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T, by considering PMO debt situation, $23m is decent for them. Currently, PMO strategy is low risk portfolio rather than risky balance sheet. PMO spent at least a year of DD before deciding to invest in this project. So far, success record of PMO is attractive.
One thing we all need to understand that shallow target are high risk and even PMO are not interested. Charlie primary target is torok.
The drilling operations are managed by 88e so you can bet that the full $23m pmo cash will be used, no question. The question is if we go over will we pay out extra for say HRZ data but assuming no drilling issues this should all be covered.
Pmo are committing to the whole project, not just the first drill. The second appraisal drilling and development will be in the hundreds of millions. we are lucky to have them on board, they make a lot of revenue and run tight projects. the conventional target here is a really good fit for them and they are a really good fit for us - allowing us to take the lead on the drill.
DW needs a win, 88e needs a win and I need a win, I’m sure you all do too.
I’m excited that we have such a good range of targets, nothing could be better for our average then testin FB all the keg zones. My only concern is that the well has been positioned for stellar and isn’t in the sweet spot for the upper targets, I hope the market doesn’t get hung up on any issues there. I was going to sit out until the initial results on the upper targets as I felt they might not be good but with the SP so low didn’t seem worth the risk in waiting.
Finally the HRZ core will give us some great data and help pinpoint the next drilling target for the unconventional assets, I am sure this is only a soft farm out until those results are in. Then it will be full steam ahead on HRZ, 3D across our other zones and planning for the next lot of appraisal wells with a possible sale on the table. That’s how I see it anyway. (and Yukon yes I know but no idea what will happen with that one), March is the month 88e makes history!
To be fair $23 mill is a big chunk of money for a $760m mcap company, and with a sizable debt, they can't afford to throw more money away on a whim. These guys know what their in for due to data, research and ex BP employee's within their ranks....on the quiet they know....
Tarth, I can see you never read up on what OIP means.
Tarth: $500k per day for a land based rig is way too much. Top spec drill ships for ultra deep water are close to breaching $300k. Looking at the spec of the rig & including the camp facilities I would guess in region of $150k would be more likely.
Anyhow, tomorrow is another day. Good night all, and good luck all.
Fingers 22:17. Likewise. It was PMO's involvement that persuaded me to invest. Looked at 88e sub 1p but couldn't bring myself to invest. Had a resolution never to invest in AIM again!! (Solo, Aminex etc).
Cheers Tarth - understood
After all, the rig costs around $500k/day. The drill is likely to take up to 30 days. That's $15m just for the rig.
I think if this was purely on 88E's data I wold probably not be heavily invested here but due to the previous data by the likes of BP I am more confident. Also I have always admired PMO for their work and that is what made my decision to invest.
Fingers, I take your point about PMO's profits, but the whole drill is likely to eat up the £23m. PMO can't back out if the top layers don't look ecouraging! They will have to pay for the first $23m worth of drilling. They're committed to that.
Likewise, 4 years in the making, all the upto date technology you can get your hands on.
Heads will roll im sure if its a failure , up the 88e
Tarth, $23M is still a fair bit of money for PMO - it's around 10% of their yearly profit and given their debt situation they would not go ahead with this without a major chance of success. What I am not sure of is how much of the $23M would PMO have burnt by the time they have worked out if this is a go-er or not. If they will have only spent say $5M (as they have committed to pay up to $23M - that does not mean they will use the whole $23M ) then that is not a massive risk to them. Not sure if anyone knows the answer.
p.s. I remain optimistic, but I'm equally aware that this is AIM country.
Firstly, no intent to ramp/deramp here. Just a thought. (I am invested heavily for me......)
Lots on here have said that the project has to be a winner since PMO have invested $23m for the drill, and they're no fools.
But $23m to PMO is pocket money.
Just some rough figures.......and clearly just an exercise, humour me please.
PMO 80,000 bopd production @ say a low $50pb = $4m/day.
So $23m equates to around 5.75, say 6 days' production.
Potential oip at Charlie 1 attrubutable to 88e say 480m barrels. PMO would have 60% of that , and at $50 pb would earn $24bn x 60% which = $14.4bn.
That's like betting $1 to win $625 ish. Seems like a no-brainer to me. Win or lose.
So just because PMO are paying for the drill does not make this a certainty, as some may believe. We all hope so!! But there is nothing 100% about this. PMO will not miss the $23m if it all goes to bitumen. Just some musings of an old fool m'dears. GLA.