They seem pretty good to me I certainly dont think they will differ too much. Just a little uncertain whether there will be an N4 or new Likonde drill? Much depends on that long awaited "new" TDPC agreement.... difficult to be sure without that. And of course without that how much are we likely to get for KN1 if we could lose some of it?
So yes maybe $9m in the bank but with no replacement income for how long? (EPS for N1?) It will dwindle so needs to be put to work in replacing KN1 income.
We need $9.5m for Argo. Possibly $15m for N1, N2 and N3. Leaving us $5.5m plus what we have currently. Circa $8m or $9m in bank after costs. We may need some funds to put in place for funding our new project.
$50m? $1m per month for 7 years? Maybe 10? OK, on a reducing flow rate but even so! Only 4 years at $1m per month and we are at $48m; another 6 years at a third of that is another $24.... Even you highlighted that the graph used in the corportae presentation is totally unrepresentative.....
And don't forget, that cash wont be there once we have used it to fund two drills with an average of 45% COS...
Bad for the balance sheet. Mate we'd have $30m in the bank, nothing better for the balance sheet than that. When I'm discussing figures for Kiliwani I'm talking our share of the profits. Our share of the well over its expected lifetime is $50m so I feel $30m upfront for our share is fair??
Point taken TT my comment was very tongue in cheek... Refinancing would be the best option then; pay off ARGO get three times as much for the same interest and plough a lone furrow. Subject to satisfactory conclusion of all outstanding Ruvuma issues..... including a route to market.
The key being Crusty......we've already hit a commercial well in Ruvuma at Ntorya-1. If we were wild cat drilling I would completely agree with you but we are only drilling a step out well 1500m away from our discovery. Our acreage is surrounded by fully charged gas reservoirs which produce for fun and our discovery is no different. Ntorya-1 was the largest light oil discovery in Tanzania and still produced 20mcf\d aswell. We have already bagged 70bcf for the Ntorya well which is nearly 2.5 times bigger than Kiliwani. Likonde well which we drilled nearby showed huge potential beyond belief and our Ntorya-1 discovery produced 20 mcf from 3m perf which is very, very impressive.
Ruvuma is going to be huge and I want to keep 75% of that asset because I'm greedy !!! I didn't come all this way to let it slip through our fingers at the last moment. Kiliwani is a baby........Ruvuma is the Daddy and I am talking potential Ndovu !!
And I would tend to agree with you TT on the KN1 production figure and hence I would be reluctant to sell up too early. It is a trade off; which is the most financially efficient way of funding Ruvuma? How much of a "discount" might we sell KN1 for, might it be more efficient to farm out a slice of Ruvuma or if we can borrow funds very cheaply might we be better off doing that.....? It's all about the "cost" of the money.... Interest vs Ruvuma dilution vs KN1 "discount". The only one of these that is fully quantifiable is the interest. However we could end up farming out Ruvuma and it costing next to nothing if NT2 & NT3 end up being "dusters"! I wouldn't mind giving away 50% of nothing!! ;-)
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