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I think we should be aware that there are a multiplicty of value-crystallistion mechanims that could actually come into play here.
I know that Morocco is the "blow the doors off" component here.
But, as regards CCS/EOR (which I was originally here for and about which I remain very interested to the positive), there is every possibility - assuming proper structuring - that that whole thing could be effectively spun-off into a "green bond" (probably out of Luxembourg - probably the best green bond exchange in the world at the moment).
That would crystallise the future royalty streams from the CCS/EOR now and leave PRD with upside equity participation.
The spin-off would be cash crystallised - sale by PRD into the SPV issuing the bond - and thus available for distrubution.
Any of PRD's advisors listening?,,,,,,,,,
It appears that the gap between SP and potential blue grows ever wider.
Let’s hope there’s a decent ‘laccy band connecting them.
The numbers are actually very attractive.
The more so because of the calibre of the posters who put those numbers forward (when it comes to DYOR, I would always counsel any newcomer to have a look at a poster's history; from that you can usually get a good sense of the quality).
The SP is not currently reflecting anywhere near those numbers.
That could continue to be the case for a while.
But, if you hold to term, it DOES NOT MATTER.
Because the value-crystallisation mechanism is a form of payout (special divididend, dividend in specie, whater - there are many ways to unlock).
So, any worried about the current SP should know that it may not be even remotely reflective of the VALUE here.
And you don't even need for that mis-alignment to get corrected (it may do, it may not).
All that matters is the crystallisation (probably special dividend).
Effectively, pay-out of the terminal value.
Very unusual situation in a listed company.
But very attractive when the arbitrage would appear to be so large.
Holding through the squalls might prove rather more than just profitable.
That is just my view.
And I am just arandom BB poster who might know nothing about anything.
Just playing around with figures the company have provided :-)
The 180Bcf/yr is the projected demand from gas-to-power once LNG is in place and is referred to in the document which LN kindly posted yesterday. I’m pretty sure if we were able to supply that quantity of gas, the Moroccan govt would pull out all the stops.
Afternoon GRH, Mick ....
My thanks to you for continuing to share your thoughts and calculations !!
The lower number net to PRD did cause a large smile :-)
At a production rate of 100 mmCFGD it appears that the Moroccan industrial market could consume such a rate with some users transitioning from oil .... so doable IMO
Rates at 500 mmCFGD or greater will need gas-power consumers and export market. The markets are there but more work wrt logistics, agreements and approvals ...... so eyes on the prize
Good afternoon GRH and MT,
Sooner or later people are going to cotton on to all the pointers, often in clear sight or partially hidden in various RNS, Presentations etc.
These figures are HUGE, why would PG even mention these headline figures ???
There is growing evidence that PRD are sitting on something not just truly special, or company making, but of major significance to North Africa and its politics. This will put Morocco on the world NG Map and PG is the ‘architect’ of all of this.
I just keep buying more and more ahead of the new CPR and any joint venture/Finance announcement:)
Gentlemen, gentlemen, $16Bn a year sales for a £18M market cap company? - if you keep going like this you could be accused of ramping...
Also, if MEM is correct you can double those figures. Should the field prove to be Leviathan- sized, you can then quadruple them again :-)
So that’s 1.8Tcf @ 180Bcf/yr for 10 years.
Over 1 year:
$8/mcf brings in $1440M gross
$12/mcf brings in $2160M gross
$8/mcf brings in $14.4B gross
$12/mcf brings in $21.6B gross
wouldn't it be interesting if the high case (per recent PRD presentation ) resource estimate
(pre a new CPR)
was being profiled at almost exactly the same production rate as Kela 2?
Looking at very much lower numbers:
Did anyone find it interesting that 'even' (!) a nett 295BCF
over 10 years ...yields undiscounted nett cash of $1.78BN
Thanks for the up to date figures :-)
I had understood current production at Kela 2 to be about 180 BCF per year.
Please humour me and hold THAT PRODUCTION figure in your mind...just for a few days ...
To be continued??
Hot off the press, posted an hour ago...Algeria provide half Morocco's gas, just in case anyone unaware..very serious indeed
CNPC state that Kela-2 is running at full production capacity of 10.7bcM/yr, or 378bcf/yr.
The presentation states that current Moroccan gas demand for power is currently 100mmcfd,(37.5bcf/yr) Overall gas demand is projected to rise to 180bcf/yr with the introduction of LNG in a few years time.
Currently, power market pays $8/mcf
industrial mkt pays $12/mcf
If we could grab a large chunk of these markets while our competitors are sitting on their thumbs…:-)
I agree...there is something that doesn't quite jibe re the road expenditure...
it's just SO much money for (at present) seemingly little reward...there has to be more to it!
Obviously, there is a lot we don't know about Morocco's plans...
(the geo politics meaning they are partly under wraps at present)
but I reckon their plans are mighty big
BTW (as if)...
1) has anyone considered the current annual PRODUCTION profile of Kera 2 ?
2) has anyone then looked at the 9 September PRD possible PRODUCTION profiles?
They are not my figures...they come straight from PRD
I might find time to publish some more ...production led...maths in a few days
Guercif has a population of circa 90,000, it already has a good road up to the coast (N15) to Nador.
Is this a way to talk about the Finance for a tie-in to the Mahgreb pipeline, and take gas up to the coast, Power Stations and export, the road might be a red herring.
It seems bonkers to spend these sort of sums for a new 'road' for a population of 90,000
The Nador Port article states that it is currently being developed for LNG, coal, & oil IMPORT. Not sure of the economics of trucking compressed gas from Guercif, then liquifying it at the new Nador facility for transport elsewhere in Morocco.
Intriguing find on the road Wacky, thanks very much, and some great general discourse over the past few days led by GRH’s ever stimulating contributions.
My only gut instinct challenge on the road development being a massive signal of OHNYM & PG knowing more than all us shareholders is as follows:
- Road leading from a gas field to port at the coast would be for export? If this is the case, why not just begin a project to tie into the Maghreb pipeline instead? Would be a lot cheaper, and a more efficient way to export gas without the obvious limitation of trucking CNG.
- There is currently massive spend planning on the LNG and power gen side at Jord Lasfar on Atlantic coast (involving PRD as one of the interested parties). Why then would government spend loads on developing a separate export facility. Intregration of plant and civils for import/export would surely make cost sense?
Don’t think below link has been posted before (although I can’t believe that), sorry if it is a re-post, fascinating from an overall gas strategy perspective. It also pre-dates MOU-1 drill which might have changed everything!
Keith...thanks re my memory:)
IMO you might have just contributed (YET AGAIN...I am 'in your debt'...thank you!)
one of THE defining pieces of this giant jigsaw puzzle
that we are trying to stitch together...with the information we can sometimes glean
Let's just copy/paste a relevant section:
'One of the largest infrastructure projects is the enlargement of the Guercif-Nador controlled-access highway in northeastern Morocco.
The road is 105 kilometers long
and its expansion will require an investment of MAD 5.7 billion ($633.16 million)'
WHY would Morocco spend TWO THIRDS OF A BILLION dollars on a road enlargement?
Is the key in these words (my caps):
'CONTROLLED ACCESS highway'
What if that road is to be used for trucking of hydrocarbons?
As ever...I say to anyone reading this BB...
PLEASE do your own stuff
as its YOUR money on the line
and I could be wrong this time
Hi GRH, things are certainly ticking along nicely,
Couple of observations,
You are spot on with the encountered pressure regimes at MOU1.
You may have to revisit Michael Caine once more with regard to production figures.
Funny you should mention trucking the gas, a major new highway project linking Nador (proposed lng terminal in the north) and Guercif in the south is underway.
Quite an ambitious project to link an average size town like Guercif.
AIMHO of course.
Very high pressure systems (10K PSI+) are invariably caused by thrust faulting - faults with a predominantly horizontal rather than vertical plane. This is the case at Kela-2, where gas is derived from underlying coal beds, trapped in a sandstone anticline (dome) sealed by a thick layer of salt, and squeezed by thrust faulting from the sides. So GRH's memory is fully functioning on this one, the geology is quite different.
However, I am more than happy to exchange our lower pressure for a resource the size of Leviathan, which is twice the size of Kela-2, which is itself by far the largest discovered resource in China. I am sure you all know that China is a much bigger country than Morocco!
I was discussing with a friend only yesterday that there would be practical limits re trucking...
also re scale of the local markets...
I think that MEM might be correct re sdx and the limited nature of their supply contracts abilities
As to Kela2...I was going to urge great caution as... from memory ...the geology of that field is rather different to Guercif...
but my memory is not 100%!
I do not wish to draw the conclusion that we have another Kela2 on our hands...but several vital characteristics ...geo history...thrust faulting and depositional systems...are similar
I would tone down expectations from Kela2 production rates...it is beyond extraordinary!
But...I am very hopeful that my comparison in scale with Leviathan could be correct
Is PG about to become one of the greatest GAS explorers in history?
I would not bet against it
If it works ok at shallower strata...
I reckon he could also become one of the greatest OIL explorers...
let nobody tell you that big oil is no longer needed...
It will be essential IMO for many many decades
Yes there is risk ...
and my own research could be wrong this time
So please 'do your own stuff'
Your last post prompted me to revisit this:
It would seem that ultra high pressure allows for ultra high production. In the case of Kela-2, the pressure is > 10kpsi. CNPC have set the field up for high productivity from few wells. They quote the maximum daily production achieved from a single well as >5M m^3 (Wow!) The good news for us, should we encounter such pressures, is that Schlumberger designed the wellhead and downhole kit for this project.
One quick, ( possibly daft,) question - I’m guessing that if we’re trucking the gas out, there will be a maximum production rate that we can handle. Are there any plans to apply for pipeline permissions while we truck the gas out or are we leaving that to a potential acquirer?
Notwithstanding the increased 'maximum' pressure at lower depths - we still have a MUCH higher potential rate of production through 'manageable' increased pressure & longevity at lower depths . . .
This just gets bigger & bigger!
The pressures do not look...at least at these shallow depths ...to be really problematic...
high pressures really only start to be a possible nuisance (!) at 10000 psi and upwards
but I do surmise that at lower depths this thing
could need 'careful handling' (!) via modern specialist kit
Kit that was not available to previous licence holders???????????