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14.98p - It's almost as though the last 4 years didn't happen!
“If you build it, they will come” - Kevin Costner
And when I say come back down to earth, I am not being trite. I think back to "analysis" on bulletin boards and from commentators. Off the top of my head, I think of the "respected oil analyst" who declared: "This is a 50p stock in anyone's money" - even as the SP was sub-10p, the oil price was collapsing and the company was going bust (CAZA). I think of the LSE punter who said "I keep all my eggs in the bank of Maggie" & "This company is safer than cash" (MAGP) Or the AIM CEO who, when asked what a full valuation looks like, quoted the "bulletin boards" and declared that something between £3 and £8 p/share was about right. I laugh about it all now. Don't let that be you Rabito.
Let's suppose for a moment that your analysis is correct. Let us further suppose that shareholders are able to realise circa 50% of the value - you are talking about a "potential" 20 bagger. Do you think that this is in any way reasonable? Do you seriously think that you make any meaningful assessment as to such an outcome from this early stage? Based on the "story" from a rival promoter? Based on 3 or 4 drills? Enjoy your trip to Scandinavia and when you come back, let's have some sense.
All I said was please come back down to earth. Listening to the promoter of another company and trying to read across to this company is an exercise in futility. Why waste your time? The potential is huge? Prince William is going bald. So what? I own a patch of grass out the back - the potential is huge! A promoter tells a story. Who cares?
GG, I have not claimed anything. I pointed out that ‘if’ you apply DW’s comments (not mine) regards valuations to Pantheon you get the $4.5M number. People can discern from that what they will. You may have read it differently, but as a wise (slightly patronising) man once said, humans nourish false beliefs.
I actually pointed out the flaws in what was presented by referencing the Oil Search 16 drills and also our own valuation post Alkaid success. I referenced these deliberately to counterbalance DW’s comments. In fact I have referenced the 16 drills in numerous posts before when people have referenced the $3.1 paid by Oil Search
It’s a simple statement of fact that the Alaska potential is massive, the key word being potential. Believe it or not I do have an understanding of the difficulties, in my job I get to meet with Project Managers and sometimes CEOs of companies in the pre FEED stage. Please note this is not an ‘I have got an MSc moment’, rather just pointing out it’s not just you who can reference some ‘relevant’ experience.
I must admit George for someone who assumes to be wrong all the time you are very good at arguing you are right.
“It is a very large structure located in shallow water within a proven play fairway and adjacent to an existing oil discovery...All the ingredients required for exploration success are present in the region..."
The expectation is failure - that is my starting point and in the above example it proved to be. Human beings are fallible - they nourish false beliefs. Therefore reality is liable to diverge from expectations. You have emphasised comments from the promoter of a company whose track record has largely been one of failure and from those comments have arrived at a future valuation of this company. I take it as given that such comments and your subsequent thinking will be in error - my objective is to consider where. You yourself point out that the Oil Search transaction followed a 16 drill campaign yet you say that a 3 or 4 well campaign might unlock $3-4 billion of value for Pantheon? You also said that the promoters of oil companies know more than us. Yet, as shareholders, we are the owners of the company. At the very least, it is our job to discern the difference between promotional activity and reality. What I heard from the 88E recording were the words of an expert promoter. They were words, nothing more. It was a very interesting presentation and I said as much on here. I also said that I might have a dabble with the shares myself. I am certainly not going to take the speculations of a rival promoter and apply them to Pantheon at such an early stage. As I said, you are looking at things the wrong way. In my view you need to look at the FLAWS in what was presented and start there rather than focus upon what you clearly consider to be a positive read across to Pantheon. At the very least, go into speculation with your eyes open. It's as though you have learned nothing from the past three years as a shareholder here! Who was it who said that East Texas NPV's might be in the region of $10-20 per/boe? What actually happened? So, why not come back down to earth, see things for what they are and approach the task at hand with an appropriate mindset?
As you know, I do see an opportunity here and I believe that we might actually make some money from some decent drilling results in Alaska but I do not go as far as to declare that: "...my take away from the 88e presentation was the Alaska area’s potential is massive and we don’t need to convert that much of it to be well rewarded." Do you have any appreciation of just how difficult the task actually is? The expectation is failure - start there.
‘People need to remember however it took 16 drills for Oil Search to spend $3.1 per bbl of discovered oil.’
That’s the bit you missed out. I wonder why you attended the 88e meeting at all really.
To me the final value of Pantheon’s assets will be determined by what another company are willing to pay for them, therefore getting reference points from other deals helps this.
I didn't say you were stupid. That said, you came on here and claimed that 3 or 4 drills might equate to a valuation of $3-4 billion. Your writing didn't come across as sceptical to me in the slightest.
"So admittedly DW’s comments are bullish and their are a lot of assumptions in there, but all I am doing is taking DW’s comments and correlating them to PANR."
Why? To try and arrive at some theoretical valuation for Pantheon? It doesn't work like that.
GG, you make me laugh. Ignore any of my comments highlighting some scepticism and monopolise it with your own.
Hopefully us stupid will get lucky and you can make money knowing how us stupid people will react.
"GG perhaps people that run oil exploration companies know."
Yes, and perhaps they don't know. Perhaps they want to have a company and remain gainfully employed? I can think of a dozen or more current or former companies off the top of my head in that category. Then there are those who think that they are on to something but, alas, reality diverges from expectations. Perhaps these guys are life's adventurers? Does anyone on here remember Tangiers Petroleum? “It is a very large structure located in shallow water within a proven play fairway and adjacent to an existing oil discovery...“All the ingredients required for exploration success are present in the region..." Remind me who said this.
"He also discussed how the amount of drills correlates to realising the value of the reserves, with one well equalling 50% and 3-4 wells equalling 80-90%."
I am sceptical about that but we will see.
"He stated the company would have to carry out a cash raise post Charlie one but if successful the market cap should be between 4-5 times higher and therefore the dilution would not be as significant."
I am also sceptical about that but we will see.
"Now if you correlate that to Pantheon and Alkaid/Phecda , you get 900M x $5 = $4.5billion, of which we may retain 50% post JV. $5 being significantly lower than the $7-12 quoted by the company."
Given my first observations, why would you correlate anything he says to Pantheon? I wouldn't assume that anything he says is accurate. Others might do so - and there lies the opportunity.
"We know that we are fallible and it is the fact that we are participants that limits our power as observers. We think of reality as something independent of human foilbles, whereas our imperfect understanding is very much part of reality. Financial markets reflect the biased views of the participants; they also play an important role in shaping the course of events." - George Soros
GG perhaps people that run oil exploration companies know. DW gave quite a clear commentary regards 88e’s plans regards a final asset sale. He mentioned figures of $4-$5 per barrel for discovered barrel of oil, making reference to the Oil Search purchase and the price of oil at the time of bid and close. He then stated their goal (yes I understand it’s a goal) to prove up between net 200-300M barrels by 2021/2022.
He also discussed how the amount of drills correlates to realising the value of the reserves, with one well equalling 50% and 3-4 wells equalling 80-90%.
He stated the company would have to carry out a cash raise post Charlie one but if successful the market cap should be between 4-5 times higher and therefore the dilution would not be as significant (please note I do believe this is ambitious given our valuation post Alkaid having achieved 88’s target of 100bls/day).
Now if you correlate that to Pantheon and Alkaid/Phecda , you get 900M x $5 = $4.5billion, of which we may retain 50% post JV. $5 being significantly lower than the $7-12 quoted by the company.
So how do we get the money, well a good JV would be a good start. Hopefully enough carry and cash to cover 4 wells. You know how much money these would generate ‘$120M right up the highway’ I believe was the quote. So that would be another 6 wells. So 10 wells completed and we get closer to Armstrong’s 16, however ours will be generating much more information given they should be in production, as per Scot’s comments from the PANR presentation.
So admittedly DW’s comments are bullish and their are a lot of assumptions in there, but all I am doing is taking DW’s comments and correlating them to PANR.
I am travelling in Scandinavia this week so might have some time on my hands to do a closer comparison between 88e farmout and Pantheon.
I will leave Talitha for another day, but with the data we have and DW’s comments you would expect a minimum COS of 50%.
So I understand we have to take his comments with a pinch of salt and PANR track record needs to be considered. The timing of CPUs could also be of consideration. However my take away from the 88e presentation was the Alaska area’s potential is massive and we don’t need to convert that much of it to be well rewarded.
Thank you for whiling away the time on my first flight.
I think you are looking at things the wrong way. Number of wells - who knows? Pick a number. Where is the money coming from? Where are the revenues? The idea that we are 3 or 4 wells away from a $4.5b valuation is ludicrous and if that's what you have deduced from Wall's "economics" then surely that tells you something - is that really what he was saying? If the market comes to believe that, or anything like it, then very good - that will your opportunity.
Yes GG, that is why I followed the point up immediately with the reference to the 16 drills completed before the Oil Search deal.
Although in fairness he is more qualified than both you and I in these matters. I would agree he would have been in promotional mode when he made the point.
How many drills do you think it will require and your not allowed to say between 4 and 16?
When your outflow exceeds your inflow, your upkeep becomes your downfall...
"One thing is for sure if we apply DWs economics to Alkaid/Phecda alone you are looking at being 3-4 drills away from an asset worth in excess of $4.5B of which we should still hopefully have at least 50%. People need to remember however it took 16 drills for Oil Search to spend $3.1 per bbl of discovered oil."
I thought Wall talked a good game but I wouldn't apply his "economics" at all. 3 or 4 drills away from $4.5b? Back to earth please.
Thank you Rabito79 for all the info , I will look into it , and hope they don't get the farm out till after Feb and then tranfure some of my founds from 88E in to this share if they do well .
BH, I don’t believe it will be too late to invest after the farmout deal, however I do believe there will be a significant uplift on farmout announcement. Indeed I will likely be averaging up from my current position post farm out.
You will know from the recent 88e presentation the interest shown in their conventional farmout. In Talitha alone we have similar numbers to those in the Western blocks of 88e with our location adding to the commerciality. The data itself seems to have third party verification given the eSeis deal for which I have posted about previously.
In Alkaid we reportedly 900M bls OIP which has been shown to flow in commercial rates in an admittedly short well test. This test took place on the edge of the reservoir with PANR and eSeis modelling showing reservoir quality improves as you move to the heart of the reservoir. This would seem to significantly improve the COS as per DWs commentary for the Charlie COS.
The above doesn’t really answer your question but helps when considering risk reward. It would have been easier (but not necessarily better) if HAL had taken up their options but I am happy with the proposed reasoning and discussions around why they never. To me the eSeis payment/royalty swap reduce the risk of it all being lies. Furthermore Great Bear brought some well known backers in Riverstone and Farallon which also add to credibility something which is in short supply on the Legacy Pantheon side.
One thing is for sure if we apply DWs economics to Alkaid/Phecda alone you are looking at being 3-4 drills away from an asset worth in excess of $4.5B of which we should still hopefully have at least 50%. People need to remember however it took 16 drills for Oil Search to spend $3.1 per bbl of discovered oil.
I would again point out I don’t own 88e shares but do think the risk reward their is good. Very similar to where we were in January with Pantheon needing some success from Alkaid/Winx. It would appear we have got that and I hope 88e will get some too.
That depends whether you believe a farm out will actually take place and whether you want to sell at 28p, 100p or at several points in between. Have a look at the charts and decide!
I am looking to invest in this share but are they telling the truth the whole truth and nothing but the truth , about what drill results , i am still holding back intill they get a farm out deal or will it be to late to invest then ???? .