,755 barrels or an average of 120 barrels of oil per day (bopd) was higher than in the comparable period (19,968 barrels or an average of 110 bopd in 1H, 2011), there were several factors that served to restrict oil production. Encouragingly, since this period ended we have seen production in excess of our targeted level of 200 bopd and average in the vicinity of 170 bopd over a limited period.”
We already knew that July output came in at 3,660 barrels or 116 barrels a day. But surely given that upbeat interim statement ( made 11 days after the end of August) Sefton’s optimism must have been based on August numbers.
Er…back to DOGGR which has just posted news that production in August was 3,002 barrels. That is less than 97 barrels a day. It is the lowest monthly number in 2012. Sefton must have known this when publishing its interims so how the hell does this tally with what is in the statement?
This is pretty simple. Either the State of California or Sefton is misleading investors. I sent my article of 13th September to Sefton’s NOMAD Fox Davies and have had no response.
I shall also send this article across. I suggest that Sefton must either take immediate legal action against the State of California for misrepresenting production levels or it needs to issue an RNS at once explaining this apparent glaring discrepancy. If it fails to do one or the other, investors have every reason to panic and bail.
Alex
As far as I can see the Ca operations will always need vast capex just to maintin tiddly production so based on a NPV of FREE cashflow I’d value them at sod all. Kansas might just change that ( far from convinced) but where’s the cash coming from to deliver that? Throw in the corporate overhead ( must not skimp on that)and the debt I’d say target price is sod all.
But in some companies the management is of such a high quality that one would pay a premium to fair value.
Best wishes
Tom
You are doing a wrong calculation again “in August was 3,002 barrels. That is less than 97 barrels a day”
Check the August 2012 production in
http://opi.consrv.ca.gov/opi/opi.dll/Search?UsrP_ID=100186329&FormStack=Main%2COperator&Opr__ID=100002209&Action=Get+Sums+&PriorState=Encoded%3DTrue
You have just looked in to the “Oil(bbl)” and you have not noticed the “Days”. Now have a pint (or double scotch) and think what that days refer to.
Date Oil(bbl) Water(bbl) Gas (Mcf) Days
08/2012 3,002 67,043 645 601
Misleading the markets is a serious offence, you could get into serious trouble. and that’s too using American flag!!!! are you trying to say DOGGR (American department) is misleading????? EDUCATE YOURSELF, BEFORE POINTING FINGERS AT OTHERS!!!!!!
Dan, kindly explain what ‘days’ means?
Hi Mohammed, here you go…
Well number Date Oil(bbl) Days bopd
Hartje 19 Aug-12 518 26 19.92
Hartje 13 Aug-12 381 26 14.65
Yule 5 Aug-12 243 31 7.84
Hartje 15 Aug-12 235 26 9.04
Lackie-USL A-4 Aug-12 226 28 8.07
Yule 10 Aug-12 207 31 6.68
Hartje 12 Aug-12 189 26 7.27
Hartje 16 Aug-12 159 26 6.12
Hartje 11 Aug-12 137 19 7.21
Snow-USL 5 Aug-12 113 31 3.65
Hol-Har 3 Aug-12 91 29 3.14
Hartje 17 Aug-12 87 26 3.35
Yule 11 Aug-12 87 31 2.81
Hol-Har 7 Aug-12 45 31 1.45
Yule 9 Aug-12 44 22 2.00
Yule 7 Aug-12 43 16 2.69
Hartje 1 Aug-12 36 17 2.12
Hartje 14 Aug-12 33 24 1.38
Sloan 4X Aug-12 30 30 1.00
Hartje 18 Aug-12 27 2 13.50
Hartje 7 Aug-12 21 19 1.11
Hol-Har 7A Aug-12 19 31 0.61
Hartje 5 Aug-12 12 11 1.09
Yule 12 Aug-12 12 13 0.92
Snow-USL 4 Aug-12 7 29 0.24
Total 3002 601 127.8390734
bbl days average for Aug 2012
Mohammed, Based on the actual production figures in RNS (“Although oil production for the first half of 2012 at 21,755 barrels or an average of 120 barrels of oil per day (bopd)”), the summation for Aug’12 is bit more than the average for year. Though this is not great, as SER’s target is more than 200bopd, the heat issue and the tank issue to be taken into consideration for this low figures. IMO There are more chances this will turn into better position.
“To err is human” but after making an error, if someone is not admitting. Then respect not his words ;)
Dan
Dan,
Tom Winnifrith is clearly stating 98bopd from August and not quoting half yearly average figures. Nonetheless, the difference between 98 and 120 is hardly worth agueing about…Additionally, if all the wells have no issues and are fully operational, what would be the projected output?
Why after such much money raised hasn’t there been a significant output so far?
In comparison, look at Nighthawk Energy. They produce far less and have never made any profit, yet have a mcap of 22m pounds. So this make Sefton cheap or expensive?
Mohammed,
if you think difference between 97 bopd and 127 bopd is hardly worth arguing, then its your mistake! that is 30bopd. Importantly, 120 bopd plus is minimum production figures of 2012 and the maximum is 148.54 in May 2012. Hartje 7, Yule 7 started to produce in August, Hartje#20 drilling completed, production not started and there are 16 wells yet to start producing oil (E. Sloan 103, Hartje 2, Hartje 20, Hartje 3, Hartje 4, Hartje 6, Hol-Har 1, Lackie-USL A-1, Sloan 2X, Sloan 7X, Snow-USL 1, Snow-USL 3, Yule 2, Yule 3, Yule 4, Yule 8). Lets average to 140bopd as current trend and add up additional 16 wells with an average of 3 bopd (16*2)=48bopd. So 140bopd + 48bopd=188bopd, at normal case. Do your calculations, that will make it clear :)
I think the point Tom is making is that no matter how many barrels of oil they pump up from the ground, Sefton will barely make any decent return. Whether it be 1000 bopd or 2000 bpd , because the BOD are so bad they’ll keep taping the market for more cash.
For instance Jim Ellerton pays himself a salary in the region of $500,000 per annum….doesn’t that tell you something?
Rez, Read his blogs about SER properly, you’ll understand whether he is misleading with the numbers or worried about the revenue paid to Jim himself!! August bopd is 127.83, but he claims 97bopd :p
Here is a sample from blog..
“Er…back to DOGGR which has just posted news that production in August was 3,002 barrels. That is less than 97 barrels a day. It is the lowest monthly number in 2012. Sefton must have known this when publishing its interims so how the hell does this tally with what is in the statement?”
Boots is having free eye test *when u buy glasses. Please do one :p
I have followed Tom since the T1PS days and his sell recommendations have been pretty solid for shorting. Once the report from the house broker comes out SEFTON probably should go up 10-20% and we should see a spike . Should Sefton go to 2p+ it should be an ideal time for shorting, so I will keep my alerts on. Because of this reason SEFTON is not yet a short.
All in all Sefton will use the remaining $2.5m to be used for water facilties and generators which long term should be a waste of money. In fact Jim Ellerton is better off sticking the $2.5m in a high interest bank account. In the words of Tom, SLAM DUNK SELL – but only after the report comes out.
The best proverb comes in my mind for this situation “Even Homer nods” ;)
I do follow , respect and value 5 * credits for some of his blogs, but in this blog his understanding of production data is wrong. Having wrong number running in mind, the blog on SER was classically exaggerated with classic words. One classic imaginary example is, you see the menu of lets say “Deal Boy Pizza” and you choose “Boy King Pizza” from menu, but for your eyes the garnished prawns and olives looks like cockroach! just b’coz it looks like cockroach for your eyes, you could not spread rumour all the pizzas of “Boy King Pizza” have cockroaches in it ;)
I know offhand that the Ali report has already been produced. Mr Ellerton does not want to release it as it is deemed far too costly to implement and dare i say it will certainly bankrupt the company.
RAFA, thanks for your secret information. Much appreciated.
First off I would like to say fantastic blog! I had a quick question that I’d like to ask if you don’t mind.
I was curious to find out how you center yourself and clear your
thoughts prior to writing. I’ve had a tough time clearing my thoughts in getting my ideas out there. I truly do take pleasure in writing but it just seems like the first 10 to 15 minutes are usually lost simply just trying to figure out how to begin. Any suggestions or hints? Thanks!
My page computer support
I read up, make notes & then go have a 10 minute break with a coffee & a cigarette and think – by the time I am back at my desk I know the first two sentences and it just flows…
Thanks for the question & praise
Tom