The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Flow rate of the gas will also play a big part as the four existing vertical wells flowed at quite low rates compared to on neighbouring licences - but still enough to make a material difference if proven to be a success at up to 1.6mmcfd, or close to 300boepd (on an oil equivalent basis)
I think the market has called this right with a share price of 11-14p based on current ops. By YE if Block are successful in having stable production rates of 1500 bopd and oil stays around $60 I'd be looking for the share price to be in the high 20s, maybe even low 30s.
MP
I’m aware that they’re flaring gas (there were photos and videos of it happening during testing) - just pointing out that the main gas resource is based on the lower zones
Not flaring it from the lower Eocene and Cretaceous where the 2C resource is based on - oil is in the middle Eocene where the current horizontal drills are trageting
Hard to compare the two as believe that licence is one Tanzania, and at a different stage. For example, Chariot were recently awarded a big chunk of a licence with over 300bcf in Morocco without having to pay anything for it. Really all comes down to what Block achieves itself with regards to drilling this gas and the data that is recovered during those operations
Garyn we are currently flaring the gas so it is present
Juts pointing out that the current open market value for 2C gas resources based on a current deal is $80 million for 763 BCF 2C. BLOE have just over 600BCF 2C gas.
Why does it have virtually no carrying value on the balance sheet if it underpins the market cap? Until they drill to target the gas and the outcome is known, I personally don’t attribute a lot of value based on a historic gas find dating back decades for an unrisked amount of 2C. Obviously if they are able to prove that amount and that it can be extracted commercially, then the carrying value would increase significantly at that point
Based on current market offers for 2C gas resources (See AEX & SOLO- $80 million equivalent for 763 BCF) The 2C gas more than underpins the current mcap alone.
Meant even without the gas!
If I remember correctly PH was saying 8000/10000 bopd within 2 years without the gas. That may be optimistic but the probability will be that all our wells will have reserves, some more that others and even half that figure will give bloe massive free cash to use.
We have the funds to drill these wells in a proven and establish place. The infrastructure and ability to sell is coming together. All the news coming out from block is positive.
If you do the sums, even without the oil then this does look like a share to hold.
Jrlomax and magigpuppy, thanks both of you.
$36 is the net to block with Brent at $65, adjust the net back with movements in the price of Brent.
1000 bopd x $36 = $36000 per day ($13,140,000 per year)
1500 bopd x $36 = $54000 per day ($19,710,000 per year)
2000 bopd x $36 = $72000 per day ($26,280,000 per year)
Current Market Capitalisation = $56,000,000
MP
My understanding is that 36 dollars per barrel at $60 Brent is net to Bloe. So on a 1000 bopd it’s $36000, a day
Jrlomax, thanks for your reply. Are you saying that BLOE's share of profit per barrel is 36USD at 60USD Brent or that the 36USD netback would be the figure that would be subject to the split between Geo gov and BLOE as referred to in the PSA?
Paul has stated $36 net back at $60 dollar Brent numerous times, base your calculations on that
I have based my investment in this share on very conservative calculations. I work on the basis, as has been mentioned, that Block only, sees 40% of profit, that it only gets £40 per barrel of oil and that it only achieves a modest p/e ratio of 10. On that basis, even if well 16aZ is flowed at 700 bopd, I still have a share price in the 10-12.5p range. If well 38 is flowed similarly, I see a price in the 20s. Each additional well flowing even at that modest rate would see a similar increase imo. I am prepared to sit and wait for the back to back drills are complete as unless 16aZ is a complete outlier / fluke which seems very unlikely, anyone buying in at the current SP and prepared to hold for a year or two should imo see a very significant return on their investment. Just my view. I wish everyone good luck.