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Morning all,
The TRACS CPR outlines the commitments for the various stages of the Guercif licence (see p6 [p99 of the Prospectus]) and there’s a requirement in the first extension period to “Acquire and Process 200 sq. km. of 3D seismic over Tertiary prospects including AVO, Rock” at an estimated budget of $2.5M ($12.5k / km2, consistent with Keith’s estimate of costs).
https://wp-predatoroilandgas-2020.s3.eu-west-2.amazonaws.com/media/2023/08/20230810-Project-Allossaurus-Prospectus-FINAL.pdf
Also, back in February of 2023, Paul covered the issue of 3D in the IMC presentation Q&A (from 47m12s):
https://youtu.be/7xbTMWdGHtQ?si=CJ6Vaki3-gsJ4PwD
“Yes, in the next phase we will have to shoot 3D seismic and that’s part of the commitment. However, we’ve got at least 18 months to 2 years to do that. We do not see that as being a key objective for us… there are parties that are more interested in the oil potentially, one or two parties at least are more interested in the oil. It would be advantageous to us to allow them to shoot the 3D over that part of the licence for equity in Jurassic oil, basically. And we will initially focus on the gas. We have MOU-NE but we’re developing a number of other prospects on the licence. We have to relinquish 25% of the licence this year but we have plenty of fallow areas to relinquish. So I would prefer that we found a partner to progress the 3D in the Jurassic.”
It’s interesting that Paul mentioned 3D over the Jurassic when the licence commitment specifically mentions it being over the Tertiary, but perhaps there will be some wriggle room with ONHYM with regard to slightly amending the terms for the 3D requirement. However, ultimately, I suspect the issue of shooting the 3D will be the responsibility of the next operator, not Predator.
If you multiply several conservative percentages together you get an ultra conservative percentage.
Also, the Jurassic upside is enormous and it’s $3m to drill - why would you not?
Thanks Keith that does help to clarify a lot but I am a bit confused why we are going to drill a well that only has a 12% chance of success. I would have thought drill one with a far higher chance and use that to sell on for the CNG gas or is there only this field for that. Either i do not know or cannot remember. Also i do not seem to remember the odds being so low. I always thought they were meant to be higher seeing that we know the gas is there. What we do not know from i can gather is how much and the flow rate.
3D seismic could cost anywhere between $10K - $100k per km² depending on resolution required, compared to perhaps $5k per km for 2D. 3D is of great importance for getting a $150M offshore well in exactly the right place, much less so when your onshore wells are less than $3m a pop. Paul & Lonny seem to have done pretty well so far using 2D, and I would expect them to continue not to bother with the time and expense of 3D for the shallow biogenic gas - these fields are likely to be of vast areal extent, and cheap, fast & easy to drill. There may be good reasons for using 3D for the Jurassic carbonates, where the reservoir structure is likely to be more complex, and this is one of the reasons that Paul has stated that he would leave the development to an outfit with deeper pockets and more employees.
It has always been the case that 2 or preferably 3 or more producing wells would be required for ensuring continuity of supply for CNG, and this is what there will be. For G2P, of course there will also need to be continuity of supply, and for greater gas offtake you will require greater gas flow, therefore more wells. Paul has made it quite clear that G2P is a project for another company.
All this is pretty obvious. I'm not sure why this topic is now being raised as a negative for PRD - it is simply not relevant to currently planned operations.
Harry Christa.
I responded to the question if there was a conflict between chariot and predator.
If you wish to introduce additional facts, please do so for comment by others.
Surplus gas generated in Morocco can easily be sold in Spain.
Jimmy
As the seed of monetisation is being planted in a more sensationalised way the derampers have got to play their hand. Those who are just invested have got to form their own opinions. There is a reason why the share has been good for traders as Paul said himself.
Just an instinct thing with me, can't shake it off
Hi Jimmy,
Thank you for your response.
I get those points of course but Paul has mentioned that potentially we could have too much gas to know what to do with.
So I guess the point is should predator and predator shareholders be weary of chariot and chariot shareholders in this race that we’re seemingly in as surely predators onshore licence is far more attractive short and long term.
I am no expert of course but wells offshore let’s say in the ten’s of millions. Infrastructure offshore for these potential wells are in the hundreds of millions. Versus onshore wells of a few million and infrastructure probably in the tens of millions.
If predator can prove up then surely the maths speak for themselves.
If you have a plentiful supply for a decade or two why would you invest or indeed be able to compete price wise with predator?
It is just how I see it when reading between the lines.
Come on Jimmy get it off your chest. Every post of what once used to be a welcome fair perspective is now mentioning 3D seismic. Although it would be great to have I recall it didn’t do Sound any favours. Please save your not so subtle ramping of Chariot for their board.
Hi ford,
Good points.
Chariots offshore anchois field is likely to be used for power generation, which requires a high level of certainty of long term gas flow and gas which is highly processed for international pipeline specifications.
Predator are going for cng, so it does not incur the high cost of processing for pipelines.also because it does not have 3D seismic its long term supply is not as assured without lots more production wells.
So in my opinion, no conflict between chariots offshore and predator onshore.
Jimmy
GRH. .. .. . Thus, it will be readily apparent that
🌟The period between flow testing
🌟And Jurassic drilling/testing
🌟Needs to be minimised
I believe that is being very achieved
VERY effectively 🔥
Should of said “would impact” not would not 🤦♂️
Would you not agree though that if predator is first to gas sales that it would not impact Chariot.
Also if predator had enough gas onshore with low cost drilling etc etc that it would not impact the offshore, high drilling costs, large investment needed and several years away from gas that chariot has?
Thanks Bowsled, my thanks also to Jimmy, BRV and Graham.
I believe Bowsled makes an extremely valid point and perhaps a great deal of lack of Comms (that I have complained about) is all about keeping a very very low profile.
Have a great weekend all
MEM
GRH. .. .. .. 29.9 + % mandatory bid
50.1 % de facto control
75% can force through EGM
90% compulsory mopping up of 10%. M&A:
🌟Fully hostile bid = NOT likely
#PRD owns licences
Bidder needs ONHYM agreement
🌟Low ball bid = VERY likely
🌟Bid following flow testing = EXTREMELY likely
But not reflective of Jurassic values
🌟 Risk of unwise PIs accepting below value
Whilst I have always had reservations about PRD's comms strategy, it could well be that Bowlesd is right and that there may be a real plan behind it.
Either way, we would appear to have some great assets (VALUE), and some great posters who add real insights and information (BRV came to bat again today).
And I have always felt we would all be better served by letting the driver drive than indulging some mewling kids on the back seat constantly howling "Are we nearly there yet?"
BowlesD, I thought was a very observed post. My own view is that the chance of a hostile approach is low but there remains a possibility that an attractive (to some) offer comes in too early on the value-creation curve.
That will be for shareholders to accept or reject, should it eventuate.
But I do agree with the general proposition by Bowlesd that we (the shareholders) would likely be better served by delivering a Big Bang outcome than by drip-feeding small results.
Anyway, have a good weekend all and may we have some great weeks and months ahead on the good ship PRD.
Jimmy and BRV,
Thank you both for your excellent, objective contributions here.
Sensible analysis, devoid of heroics and subjective manana possibilities.
The drill will tell all, hopefully very shortly. In the meantime, the opportunity opens up to CHAR to share the limelight in Morocco. I wish them well, though my money is invested solely with PRD.
Afternoon Jimmy
As you say, that’s a lot of reservoir! And we only need 1-3mmcfgpd to reach the minimum threshold for a commercial CNG development, which is why I remain very relaxed about my investment in PRD.
At the Proactive presentation last month, Paul stated that the most significant residual risk was the degree of formation damage:
“The risks with the testing is getting through the formation damage. We believe we’ll get through the formation damage but we can’t be 100% certain, nobody can be 100% certain of anything in the oil and gas business, but we believe everything’s lined up to do that, and we’ve got the most powerful tool that we need – Sandjet – to do that.”
So the comment that really caught my eye from the RNS released the other day was relating to the A sands:
“We have also encountered shallow higher pressure gas that was better protected from formation damage whilst drilling by the setting of a shallow casing string. This can also be perforated and tested now using Sandjet, even though it sits behind two casing strings.”
So the probability of successfully flowing gas above the threshold of commerciality from the A sands has increased significantly due to the relatively low levels of formation damage in this zone. As Paul said last month, the A sands alone hold about 30Bcf of gas which is worth around $150M net-backs to PRD (cf our current Mcap of £55M).
And then there’s the huge upside from all the other reservoirs as you mention.
As for the rationale for drilling the Jurassic in the near-term, my feeling is that Paul’s preference will be to sell PGVL asap after successful flow testing. However, if we don’t drill the Jurassic before any sale then this would potentially leave too much value on the table, IMO. Again, in the Proactive presentation, Paul stated clearly that he has no intention to develop the Jurassic as it’s far too big an undertaking. But a successful MOU-5 result will hopefully ensure an extremely competitive M&A process.
Finally, on the topic of O&G companies being grossly undervalued (as discussed earlier), it’s interesting to read that ADNOC has been sniffing around BP. With BP’s P/E of ~7.5, it’s no wonder it’s a potential target... as I’m sure we will be too once the flow rates and MOU-5 drill results are announced:
https://www.reuters.com/markets/deals/uaes-adnoc-recently-eyed-bp-takeover-target-sources-say-2024-04-11/
Both testing and drilling are planned.
Jimmy
Can they tests pressure connectivity in MOU-5 (to the 2m MOU-4) as a proxy for seismic. While further drilling would still be required we will not likely be around for the full prove up and the BoD may prefer to indicate the likely multi-TCF potential to a degree of certainty for corporate activity purposes.
The recent financial statement updates included a comment that 58 meters of shallow m1 reservoir in mou 4 had now been recognised as gas bearing by nuetech. The independent technical report did not include such a reference . In addition mou 2 is now reported to have encountered 100 meters of variable quality reservoir in the mou fan reservoir, but no confirmation if they are gas bearing or not.
In the mou fan reservoir we now have 21 meters in mou 4, 50.5 meters in mou 3, 100 meters in mou2, 12 meters in mou 1, total 183.5 meters.
The new A sand has 11 meters in mou 3.
The new m1 reservoir in mou 4has 58 meters.
The ma tgb 6 reservoirs in mou 1 are 10 meters and 11 meters in mou 3 and reported as in reservoir communication.
Total reservoirs requiring flow testing approx 273 meters of potentially gas bearing reservoirs.
I believe the market will seriously re rate predator if it successfully flow tests these reservoir that have a potential to flow a combined 273 mmcf per day.
To me this is the low risk strategy to increase market cap , compared to follow up drilling of 2 meters of jurrasic carbonates that will require 3D seismic to evaluate.
Jimmy
deification of paul & lonny does nobody any good.
they may have reasons for waiting to test until mou-5 is done also but haven't necessarily gone about it the right way or explained things brilliantly and by own admission taken their eyes off the ball resulting in several months delay.
we are here because we believe the risks are reasonable for the gas which may be found but those delays have opportunity costs. the bod just dismiss this out of hand, they better have actual gas flowing as he will look a proper **** if not given the hubris.
i would just prefer a more measured style and where timelines slip then revised timelines they can stand behind instead of fall behind.
No I am not Jimmy Lea.
I am invested in both chariot and predator and do not see any conflict in doing so.
I do not believe the conspiracy theories about chariot trying to undermine predator.
There is enough gas demand in morroco for both companies to be very successful.
Looking forward to chariots imminent drilling of low risk loukos prospects, and eventually flow testing from predator.
Jimmy
GRH. On X. .. .. .. I wonder
If an LSE poster called 'Jimmy'
Is actually Jimmy Lea
Who runs PR for Chariot?