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What is annoying but typical of AIM is that even a great CPR will be unlikely to get us back to the 190+ we reached on the morning of Joe result.
less than 10% on Hammerhead
You only have to listen to the last 2mins of Gils latest proactive investors interview to which he seems confident in additional targets. An updated cpr coming any time soon to confirm and in the words of Mr Holzman a correction in the share price.. make of that what you will.
Some surprising selling towards the back end of this week. Next week is right in the middle of Gils estimate for the issue of the updated CPR.. You'd have to assume its v likely to be a significant % uplift for Eco's share of the prospective resources with the SP to rise in line. If the rns is issued on Monday pre open then the recent sellers have left a lot of cash on the table with no chance to buy back in at these bargain basement lows..gla
I don't think so...
I wonder if the Exxon survey was to test how much of Hammerhead is on our licence and how much of Aurituk and Jethro is on theirs to see if it makes sense to see you keep yours and we will keep ours.
Not much happening until the CPR.
Watched Gils proactive interview after the Joe result and he reckons disregarding the rest of the licence there is 70% upside from this level.
I think perhaps the market tends more to the $5 value per barrel. The CPR will change that balance as it ascribes new CoS to the fields and explains what has been found and what is to play for yet in more detail.
If the drilling is successful in the New Year then even $5 a barrel will prove very lucrative. Add in a buck a barrel for the rest of the licence and Gil will be smiling with the rest of us.
If there is competition for the assets (presuming continued success) that is when the higher $8-10 figures may come into play.
To give some context either Exxon or Total in recent announcements were very happy to add barrems at $2.50 but this was from wildcat and didn't cover the spend.not rewarded.
BP currently struggling in Brazil to turn CapEx into barrels is a good example of the attractiveness of our.licence share.
Posting so quiet 2day, thought I'd just say sleeping giant.
for purchase this morning on quote and deal even at full ask. Has the air of a fishing trip.
In my oppinion, the value of oil (already discovered) still in the ground will be greatly influenced by the breakeven price for future production (the higher the break even price, the lower the value of the oil in the ground).
In the case of Guyana discoveries, Hess has estimated that the break even price for future production is US$ 35/b
Then, assuming a long term oil price of around US$ 60/b, a potential buyer of Eco will earn US$ 25/b above the break even price.
How much will this potential buyer be willing to pay for these barrels? A price in the range of US$ 5-8/b seems reasonable to me
I can't see Jethro being 300-450m... Comparisons were made with hammer and that thing is a monster... Expecting between 600m-1b..
"The thickness [55m] exceeded our best estimate pre-drill expectations, so potentially it is a much bigger discovery than we anticipated."
Best estimate pre-drill was 32.2.
Hil talked about the excellent porosity and the sand body dripping with oil. He also mentioned Jethro was 20km square plus. Taking those into account has led some to look at the P90 expectations and apply an uplift for better porosity and recovery also.
Think Tullow then have him a kick in the balls as they are miserable and dont seem to like good news.
On prices per barrel, the 88p a share per 37m barrels I mentioned yesterday from Hannam note in Oct'18 is also $5 ish a barrel (around $5.50) so this is a good ballpark.
The uncertainty is frustrating for PIs as I can be sure the roadshow had more detail even if off the record or just heavily hinted.
Put it this way, $5 a barrel for what will be drilled (if success continues) by end H1'20 and $1/$1.50 per barrel for remaining prospectivity would lead to a very strong outcome.
Noix - I have mislaid a document that was post drill that had Jethro as 300mmboe as the low estimate and 450mmboe as the high so this interview is interesting. Gil also did an interview with Andrew Scott on 19/09/19 when he said, 'Big, very big Jethro discovery'.
I think Jethro by itself will come in higher than 40mmboe net but you have given me new information. P94 of the CPR below is where I get my thinking from but I will keep looking for that post drill document unless someone can help me out.
On the contrary 40 millon barrels is completely in line with the GH statement in his recent proactive interview, as detailed in my post at 15.28 yesterday. The only possible variable is that the amount that I've allocated to Hammerhead, of 16 million barrels, may be too high. It may also be too low and that's the whole point. None of us know and that's the fact that I'm putting across. The only real value that we have is that indicated by what the market thinks it's worth, currently circa $350 million. GH said in the interview he believes it's worth more. Parhaps you could explain given the comments of GH, how you arrive at this comment, giving sources and figures: " 40m is actually lower than the lowest estimate giving a 40 cent discount."
I've told you where mine comes from, the horses mouth, with an adjustment for Hammerhead.
I can accept a share price - that's a fact. But $5 for a barrel is the lowest price on the reasonability scale and 40m is actually lower than the lowest estimate giving a 40 cent discount. If you chip the figures like that then they are no longer real. Real will be along in a couple of weeks.
Quite and the reason for my post (s) on value is that it is so difficult to value a share such as ECO with the size of the potential prize. There are just so many imponderables.
That said, if we attribute 40 miilion barrels of discovered resources to Jethro and Joe and accept that the current share price has risen circa 80p since the jethro discovery, then the market is valuing that 40 million barrels at $4.60, which sits nicely with your $5 a barrel. There are all sorts of ways of looking at it :)
I find it interesting that Eco as partner remains independent for the CPR update; I know one could say its industry standard and the partners would share such information anyway. Guess my point is Total SA probably have the clearer picture with their kit hence have a advantage over outside suitors.
So will the sale/deal go through before the next drilling campaign? My guess it will remain a "in house" deal IMHO but could be wrong.
Thats why I am still in this it could take off anytime. And as said before the lack of colour on the QP deal adds further spice.
Am looking at taking the next modest profit slice at 300p; but I have got 500-1000p in mind for Guyana inc sale. Have a good day.
Total apples and pears! The Total deal with Qatar is utterly indecipherable as it is wrapped up with multiple asset swaps and sales between them. the only metric we have for barrels in the ground is the one one Gil quotes which is the value that Exxon gives its barrels in the ground, namely $8.
So, let's call it $5 to cut out some of the hype. I still think we are cheap. All those tertiary prospects de-risked and a whole raft of upper tertiary prospects to be added plus discovered barrels ...........and we haven't got anywhere near the Cretaceous yet.
Unless we.get sight of the true value of the Qatar deal with Total (including deferred consideration such as Total interest in Qatar gas fields) the any comparison is apples and pears.
I've made clear the sale is for producing assets I expect people can surmise that equates to infrastructure cost being sunk already. However, such assets are also much closer to decommissioning and costs to be incurred there compared to Guyana.
There are myriad variables but taking them into the.mix gives one an idea of industry prices.
Your inference appears to be that the Neptune/Energean deal justifies the $8 a barrel valuation circulating in some quarters for discovered resources in off shore Guyana ?
This is a more detailed description of the deal and should be read in conjunction with the comments by Tullow's George Cazenove, posted by WilkCoutts below.
Are you not comparing apples and pears ?
Adds 30m barrels (producing) and they have paid $250m for the privilege or in excess of $8 per barrel.
So when we say 100M barrels of oil resources that’s great, it’s a good result but it’s the start to what we are trying to achieve, and it would require further work, and further interpretation of the data that we received from the well,” he explained.
Jethro-One was drilled by the Stena Forth drillship to a total depth of 4,400 metres in approximately 1,350 metres of water. Jethro-One was the first discovery on the Orinduik licence and comprises high quality oil bearing sandstone reservoirs of lower tertiary age. The well encountered 55m of net oil pay which supports a recoverable oil resource estimate which exceeds Tullow’s pre-drill forecast of 100M barrels of recoverable resources. Meanwhile, the Joe-One exploration well was drilled by the Stena Forth drillship to a total depth of 2,175 metres in water depth of 780 metres. The evaluation of logging and sampling data confirms that Joe-One has encountered 14 metres of net oil pay in high-quality oil-bearing sandstone reservoirs of upper tertiary age.
Cazenove noted that though the Joe-One well may not have exceeded Tullow’s pre-drill forecast of 100M barrels of recoverable resources, it is a strong indication of what exist within that section of the block. “The Joe Well opens up a lot of the western side of the licence. The licence has a western side and an eastern side. The Joe Well opens up whole of the western side, and if that had been dry, if we had found nothing there, it would have been difficult to carry and explore on that side of the license. But now that we have found oil, we can use the data from there and map it unto other prospects within the licence. So it is a great start of the campaign; we are so happy and excited to drill two successes but it is still the start,” he explained.
The Repsol-operated Carapa-One well on the Kanuku licence, of which Tullow owns 37.5 per cent, is expected to have commenced drilling with the Rowan EXL II jack-up rig and will test the Cretaceous oil play with a result due in the fourth quarter of 2019.
Cazenove told this newspaper that the successes of those three wells will determine how Tullow moves forward in 2020. “So what we will do in 2020 would be a mixture of further exploration, so again, we will be looking for new accumulations of oil, but we will also be deciding what to do with both the Jethro accumulation and the Joe one as well,” he said.
Overall, Tullow Oil has injected US$80M into the drilling of the three wells offshore Guyana. With U.S oil giant ExxonMobil putting its gross recoverable resource estimate to more than six billion barrels of oil equivalent in the Stabroek Block, Cazenove said is cognisant of the country’s potential.
GUYANA stands to benefit from as much as 60 per cent in oil profits, if discoveries in the Orinduik Block continue to be successful, Tullow Oil’s spokesman, George Cazenove said, as he dismissed claims that the country will only benefit from a meagre one per cent in royalty.
Less than six weeks apart, Tullow Oil, a UK-based oil company, discovered oil twice in the Orinduik Block at the Jethro-One well and the Joe-One well. Amid its success, claims surfaced that the Production Sharing Agreement (PSA) it signed with the Government of Guyana is “worse” than the PSA signed with US oil giant, ExxonMobil.
But Cazenove, in an interview with the Guyana Chronicle, said the PSA must be analysed as a whole. “There is no point talking about the royalty in isolation,” he said. According to the PSA signed between the Government of Guyana, Tullow Guyana B.V and Eco (Atlantic) Guyana Inc., the country could benefit from as much as 60 per cent in oil profit, including a one per cent royalty once the companies commence pumping for oil in the Orinduik Block.
“So we have Petroleum Sharing Agreement, in terms of the sharing which range from 50 per cent to 60 per cent. So if we produce over 80,000 barrels per day, then the government gets 60 per cent share of production and that is absolutely aligned with contracts all around the world, and that is a key part of the contract in terms of where the Guyanese economy and its people will benefit,” Cazenove explained.
According to the PSA, for the first 25,000 barrels of oil, Guyana will receive a profit of 50 per cent. For the next 25,000 barrels, the country’s profit would increase to 52.5 per cent and 55 per cent for the next 15,000 barrels. For the subsequent batch of 15,000 barrels of oil, Guyana would benefit from a 57.5 per cent profit and 60 per cent profit for more than 80, 000 barrels of oil. The profit will be shared between the government and contractor on a monthly basis.
He said in cases where the royalty is higher, the profit with the PSA is lower. “So you may have a contract where the royalty might be 15 per cent but the production sharing would be that much less, because the royalty is that much higher. So it just depends on where the weight is within the contract,” he further explained.
Iterating the need to analyse the PSA in its entirety, the Tullow spokesperson said Guyana is fortunate that at the beginning of its oil and gas life cycle it has transparency due to the fact that the government has made the contracts public.
“In many oil and gas economies, the contracts are not public, so you wouldn’t know what the state’s take is and what the company’s take is,” he noted.
Turning his attention to the company’s successes thus far, Cazenove said though Tullow has made two successful finds to date at the Jethro-One and Joe-One wells in the Orinduik Block, it remains cognisant that it is still in its early stage of exploration.
IJWT - just read your post again more carefully and see you mention the channel too. Whatever the case, feels like a treasure trove at the moment. Let's hope news lives up to the growing confidence.