General Corporate

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The so called transformational growth is suggested will come from a successful drilling campaign in the South West Peninsula (SWP). How will this be funded and will it involve any significant dilution of current holders?
The Company’s strategy for over a year has been to fund our initial exploration activities in the SWP from cashflow generated from our operations. At the end of 2017, Columbus became cashflow positive from operations and is currently following an active campaign to grow production and cashflows, including through the addition of the Steeldrum assets which the Company believes will provide many new areas for early production growth. It is intended that future exploration activities will be funded by this cashflow and from existing resources, with the initial drilling campaign still being planned for mid-2019.
Management are 100% aligned with shareholders and are investing in the Company on a monthly basis by taking 50% of their remuneration in Company shares. They have no plans to introduce measures which result in significant dilution for shareholders.
On exploration success the Company would seek to progress innovative additional funding arrangements in an accretive manner to appraise and then develop the SWP and has had discussions with numerous parties interested in assisting the Company unlock the huge potential of the SWP. There are plenty of financing options available to the Company that would not result in significant dilution should the Company see success in its exploration activities.
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Remember that if funds become available from Predator that this also involves a large share issue on top of the shares that will be issued on completion of the Steeldrum acquisition. There is no such thing as a free lunch!
There is no guarantee that Predator will exercise their right to acquire the Innis-Trinity field. However, in the event the Innis-Trinity field is sold to a third party (including Predator) for no less than US$4,200,000, the Company is obligated to issue 16,920,083 additional shares in Columbus to the Steeldrum owners, this representing approximately 2.3% of the 743 million shares which will be in issue following the completion of the Steeldrum acquisition. Assuming a share price of 4.0p at that time, those 16.92 million shares would be valued at approximately £675k (or US$860k), which is significantly lower than the US£4.2 million Columbus would be receiving from the third party. If these funds were received, the Company would look to use these funds in other value-adding opportunities, including exploration activities in the SWP and on our other assets. Columbus’ management agree there is no such thing as a free lunch but believe that this lunch would be very palatable for the Company’s shareholders.
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Will Steeldrum make a tangible difference to the bottom line? BOPD may increase marginally but so will costs/overheads?
We believe Steeldrum has the potential to make a tangible difference to the Company’s bottom line. The acquisition increases and consolidates the Company’s acreage position in SWP, giving Columbus six fields to play with and will generate further cash for the business. It also delivers optionality and flexibility to the Company on where it invests its cashflow to deliver the greatest returns for shareholders.
The Columbus management team recently spent some time in Trinidad reviewing the Steeldrum fields and have identified numerous opportunities to establish “quick-win” production growth through a programme of well optimisations, well reactivations and also some infill drilling activities, all to be funded from currently available resources. This would be in addition to our already announced activities at Goudron, Bonasse and Icacos. Further information on these planned activities will be announced in the near future.
Both companies are already working together on plans to obtain real production growth in the near-term and an integration process, bringing the two companies together, is currently being progressed involving management and staff from both companies. Some of Columbus’ operations staff are already working with Steeldrum staff on early optimisation targets on their producing fields through a short-term contractual service arrangement. The Company is seeking to complete the Steeldrum acquisition within the next few weeks and has made good progress to date on the outstanding matters required for completion to come into effect.
As with any acquisition, there will be an increase to overheads in the short term but there are a number of integration and natural cost synergies. The integration process continues at a pace and management are hopeful it will be completed in the not too distant future.
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Is the Steeldrum acquisition a key component of the company growth strategy or more for show to investors that something is happening?
This is the third acquisition of the year following the Icacos and BOLT transactions and we continue to make good progress. The Steeldrum acquisition is another piece of the puzzle with more to come. As stated in the Annual Report and detailed further below, the company has begun a screening exercise for M&A opportunities in Trinidad and Tobago and elsewhere in South America.
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What are the realistic chances of success in the SWP?
One of the reasons that Leo joined Columbus was because he was excited by the opportunity for exploration in the South West Peninsula. He believes that the assets we have there are the type of assets found in a major oil company’s portfolio given the potential resource size.
The assets in the SWP are near to, and geologically a part of, the prolific East Venezuelan Basin, offering significant exploration, development and production optionality and the assets have the potential to deliver transformational growth.
From an exploration perspective it ticks many of the boxes given its proximity to a proven oil play and is located in a well-established oil province with easy access to export for any successful development project. It offers, from an onshore location, large scale, exploration potential that would typically be seen offshore where the drilling costs would normally be 3-5 times that of Columbus’ onshore exploration wells. In addition, the SWP is relatively shallow, keeping exploration and development well costs down.
All these reasons make us believe that this is a relatively low risk play in exploration terms, improving the chance of success on what would certainly be a material play in worldwide oil terms.
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Is Spain a millstone and does the company genuinely hope to gain a new licence or is it looking for an exit strategy at minimum cost to the company?
Trinidad is our core area and focus but Spain still provides potential upside. We hope to apply for the new license for Spain as soon as possible, either on our own or with a partner, and are awaiting the instigation of the tender process by the Spanish authorities. In the meantime, we continue to keep our costs in Spain as low as possible. In the event we are unsuccessful in the tender, we will continue to execute our growth strategy in South America.
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Will CERP ever move into South America? If so, how?
Columbus is actively looking to expand into South America as it has the same operating environment in Trinidad with an established oil supply chain. The reservoirs are part of the East Venezuelan Basin and we understand the geology and exploration potential. The Company is looking at opportunities in Trinidad, Colombia, Guyana, Suriname, Venezuela and elsewhere and have identified a number of opportunities, both at a corporate and asset level, which meet our strict investment criteria of onshore: operatorship, easy export routes, mature oil provinces in the Caribbean or South America: and close to infrastructure. Any acquisitions will be financed through innovative funding strategies and the management team has much experience in securing funds in such a manner.
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Is all oil currently produced through the water injection pilot classed in the monthly oil production figures?
We are not yet attributing additional oil to water injection responses. The oil increments to date are from well stimulations and reactivations. Some of this planned wellwork was also targeted to provide the additional produced water and has resulted in welcome incremental oil.
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How long would you anticipate before this is effective and in turn increasing the oil output?
Responses to individual injection point pilots that deliver oil output increases will be gradual with peak gains taking months depending on interwell communication.
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In the recent RNS, it stated that BWPD has increased by 1000 and this is therefore available for water injection pilot work. What was the previous volume of water available for water injection and at what stage do you anticipate the additional full 1000 BWPD being used in the pilots?
Additional injection volumes will shorten the time to gain interwell connectivity information and allow multiple simultaneous pilots to be run. To date injection has been in the range 300-500 BWPD. Some of the increased produced water volumes are available to inject immediately. Other volumes require additional low cost tank storage to facilitate and the 1,000 BWPD will be utilised during the course of 2Q18.
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In the RNS of 19th March 2018, the SWP is stated to potentially hold multiple prospects of 20-400 million barrels in place. Does mean up to 400 million in total or the prospects observed to date could hold anything from 20-400 million barrels?
Identified mapped prospects individually have a range of 20-400 million barrels. We have mapped multiple prospects to date in that range of potential oil in place volumes.
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Was the Bonasse oilfield included in the Full Tensor Gravity ("FTG") gradiometry survey acquired by ARKeX Limited in 2015?
Yes. The Bonasse Oilfield was included in the FTG survey.
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There is market speculation that a placing is imminent, can you confirm?
There is no requirement to raise funding in the short to medium term to fund our current activities and no placing is planned or imminent. As previously announced, the Company is fully funded for our planned 2018 work programme. The 2018 work programme includes all costs of running the Company’s activities in London, Spain and Trinidad, including the costs of our capital work programmes, all G&A and the servicing of our outstanding loans to Lind Partners.

Management continue to focus on delivering our targets, increasing shareholder value and are making good progress on all fronts. We will update the market, as required, in the near future.
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How committed is Leo Koot to CERP given his other Directorships?
Leo Koot is Executive Chairman of Columbus Energy Resources and is supported by a strong and experienced senior management and operational team. Leo is 100% aligned with shareholders to create value and deliver shareholder growth. This was most recently demonstrated by his participation, alongside other members of the senior management team, in the Company’s placing.

In addition, Leo is Non Executive Chairman of Tulip Oil, a private company, which requires minimal time commitment and does not represent a conflict of interests. This appointment was approved by the CERP Board prior to his appointment to that role in January 2018.

Leo was also a Non Executive Director of Sterling Energy plc when he joined CERP as Executive Chairman and remains in that role which, again, involves minimal time commitment per month.

It is not unusual for a Director to hold more than one Directorship and the Board of CERP is satisfied that Leo’s additional roles are not affecting his focus in growing real value for all shareholders at CERP.
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In your 11 September 2017 RNS you state that “The Company has granted Lind 17,992,308 shares, to be escrowed by Lind for at least six months from the date of issue (expected to be 23 September 2017).” Please confirm that at the end of the escrow period the 17,992,308 shares will be Lind’s to do with as they see fit.
As confirmed in the RNS of 11 September 2017, the Company at that time had successfully re-negotiated certain terms of the Lind convertible security funding agreement which involved, amongst other changes, the granting of 17,992,308 shares to Lind to be held in escrow for at least six months. As part of this re-structuring Lind agreed to increase the conversion price for the first tranche of the loan that was outstanding from 3p per share to 4.5p per share. The Company also confirmed on 19 September 2017 that application for the above-mentioned shares, together with a further 2,307,692 shares relating to the repayment of loan due for the month of September, had been made to the London Stock Exchange and that it was expected that admission to trading and dealings in these shares would commence on 22 September 2017 (subject to the six-month escrow requirements of course).

Management were very pleased with this re-negotiation which was extremely well received by the market and contributed within a month to an increase in Columbus’ share price and market cap by over 120% when compared to the share price on the day before the restructure was announced. The 17,992,308 shares currently represent approximately 2.9% of the total shares in issue at today’s date (12 January 2018).

Apart from the requirement for Lind to escrow the 17,992,308 shares for at least six months, there were no other restrictions placed on Lind who are entitled to take whatever action they wish on those shares at the end of the six-month escrow period. That said, Lind maintain a very positive relationship with Columbus management and in a meeting in early December 2017 indicated that they were very pleased with the progress achieved by the Company in recent months and were very positive about the long-term potential. They also indicated that they would not take any action which would have a detrimental effect on the Company’s share price and were looking for further share price growth before they may consider taking any action on their shareholding.

In addition, as mentioned in the RNS on 21 December 2017, the total debt outstanding to Lind at the end of 2017 had been reduced to approximately US$1.35 million. The Company has budgeted to meet all repayments due to Lind in 2018 in cash, although Lind retains the exclusive right to convert outstanding debt at 4.5 pence per share at any time of their choosing whilst the debt remains outstanding. Whilst Lind exercised their exclusive right in October 2017 to provide the Company with a second loan facility of US$750,000 that month (an amount which is included in the debt outstanding amount of US$1.35 million), Lind no longer have an exclusive right to provide any further funds to Columbus.
To summarise, the Company is very happy with its relationship with Lind, who have been extremely supportive of the new strategy being undertaken by management, and is satisfied that Lind will act in a manner which ensures the Company’s share price is not detrimentally affected by any actions they may take in future.
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In the past, the Company provided operational updates to the market via RNSs on a very regular basis, sometimes weekly, but more recently the new leadership has limited the number of market announcements and has only been providing production updates quarterly. The lack of updates has the potential to lead to more volatility in the Company’s share price and potentially allows traders to speculate on a short-term basis. Why won’t the Company provide more regular market announcements of production and other performance as a means of improving information flow and better managing investors and other parties’ expectations?
Columbus Energy has a very clear strategy to build a significant E&P company over the next 5 years and this has been very clearly outlined by the new management. This strategy is different from the previous management and so may well mean the share register will change over time which we are aware of. The Company is encouraging shareholders to grow with them and to be long-term shareholders which is in everyone's interest. The management have laid out very clear targets which they expect to meet and hope to beat but that cannot be guaranteed. The management will run the Company in the best interests to achieve the best long-term share price capital appreciation and they are aligned with our shareholders to do this.

We are fully aware of our market obligations and are keen to keep our shareholders updated. To avoid confusion, any meaningful operational, business or price sensitive news will be announced without delay. In addition to this and as per our website, Columbus has made a commitment to publish its production updates at least quarterly to keep shareholders informed, in line with best practice in the industry and like many other E&P companies.

Whilst certain AIM companies chose to provide more regular updates for their own purposes, we do not believe that providing short-term updates on day to day production would help the market fully understand the overall performance being achieved by the Company in our operations. Production performance is just one aspect of how the Company wishes to grow its value. We also do not want to encourage short-term trading through such market announcements. In any company, there will be short-term issues affecting any operation (good and bad) which if looked at in isolation may mis-lead the reader about real performance being achieved. The Company believes that reporting on such matters could introduce even greater volatility to the Company’s share price to the detriment of all shareholders. Reporting on all aspects of production, operational and business performance, taking account of the good and the bad (and the ugly!), will, the Company believes, provide the market with more meaningful information when undertaken in a co-ordinated and measured fashion.

As mentioned above, it is industry best practice to provide production updates on a quarterly or half-yearly basis, with other operational or price sensitive announcements being made without delay. The Company will adopt best practice in such matters and will not seek to obtain short-term gain through communications for the sake of it.
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I have LGO Energy plc share certificate – is it still valid?
Yes, all existing certificates under the name LGO Energy remain valid.
Operations

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Please can you fully explain the potential for natural gas finds on your existing onshore acreage (and any current gas production on your acreage).
Columbus has a strong preference for focussing on oil. The geology south of the southern anticline which skirts the south of the South West Peninsula license areas has proved more gas prone. The Company is focussing on Prospectivity deeper to existing proven oil accumulations.
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Are you likely to buy further gas acreage onshore Trinidad?
The Company is not targeting gas acreage in onshore Trinidad.
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Does Icacos extend to shallow offshore?
The Icacos Private Petroleum License area is based on private mineral rights leases that apply to the land acreage only.