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Canadian Overseas Petroleum maps out plans for hedging and operations

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Wyoming oil explorer and producer Canadian Overseas Petroleum [LON: COPL] yesterday reported crude oil sales of 1,177 bbls/d in its Q4 results yesterday. Petroleum sales net of royalties were $6.7m compared to $7.1m in Q3, mainly due to the decrease in the oil price during the period under review.

COPL said it had taken the opportunity created by the WTI crude oil market weakness to execute a hedge restructuring without a cash cost to unwind certain positions in a manner that would minimise near term hedge losses that have constrained the company’s pace of development.

Canadian Overseas Petroleum is an international oil and gas exploration, development and production firm which is actively pursuing opportunities in the US and already has producing wells in Wyoming. It operates three units, at Cole Creek, Barron Flats Shannnon and Barron Flats Federal. It regards these operations are one of the most environmentally responsible with minimal gas flaring and methane emissions, combined with the use of electricity from a neighbouring wind farm which powers production facilities.

Increased exposure to WTI crude oil dynamics

The restructuring has increased COPL America’s exposure to WTI  upside and has also stabilised operating cash flow for the first half of 2023. It provides the basis for a level of revenue projection with puts at $60/bbl on 750 bbls/d and maintains the cost protection for butane injections at the company’s Shannon miscible flood.

Canadian Overseas Petroleum reported that it had improved its working capital position further with the issue of 2.2m shares at the end of March for settlement of approximately $0.2m in accounts payable. Following the issue of these shares, COPL said it had just north of 345m common shares issued.

Convertible bond financing

The company has also recently closed a convertible bond financing which has provided the capital for further operational activities. This includes the procurement for pipe and other long lead items that are required for GGS Phase 1 upgrades, which COPL plans to install during Q2 of this year. Also on the cards now are well conversions from flowing to pumping-flowing at a number of high productivity wells in the Shannon miscible flood which will increase production efficiencies and reduce paraffin induced production downtime.

Management said that these initiatives will improve production levels, by resolving constraints and bottlenecks that have limited the pace of development over the course of last year.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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