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Actually your mentioning of SOU is interesting as a comparative to PVR.
If you do the calculation you find that Tendrara gas field has about 220bcf of gas, approximately the same as Barryroe's initial estimate of the gas.
SOU has to develop a a 120km pipeline from its Tendrara Gas find to the Moroccan coast. How much will that cost and what are the benefits? It costs about $5m per km to construct a gas pipeline so the cost of the pipe will be about $500m and then you need the facilities at both ends which will cost about another $100m giving a total of say $600m.
So, here is Providence with a ready made infrastructure with a minimum of 220bcf and more of gas which can be accessed at minimal cost with immediate effect versus a development that will take probably two or three years to develop at a cost $600m in the hostile environment of the desert which has an enclosure 50m wide running its whole length which must be protected.
No wonder it is in abeyance. Which one would you prefer?
Well, Manyana, if so many companies are talking to PVR - presumably, with about six talking about gas, the total could be in double digits - there's a good chance that Petronas is among them.
I note that SOU have put their deal on hold because they are not happy about the sources of the money offered, and are talking with other companies, presumably including ones whose offers had been rejected.
I still think it's possible that at least one company made an 'inferior' offer to APEC's and is now in talks again with PVR.
If a deal with a major is done, then fine, but if it's with a 'minor' then I just hope it's contingent on some money up front.
At least that way we won't be wondering whether a postal order from Hong Kong will ever arrive.
It is interesting to check the Petronas mission statement for Europe. It says:
"Our objective is to create a successful, sustainable and asset-backed trading business in Europe. We also want to make a positive, long-term investment in Europe’s energy infrastructure to benefit homes, businesses and communities alike."
Given that their assets in Europe are now nearly defunct and they are planning decommissioning they will have to do something to "make a positive, long-term investment in Europe's energy..." Everything they have in Europe is now defunct and exhausted.
When you consider that Petronas have revenues of $46 billion a year, they could buy Providence out of their small change.
The price of oil could really get a kick if either Bernie Sanders or Elizabeth Warren were to win the American presidency. Both have stated that they want to ban fracking outright.
"Sens. Bernie Sanders and Elizabeth Warren both want to ban fracking outright. Warren has promised to ban it “everywhere” via executive order on her first day in office."
Now that would cause some chaos in America given that they produce about 10m barrels a day and is expected to rise to 17m a day by 2023.
You mention a forecast of $87 by 2024, Manyana.
I have seen long-term forecasts in recent years, all showing a gradual increase.
I've just had a look and found on various articles:
' $75 by 2029', and also:
'Worldwide crude oil prices will average $61 a barrel for 2020 and $68/b in 2021. That's according to the Short-term Energy Outlook by the U.S. Energy Information'
'ample resource base and cost
discipline keeps long term average prices at
USD65-75/bbl'
(McKinsey)
Common sense suggests that an increasing population, increased demand from developing countries, and increasing scarcity (aided by lack of exploration) will keep prices high.
The counter argument is that an alternative source of energy will be found.
But what are the chances of oil and gas being replaced before Barryroe has been fully developed (if it is ever developed)?
Sure tis a cracker this one...a wee cracker! Tis great for creatin wealth...But not for shareholders unfortunately. Keep postin lads.
A number of years ago T'OR quoted a price of $25 a barrel for Barryroe.
Sine 2013 WTI has been as low as $29.69 before a slow recovery where it is $47.09. Brent, which is akin to the oil in Barryroe normally trades above WTI with a margin of about $5, today trading at $51.28. Forecast is for a price of $87 by the end of 2023 .
So even if Providence got a partner to develop the oil would you expect oil to be flowing before 2024?
But you can see from the turmoil and oil price in the period 2012-2016 from the price in the following chart that, especially with the Transocean court case, they equity raise to pay of Melody and to pay Transocean, nobody was ever going to come on board except the abortive Sequa deal which was never a runner because they could not raise the money.
And you can discount 2017 onwards because they were in discussions with APEC for months before they announced a deal in March 2018.
https://www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart
So let us look at the gas as a quick kill. When Seven Heads was found and brought on stream it took nine months from start to finish. "he Seven Heads development achieved production in nine months from approval."
Now, if Providence could repeat that I am sure we would all be delighted and as Plunkett and Linn pointed out in their RNS there are two distinct groups looking separately at the oil and the gas and if I was a "guessing" man I would presume Petronas must surely be one of those as the decommissioning is going to cost it an arm and a leg. There is also the issue of the of the 60 employees it currently has. What happens to them if Petronas pulls the plug?
And just for good measure, consider the proposal by Fastnet that there was another "Barryroe" under "Deep" Kinsale Head in 2013. But Fastnet now has nothing to do with oil and gas having been taken over so surely a combination of Barryroe and Deep Old Kinsale head is one mighty potential oil and gas field and a combined Providence and Petronas the vehicle.
Here is Fastnet's schematic of what it was talking about
https://www.bing.com/images/search?view=detailV2&ccid=Pw1qu8vL&id=372502CFDD4313A2A656D93A8D2BD10131A7E803&thid=OIP.Pw1qu8vL8LCGPHYsgPFitwHaFC&mediaurl=http%3a%2f%2fimages.energy365dino.co.uk%2fstandard%2f140769_d08dde99554643cbbfbc.jpg&exph=508&expw=747&q=seven+heads+gas+field&simid=608011568694888466&selectedIndex=0&ajaxhist=0
I think coronavirus is a catalyst for the current market turmoil but not the cause. Stockmarkets (not including PVR of course ;-) have been insanely overpriced for some time. Something was inevitably going to kick us into the next downswing -- not just of the markets but of the global economy -- and this may be it. The signs have been writ large for some time. I'm not holding my breath for things to turn around in a matter of days or weeks. Would be more than delighted to be wrong, of course.
I think the fact that so many parties are interested is encouraging, and whatever you may think of Manyana's idea about the new management finding a new angle, he could be onto something - otherwise, why so much interest in the gas?
I agree with you that Corona and Brent, on top of the Irish election, are not helping, but if the virus starts to die down, Brent will recover - it touched $70 only last month and was $50 yesterday - and with some unrest in the Middle East, we could be on our way.
I can't help thinking the whole thing has been overblown - by the media, of course.
Thanks LW. I was using a presumably out-of-date figure linked from PVR's website: http://www.providenceresources.com/sites/default/files/orielsecuritiesresearchjan13.pdf
I'd still argue that the chances of a farmout are severely dented.
Clarification regarding the cost of extraction for Barryroe
The estimated cost of extraction from Barryroe ranges between $15 to $20 per barrel
3 August 2018
https://data.oireachtas.ie/ie/oireachtas/committee/dail/32/joint_committee_on_communications_climate_action_and_environment/submissions/2018/2018-07-03_correspondence-providence-resources-plc-in-response-to-committee-debate-of-3-july-2018_en.pdf
As predicted, WTI not just in the 40s, but all the way down in the mid 40s. Brent is barely keeping its head above 50. This all bodes very badly for PVR as there were already unfavourable headwinds. An Irish government that could be left wing or Green, Russia breaking ties with OPEC on production quotas, and now a black swan event that has hit industrial output and is crippling transport and tourism.
The breakeven oil price for Barryroe was said to be $46 some years back. There isn't a snowball's chance in hell of anybody farming in under these conditions. The oil industry is renowned for taking a short view, bearing in mind it has to pay for new development out of current revenue. It's why the oil price is cyclical, with low prices leading to shortages a few years later and high prices leading to gluts. This time could be terminal for PVR.