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Anyone have any thoughts on the Bankruptcy Court no longer being the beneficial owner of 4.9% of Falcon stock? Maybe my LSE site isn’t updating properly to see no comments on this.
I thought the rig had already moved?
Geo W. is a real possibility. Great guy is you run into him. POODS
Poods: I know the name but don’t personally know the gentleman. He’s associated with the oil industry but that’s the extent of what I know of him. I want to think I met him through a George W. event but wouldn’t swear to that.
WetWater-
Wondered if you know my friend Bill Munn in Midland? POODS
hydrogen, Origin's agreement with Falcon calls for three more wells with two of them being full 3 km productions tests. Cenkos has noted, with others agreeing, that the $250 mm in Aussie dollars is more than enough to cover all costs for the next three wells without any contributions by Falcon. It would "almost" be a shame if POQ reaches a deal to sell our 22.5% interest next spring -- as Origin won't have reached anything close to their $250 contribution by that point, but if the sale price is good -- no worries mate!!!
Interesting thought on the stacked play. I don’t think Origin would complete out of the same hole - if you drill a successful first Kyalla well and then screw up the hole in a Velkerri play your screwed! It’s done at times but I know the big players here in the Permian just walk the rig over. In a field development the well might be drilled down to deepest play and only attempt to complete the secondary zone after the primary zone depletes. I’m hearing people are very pleased with with the Kyalla test. If that holds up the rig would likely remain in place - do they drill another Kyalla test or move to drill two stage3 wells on the same pad? If they initially skip the Velkerri wet #76 well do they drill that at some point after they are through with the Kyalla 2 stage 3 wells - would be nice but we will just have to see how things develop. So many opportunities - so few wells to prove them out.
I’m thinking the initial flow test will be completed within about a week. The Kyalla well has had sufficient time to clean itself up - Just my opinion. Here’s hoping for gang buster results!!
hydrogen -- that would be a real bonus if they could use the single vertical to drill multiple horizontals. I don't believe that is possible when looking at running full length production tests, but Orson or Nanodarcy would know for sure. In stacked plays -- I am fairly sure that after the first vertical and horizontal is completed -- they just walk the drilling rig over a dozen feet or so (and our Ensign 963 contracted rig does walk -- see fun video attached) and drill the second vertical and horizontal. Theoretically -- a second horizontal could be drilled from a single vertical, with the deepest well drilled first, but since the gas and liquids from the first well will be coming up the vertical section -- I don't think the second horizontal could be successfully put into production -- but I could very easily be wrong.
https://www.youtube.com/watch?v=sHAtbVgAu3Y
Thanks Wet, I was fairly sure that you were referring to the 2C area around the Amungee -- (which also represents the size of a hypothetical development scenario that David Close and Origin submitted to the Pepper Inquiry), but wanted to make sure that was the case as it wasn't entirely clear for any new Falcon owners.
As you state -- if the Lower Kyalla 117 well performs as hoped -- where does Origin go next? A full length 3 km horizontal into the Kyalla would be great, but that leaves the mid-Velkerri B shale (and potential C shale) in limbo. A really nice possibility would be to test stacked plays with a 3 km into the Kyalla and a 3 km into the mid-Velkerri both from the existing well pad???
This would be the best of both worlds -- as the current 117 well location if far enough away from the Amungee zone that any successful mid-Velkerri from the current well pad would add another 6.6 TCF or more of contingent resources -- while continuing to prove up the Lower Kyalla with the first of two brand new stacked wells. This would also get Origin two of there three remaining exploration wells under their belt -- with a small cost saving by using the same well pad and testing out the stacked play value added option. Then the last of the next three mandated exploration wells should be over in the Velkerri east location that already has some of the structural pad work completed.
Newtofo: Maybe I wasn’t clear - Davy’s 40p was for the Amungee well including the area assigned in the 2C resources. This acreage covered 12.5% of the Beetaloo. If Origin were to step out and drill two additional Velkerri wells then it might be possible to prove up 2C resources on 37% of the Beetaloo’s Velkerri B which is said to cover 97% of the concession. Would Origin step out or drill immediate offsets in the current 2C area - don’t know. If they drill to prove commerciality in the current 12.5 , with success, they greatly de-risk the 6.6 TCF play.
Not every new well would add another 40p unless they prove up additional 12.5% blocks if that makes sense. At the end of the day Falcon,s biggest problem is they don’t have enough wells to prove up the the concession - whether that is the Velkerri, Kyalla, Hayfield, or really ideal all three.
There is not way each well would be worth 40p in a field development situation - not what I was trying to say.
Hopefully the future drilling will focus on the Kyalla but then we have the same discussion - do you prove up 2C on vast blocks or go for commerciality - that I really don’t know. Maybe by the end of the year the picture clears.
Hope this better clarifies what I was trying to say. On the road and on a friggin iPad so maybe not the best answer.
Newtofo your assumption is right of course. What however does move the dial materially is if assumptions change on likely Beetaloo commercial development and/or analysts' assumptions on costs and revenues. It's probably worth pointing out too that costs may still be higher in OZ than they are in the US given, as they see it, they have a better understanding of the risk issues down under. On the other hand LNG prices are materially higher in Oz and SE and E Asia....
Thanks Wet -- for the positive post on Davy's evaluation -- as success in the Kyalla would certainly move the needle on Davy's risked numbers for both the Kyalla and for most likely for the rest of Falcon's permits as well. The only conflict that I see with your assumption that Davy set a 40p evaluation based on just one Amungee well -- as I believe that 40p number is based more upon Origin's assumption of 6.6 TCF in the vast area surrounding the Amungee well. Even though Davy referred specifically to the success of the "first" Amungee H1 well -- their 40p was most likely in reference to Origin's stated presentation to the Pepper inquiry that a future mid-Velkerri B shale production scenerio would cover a much larger area surrounding the first Amungee well.
To clarify: if Davy was only taking into consideration one well for that 40p number -- then it could be assumed that every new well would increase that evaluation by another 40p. Therefore, if it will takes in excess a few 1000 wells to drain the B shale in mid-velkerri -- do we multiply Falcon's 40p evaluation by a few thousand? That would be nice but not what Davy was intending I don't believe.
I believe the Davy evaluation will be extremely under-valued if we get the anticipated good news from the Kyalla 117. In Davy's evaluation they risked the Kyalla at 12% - if the Kyalla makes a nice well I believe that risk will be lifted to 60% or so. The Kyalla evaluation IMO should be on par in not more than the Amungee. If one amungee well is worth 40p to Davy what would a total of three Amungee wells be worth if stage3 were drilled - add to that a hopefully nice Santos well to the east helping prove up the acreage in between. If the Kyalla produces the same volume along with the condensate three (maybe 4?) Kyalla wells could be worth more than three Amungee wells. Of course if 3-4 good Kyalla wells are drilled the Kyalla would be declared a commercial discovery IMO resulting in a lot of the remaining risk will being removed. I don't recall Davy assigning any value ($200+/acre?) to anything outside of the already declared 2C Amungee well resources - that needs to be added in the equation as that acreage certainly contains lots of potential. I don't have time to go through my all my thoughts right now - packing for a trip - but I still see $2/share written all over this stock with a nice Kyalla well. I know some see more, some less. I'm not a reservoir engineer so take this for what it's worth - which is not much!
Thanks newtofo,
Much appreciate the explanation. Some news soon would add some more momentum to an already fast moving sp. Fingers crossed.
Atb,
Northern
Newtofo, a 7.5% drop from 30% to 22.5% in our stake I may be wrong, I think is the equivalent to a 25% reduction i.e. from 52 pence to 39 pence in the Davy target price - which just happens to be (so I gather from previous posts) the same as the Cenkos target price earlier this year. Funny that...
Notwithstanding that if our chaps have a successful frac Down Under (we're not going to have to wait too long I hope) revised figures will be a lot more bullish as success in the Upper and Lower Kyalla will be more likely linked to further success in the Velkeri, and if combining them all it will conjure up dreams of stacked plays and very exciting cuts in Origin/Falcon's production costs. What's more greater wet gas in the play will bump up further the overall yield and bring closer analysts' and others' decision to factor into their numbers a higher probability that the Beetaloo will ultimately become a commercial play. Everyone says the latter is only a 10% chance today. If that figure doubles to 20% the valuation of our stake doubles too!!
Northern, this 52P is based almost entirely on the mid-velkerri contingent resources with only 8P allocated for a wet gas play in either the kyalla or velkerri east well. This would be an "initial valuation" with any commercial flow rates from either wet gas location most likely getting a substantial bump up in Davy's valuation model. There would be a discount for the drop from 30% to 22.5% as would be expected, but the bump up in valuation would still be substantial I believe and should offset the drop in percentage ownership by a wide margin.
Initial rates. Just had a quick look at the valuation below by Davy and is that a starter evaluation based on the first drill or the percentage they own. Looks a low evaluation if it relates to the 22% or do people think it is realistic?
Atb,
Northern