Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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What is your view on Duggan's Capital's analysis as per posting of Liquid 1 at 16.32?
I have checked the calcs and they seem fine to me.
15:34
Hi andy216 - understood. Please note the following facts. For 5 or 6 years as a member of lse I posted on this forum on precisely one occasion. That all changed in March/April '21 when Dave Wall of 88E a) confirmed 88E's understanding that there's likely to be an overlap of a horizon(s) from the area around Talitha/Alkaid southwards and downdip on to 88E acreage.
It is standard practice for fundamental investors like wot I am to undertake comparative analysis and comparative valuation assessments where two listed companies have a shared asset. How do I know this? Because that's been a key part of my career since 1994. Trust that answers your question.
I'd be grateful if you would, in turn, answer a question of mine?
The market is valuing 10% of the combined NN/88E oilfield at £300m on the 88E side of the border. The same market is also valuing the NN's 90% of the NN/88E oilfield at £550m????? 10% = £300m, 90% = £550m. My question is as follows: do you know the statistical probability of the equity markets continuing to value the asset in the ratio described above?
The answer is nil.
There is a zero percent probability that the market maintains this mispricing. The maths, always, always, always comes out. Always. Good stuff.
@ Scot126 - I’m not new to this forum.
I just find it quite bizarre when people put so much time and effort into posting where they’re not invested.
13:08
Hi andy216 - fair question if you're new to this forum. The answer is no. Let me know if you wish to read my rationale?
@ Scot126 - are you still holding then?
11:05
Hi ATrades - I challenge you directly to fact check Brom and Rabito79. Once you receive replies from both individuals, let's see if you're capable of an honest assessment of both replies. Actually, before that, let's see a) if you even bother to fact check either of them and b) if either of them reply to your facts checks?
Or is it not about the facts of the 88E investment case for you and simply about a massive game of pass the parcel? You tell us? Because if that's all it is, I "get" that you're utterly uninterested in facts and it's all about disinformation and misinformation of thousands of credulous Americans.
11:05 Very perceptive :-)
09:28
Well there we have it, folks. In all my years following this forum this is the gold medal post by the forum's most prolific poster. What's the number now, Brom? You getting close to 26,000 posts yet?
FAO those with even a partially open mind. At no time, repeat NO TIME, has the company made any distinction between the cost of drilling a well and all the ancillary services required to enable the drilling to occur. Brom's explanation for the 130% cost overrun for Merlin-1 is a flat out falsehood. Challenge him. Fact check him. Ask him to detail or provide a quote from a member of 88E management which explains the total cost of a well (or two wells) does *not* include all the ancillary services too. So the costs of feeding the crew when they were on site, that's separate too? The cost of diesel, personnel, generators, vehicles.....none of that is included in the "total cost"????? Only the cost of the hire of the rig and the crew actually working on the rig doing the drilling?????
That is complete gibberish. Wake up, folks. You're being lied to.
Quick summary.
88E has three main projects: Yukon, Icewine and Peregrine/Umiat.
a) Yukon - 88E's Erik Opstad (88E's General Manager of Alaskan Operations) is on record in 2021 (Petroleum News) declaring his personal leases adjacent to 88E's Yukon acreage have a "negative NPV". QED Yukon is worth $0.
b) Peregrine/Umiat - Umiat has 100mmbo of reserves but is so isolated not one barrel of oil has been produced since it was discovered in the 1940s. 88E paid $1m for it. Let's agree it's still worth $1m. 50% of Peregrine was sold back to 88E in 2021 by a consortium of Alaskan oil veterans (***after*** the results arrived from Merlin-1) for $14m. So let's stipulate Umiat/Peregrine is worth $30m. That's what the company and Alaskan veterans value it at. Who are we to argue?
c) This leaves Project Icewine accounting for a cool c.£300m of market value. April '21 saw 88E formally publish its view that certain PANR horizons overlapped into their Central Block leases. FWIW I think they're correct. Looks to Rabito79 and me that the Kuparuk, SFS and maybe some SMD near the Dalton could overlap onto 88E's acreage? I think it'll end up being <10% of the recoverable oil across the totality of the combined acreage but, for the purposes of this exercise, let's say 88E has 10% by volume, ok? Thus, the market is valuing 10% of the combined PANR/88E oilfield at £300m on the 88E side of the border. Wait, what??? The same market is also valuing PANR's 90% of the PANR/88E oilfield at £550m????? 10% = £300m, 90% = £550m.
Hmmmm, and double hmmmm.
Something is very wrong here. Either 88E is waaaayyyyyy overvalued or PANR is waaaayyyy undervalued (or a combination of both of course).
I 100% concede many (most?) of this forum accept 88E is now a meme stock, completely divorced from the fundamentals. That's your call, but pls don't be left holding the baby when the music stops.
Rab, lovely ploy to bring it down amongst the uncertainty and delay. I think the price drops 15 percent on open and you might get another trade. GL
Slide 11 Brom
https://clients3.weblink.com.au/pdf/88E/02258013.pdf
‘Innovative low cost option to allow two wells to be drilled for ~$15M’
If this doesn’t include snow roads how would it ‘allow’ two wells to be drilled.
Likewise 1st February 2021 RNS
‘It is situated on trend to recent discoveries in a newly successful play type in topset sands in the Nanushuk formation. 88 Energy has a 100% working interest in the project that will reduce to 50% post the completion of funding as part of a recent farm-in, whereby 88E is carried on the first US$10m (of an estimated US$12.6m total cost) for the Merlin-1 well.’
Did total cost not include the snow roads? No wonder it delivered ‘Bang for Buck’ if they were only counting half the costs. If indeed they did not include the snow road costs this is grossly misleading in my opinion Brom, let’s not pretend otherwise.
Don’t worry though the OTC don’t give a monkeys about ‘math’.
GS, look at the amount of overspend. $16-$17M overspend on a job reported to cost $12.9M (in consideration of the delays), I assume snow roads and rig costs would be the vast majority of the costs and these were factored in. More manpower won’t have made the drill bit turn quicker, likewise they roughly knew the length of the season so significant overuns weren’t possible. So it’s a real conundrum (at least to me) where this money went. Yours and others acceptance of it seems to be the opposite of scrutiny. Indeed whilst Brom can pick out comments about polar bears in a 200 page document he failed to highlight the updated budget post delays which estimated the knock on effects at $300K opposed to $16-17M.
Looking at this year’s drill I haven’t seen any published figures for the Merlin 2 budget. The placing in August didn’t seem to mention it yet it did say they were fully funded for drilling and logging (see what they did there) and the next 12 months operations. Yet after another equity issue to a ‘major contractor’ for $7.5M, the flow tests are still ‘subject to funding’ as per recent announcements. Looks like more Safety, Legal and Environmental costs then as you would put it.
To me the use of ELKO as one of the main contractors creates a significant conflict of interests. I can’t think of any operator I have worked with where this would be allowed, supply chain governance simply wouldn’t allow it.
I think you are giving the Twitter, Reddit and Stockwit crew far too much credit. The vast majority of them don’t even know who ELKO are or that DW and Erik have sold their shares. I managed to tune in to Katie on Twitter last week, deary me. She had everyone on the call thinking break evens were going to be $15/barrel less than Pikka/Willow. Looks like DW identified his ‘target market’ and sold into it. It’s been amazing to watch and much like DW and Erik I have managed a successful trade out of it.
Overspend??
Were the figures quoted by DW for the well only and not inclusive of snow roads and wire logging etc. which were then bundled into the final costs, add in the delays due to Biden and it may just look a little more understandable.
I am unsure if APDC would have been prepared to contribute their share of the costs without proof of spend.
Go the Cruz construction website and just look at the cost of snow roads its eye watering.
Thanks Rabito. In my 43 years experience as an engineer I have observed almost invariably when a job is rushed or the time to do it is compressed by circumstances, mistakes are made. Delays to the spud will always cause knock on effects, costs, that may not be specifically be costed as delays, but for me, the root cause of the cost WAS the delay, directly or indirectly. Playing catch up for the duration of the project to finish on time was inevitably the case. I don't know if I'm right but neither do you know that I'm wrong. I'd put money on my experience, albeit not oil related. These are small inflexible teams of people, who are asked to jump through hoops and do so, sometimes tiredness sets in and as rfarfa says we haven't been told the official reason. Thankfully safety, environmental, social aspects were respected.
Management know that we have been watching them like a hawk, as all shareholders should do with all companies. The question of trust then is down to each shareholder to decide for themselves what to believe, accept or indeed question the bod directly.
Safety considerations, legal commitments, environmental considerations are ALL far more likely to have been additional reasons for added costs rather than the fantasy assertions (libellous?) of some on here who think or point the finger at certain ' inner circle' contractors that 'may' have creamed the curve before the shareholders eyes. What a load of garbage. They would not dare do things like that in full view of onlookers. The whole discussion is designed to make you jump ship and join the NN.
And they think I have ludicrous ideas! Dear me.
As for DW selling his shares. If I left a company and had as many shares as DW, damn right I'd sell some after leaving (after all, most ppl leave because they don't want to stay!!). He still has a massive amount of skin in the game as he knows the potential upside for 88e better than most. He sold 88e shares just the same as Farallon sold the NN. Derisking perhaps? When you are rich, you do that. thats why you are rich. We should all do that. DW also knows what potential is still in the Icewine acreage but also knew, eventually, that certain experts fed him a bum steer in the 'unconventional' fad era. The 88E bod now know (hope) that after PANR's current winter campaign, the implications for capitalising on their success by the obvious overlap will help the business. It certainly won't harm us., regardless of whether we have 10, 15 or 20% or more of the overall discovered field/s. This is why the Reddit, Twitter, Stocktwits are excited.
Anyways. The wife's escaped with a mild dose of Covid so we can thank the Lord for vaccines. Hope you have all steered through this crisis as well as can be expected.
Take care
GS
Rabito79
No one actually knows why such an overspend, we haven't been told, however collectively us PI's as owners of the company could force the issue if enough of us let the board of directors know that fact this company has/had 3 institutional investors total holding all 3, 8 million shares.
We can ask why if enough PI's ask the directors WHY!
My thought are the wire line could have actually broken, State terms and conditions means it has to be removed whatever the cost. Radio active isotopes are lowered.
The large part of overspend was not caused by the delays. The placing after the delays confirmed this.
‘Owing to the advanced status of preparation for the drilling operations at Merlin-1, this brief hiatus has resulted in additional costs being incurred which take the total costs of the Merlin-1 well (including contingencies) to US$12.9 (US$1.4 net to 88E).’
The drill ended up costing $29-30M, obviously didn’t factor in enough contingencies. So $16-17M unaccounted for.
For what it's worth, I think it is ludicrous to delay mobilisation if any appellant who appeals before 31st Jan is pretty much liable for any 'harm' caused. It says so in the BLM update. Or have I missed understood, again. ;-)
These drilling seasons are too short for me. No doubt a lot of last years overspend was caused by delays. Paying ppl to sit around doing bugger all.
Appeals have to have accountability otherwise rogue appeals would be submitted on mass by brigades of green enthusiasts. Just my opinion.
Sunday night RNS sounds good to me.
Fingers crossed.
GS
One last thing is our friends PANR got their permit to drill very late, I believe their rig was already on the pad.
I would imagine Gilbert will be drafting an update
for Sunday night …
Shops shut Tuesday night on Australia Day
Thanks Keefy.. ‘my bad!’
Although no reason things can be different this time :-)
It’s a joke really. I’m sure they have moved as quick as they can but to be honest, knowing the winter is short there, things should be put in place to speed the process up. Hit the ground running so to speak. They’ll be loads of reasons or excuses but I’m sure nothing that couldn’t be fast tracked as such. Big part of their year in terms of work etc. Anyway, I won’t be selling so I’ll sit and wait.
12:14
Hi BlackAdder,
in response, just a cut & paste from wiki88e: 18 days after Permit Approval
31/01/2021 Operations Update Permit to Drill for the Merlin-1 well approved
18/02/2021 Highlights Rig commissioning complete - mobilisation commenced for Merlin-1 drilling
Drilling scheduled to commence 1st week of March 2021
18/02/2021
Highlights
• Rig commissioning complete - mobilisation commenced for Merlin-1 drilling
• Drilling scheduled to commence 1st week of March 2021
• Nearby Talitha-A well early results encouraging – potential for extension into 88E leases
https://clients3.weblink.com.au/pdf/88E/02343348.pdf
10/02/2021
The Spud of Merlin-1 is now expected in late February / early March 2021 and is targeting 645 million barrels of gross mean prospective resource#. Subject to the result of the Placing and adequate funding being secured, the Company plans to conduct a flow test of the Merlin-1 well (at a cost of approximately US$2.0 net to 88E) in the event of a successful discovery and, if scheduling and permit approvals allow, commence drilling of a second well, Harrier-1, immediately following completion of drilling and testing operations at Merlin-1. Harrier-1 is targeting gross mean prospective resource of 417 million barrels#. Harrier-1 is expected to cost ~US$7m (~US$3.5m net to 88E).
https://www.lse.co.uk/rns/88E/proposed-placing-to-raise-up-to-a12m-gduccqqitlbb13j.html
31/01/2021
Operations Update
Permit to Drill for the Merlin-1 well approved
• Field operations fully underway
• Rig commissioning almost complete, mobilisation expected within days
• Well spud expected in late February / early March 20
keefy
Also wasn’t mobilisation started last year in ‘advance’
of the drilling permit issue?
Also wasn’t mobilisation started last year in ‘advance’
of the drilling permit issue last year?
Question is
Why wouldn’t you mobilise the rig?
Rig commissioning is complete and authority checks
on emissions from rig is permitted. (I believe)
It’s only the all important drilling permit we are waiting for.
11:02
Trying to adopt a "glass half full"
permit to drill will hopefully have been pre vetted in anticipation, remember that 41 day time period that exists with the APD process.
Merlin-2 is ~5 miles distance from Merlin-1 but not necessarily that much further further.
Will we take a chance on rig mobilisation, I doubt but ...?