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Jayque, I recall that they had to mothball a couple of plants due to lack of feedstock.
The cost of ammonia and methanol production is almost entirely dependent on the cost of feedstock, which is why the ICI plant at Billingham - then the largest in the world - closed in the late 1980's when the fixed price North Sea contract at 6.5 pence per therm came to an end after 25 years.
I think that the T&T Government may very well cross-subsidise the gas price to Chemical Producers with their Heritage 20% share, as the economic benefit and added value may make it worthwhile, we shall see.
The most important thing is that our production is very significant.
It is interesting too see that in press releases that Heritage Oil likes to give the impression that they are in charge and that TXP is a pawn in their empire, whereas the 20% is effectively an extra tax on companies as a result of a Government monopoly on granting permits.
Jayque,
I think that it is all speculation at this stage, and because reserves figures are key to Net Asset Values in the Company's Report and Accounts, they are conservative by definition, as third party valuers don't want to be sued if production doesn't go as anticipated.
After it has been producing for 6 to 12 months, they may very well revise them upwards, but not at this stage imho.
As for life expectation, that is getting into experts' territory, Carapal Ridge has exceeded all expectations, and hope that we will too - get your crystal ball out.
Sankeys figure of 50 pence represents about 18 months' production which is conservative to the right of Attila the Hun, but he may be right, you can never tell what the market is going to do.
RRE share price of £10 versus £23 cash in the bank per share makes no sense either.
It's the market, innit?
Sankeys, I think that a Years Purchase of 5 is very conservative, I haven't got my copy of Parry's with me, but would think that it's an internal rate of return of about 20% or so, depending on how long you think it will produce for.
Carapal Ridge is still going 30 years on.
You have multiplied yours figures by 5, so you do not see and drop off in your plateau rate for 5 years?
Also any NAV in this market should have a 20% discount to it, i think Cas is worth 50p to the SP with route to market established and 20p for other producers and Coho. Chinook would if successful be the one to take it over £1. If the market improves and sentiment in O&G increases this figure could increase by 50%.
Yes thanks Dana - however which way you look at this the upside is massive !!
Good point Jayque, but I reasoned that there is currently a significant premium on Gas in T&T to the US price, which should offset the pipeline costs, but it is all speculation at this stage.
Yes, the other producing assets and Coho 1 are worth say 50 pence per share, so it is all looking pretty good really.
Then there is the potential of Chinook which may be 3 or 4 times bigger, plus another 10 or 11 targets that Paul mentioned.
All in all, it's looking pretty exciting to me, I hope that the market begins to realise the true significance of what we are sitting on here.
Edit. I dont see Cascadura Deep as an exploration target anymore. We now there is a monster down there, just not whats under it :)
Yes, this is overwhelming. And most likely we will get this sorted out this week. I mean, if your very conservative numbers are correct Dana, we are in for a hell of a ride here. No way the SP will stay at these levels if just Cascadura #1 is worth £1.50 per share. then there is our existing production, COHO, and the next two exploration targets to take in to consideration just this year. Much more to come in the next 3-4 years.
It will be very interesting to see if North is done selling now and how Canada will open. We should see a lot of buying today - monay, oil doing just OK, futures in the US is green and most likely news tomorrow morning.
Lexion, I prefer to look at it on a Discounted Cash Flow basis.
Stage two flow testing supports an initial production range between 7,750 and 9,700 barrels of oil equivalent per day ("boe/d"), including an estimated 40 to 50 million cubic feet per day ("MMcf/d") of natural gas and an estimated 1,100 to 1,400 barrels per day ("bbls/d") of natural gas liquids, significantly exceeding pre-drill expectations.
The second stage of production testing commenced on March 8, 2020 and achieved a peak flowback rate of 5,760 boe/d, including 29.4 MMcf/d of natural gas and 865 bbls/d of natural gas liquids.
We are going to have two producing drills here, with potential for a deeper find of more oil beneath the existing discovery.
Rather than just doubling the figures, I am going for 150% of one well to err on the safe side, even though max drawdown had negligible pressure drop.
Gas ay 45 Mmcf/day x 1.5 = 67.5 Mmcf/d at say $3,000 per Mm = $202,500 per day no SPT
Oil condensates 1,250 bpd x 1.5 = 1,875 bopd at say $35 (we may get a premium) = $65,625 per day
Total = $268,125 per day with low prices. We get 80% = $214,500 per day, in a low price environment.
Let's knock off $14,500 per day production costs so $200,000 per day x 365 = $73,000,000 per annum.
No, let's be really conservative and call it $65 million per annum from Cascadura.
This has to be worth a minimum of 5 x which equals $325 million, and if we hit a bigger one with Chinook then 3 x that.
That is what is known as a 'Wall of cash'. $325,000,000 divided by 183 million shares = $1.8 usd per share = £1.50 per share.
Please feel free to refute my numbers, these are for discussion purposes, and only for Cascadura.
WOW. That's why I can't sleep.
While stuck in a queue of lorries waiting to tip a load of wheat I have a few mins to look at reserves
If the general consensus here is in the region of 200 bcf then Cascadura could hold in the region of 35 mboe
What value would be placed on those sort of reserves ?
If that was purely oil - I guess $165 m or £135 m or 75p a share
Am I too far off the mark ?? GLA