Trader's Cafe with Zak Mir: Canadian Overseas Petroleum's "Second Coming"

Private investors tend not to be a patient bunch. The traditional stock market rule is that if something takes too long, it normally does not end well. However, with Canadian Overseas Petroleum (COPL) the punters appear to be as excited regarding their company as children on Christmas Eve. This feeling has been helped along by the latest RNS from the international oil and gas exploration and production company, saying that it has received written notice approving a Final Prospectus dated 11 August 2021 from the Financial Conduct Authority. The original timetable for all this paper shuffling was “late May, or June.”

Timing

But perhaps this is a case of the longer the wait, the greater the joy when the wait is over. What we have in terms of timing from COPL itself is that it will “update the market when it receives the date of readmission, which it expects in the upcoming days.” This last statement means that while the guessing game regarding the return from suspension is now confined to a relatively narrow window, it does underline the way that the speculation surrounding COPL shares has been unprecedented both as far as the return to market, and even more importantly at what price.

Upcoming Days

Indeed, one could almost say that there have been tighter guesses in terms of the length of a piece of string, than where COPL shares return in “upcoming days.” The attempts to correctly pin the tail of this particular donkey do however have one rather obvious anchor point, and that is the level at which the shares were suspended at 0.38p in March. If only on the basis of the rise in the oil price since then, one would be looking for a decent premium.

Giant Killer

There is little question that the Atomic deal had the two major plus points of not only being giant killing for COPL, at a distressed price, but also as contained the massive kicker far as production is concerned. In short order we have the company’s prediction of moving from purchased monthly make-up volumes rising from 15,000 Mcf at the start of the year, to as much as 200,000 Mcf towards the end of 2021.

Q1 Update

In addition, at the time of the Q1 update last month, COPL said current oil production has increased 50% to approximately 1800 bbl./d (gross) due to the commencement of increased gas injection volumes on April 1 at its Barron Flats miscible flood project. Such transformations are not easy even for mid-scale companies, and it is understandable how the bull argument apparently has such difficulty anticipating what price the return to market will be.

Just for a change it may be that some of the wilder predictions of COPL’s “Second Coming”, may have a rather better chance of being proved correct than analogous situations, if not immediately, then over the next few months.