1.PNR has provided San Leon with $5 million in cash up-front; and 2.PNR will carry San Leon’s participating interest in the first two development wells on the Rawicz gas field including drilling, evaluation, completion and testing of each well in the Permian Rotliegendes formation.
The carry, plus a 10% return, will be repaid to PNR from half of San Leon’s production revenues from the Rawicz field. In the event that there are no production revenues, the carry will not be repaid.
San Leon should have revenue at last but I feel your post is overly optimistic for the following reasons .
Rawicz is supposedly 59bcf ie 20.65bcf net to San Leon .
91% of this is methane , i.e. 18.8bcf net to San Leon
9% of it is not methane . Whilst I'd love to believe it is high calorific value longer chain hydrocarbons and we know it's not H2S , it is most likely CO2 or nitrogen which will need to be stripped out to make it pipeline spec .
San Leon have to pay for 35% of a 7km pipeline , gas treatment works and compressor station . Say 35% of $12m = $4.2m .
The farm in does not include a free carry . 50% of San Leon's revenue goes to reimbursing Palomar for fronting San Leon's share of the upfront expenditure . So 35% of 5 wells at $6m drilled and completed = $10.5m and there is no guarantee they will all be as good as this one .
So if the gas sells at $8/mcf , we are talking $150.4m . Minus capex leaves use with $135.7m minus opex minus tax will leave us with something like the market cap , not considerably more .
I.E. if follow up wells are as successful it will cover PLC costs and wages - which is a start .
Re Siekierki , it is far tighter than Rawicz and has free water , the enemy of horizontal wells . San Leon state on their website that "RPS have attributed an NPV10 of Euro 345 million net to Aurelian" . We now have 35% so an NPV10 of approx Euro120.75m .
It looks like they need to have success in Lewino , Siciny or Spain/Morocco to be worth more than 3p . The good thing is that following Rawicz it at least looks like these prospects are going to get attempted .
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