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The rationale for undertaking a comparative analysis of 88E and its direct peer, PANR, has illustrated accurately the risk/return inherent in the investment cases of both stocks. The premium value 88E enjoyed when comparing a Phoenix barrel in the ground v’s a superior (geologically) PANR barrel in the ground has decreased markedly following the recent flow test results.
An explanation provided by analysts focussing on the fundamentals of the asset suggests this is due to 88E shareholders belatedly confronting the data-supported, scientifically-consistent assertion that the downdip portion of the shared reservoirs is negatively affected by the effects of Dmax in an already tight-ish formation.
By some miracle however, an 88E barrel in the ground is today ***still valued at a premium of between 12% - 54%*** to a higher classification, commercial PANR recoverable barrel in the ground.
Using Monday’s closing prices of 0.16p for 88E and 29.15p for PANR, please find below an updated comparative valuation of both companies.
Assumptions:
GBP:USD = 1.259
88E SFS CoS = 50%
88E SMD-B CoS = 81%
[In light of the recent flow test results, I assess most analysts would lower significantly the Chance of Success for the SFS and SMD. For the purposes of this exercise, I will retain management’s unrevised guidance. However, I will re-calculate the comparative valuations below using, I suggest, downgraded and more realistic Chances of Success.]
PANR CB outstanding = US$27m
SOTP for 88E:
Namibia £3.13m (acquisition cost including latest US$920k share based payment, insufficient empirical data, option value for now);
Longhorn £6.3m (revalued from total investment of £12.1m due to underperformance of asset);
Leonis £1m (insufficient data, option value for now); Umiat & Peregrine £0 (stranded and poor quality asset).
A downdip, lower classification, questionable commercial 88E Phoenix recoverable barrel in the ground is today valued by the market at 13.9p.
An updip, higher classification, fully diluted, commercially confirmed (management and Schlumberger) PANR recoverable barrel in the ground is today valued by the market at 12.4p.
[Part 1, see above for Part 2]
[Part 2, continued from Part 1 below]
Revised value per 88E barrel using *downgraded* CoS for SFS (from 50% to 35%) and SMD (from 81% to 40%) due to disappointing Hickory-1 flow test results would see each 88E Phoenix recoverable barrel in the ground valued at 19.1p.
Note that I am not using olderwiser’s “Netherland Sewell shrinkage of BFF” logic as a readacross for the SFS and SMD. Had I applied olderwiser’s analysis, an 88E barrel would be valued well in excess of 25p. I have kept the NSAI BFF P50 estimate at 102mmbo (net of W.I. but pre-royalties.
Bearing in mind the disappointing flow test results I cannot justify an 88E barrel in the ground being valued at *any* premium to a PANR barrel, never mind a premium of 12% - 54%.
For those 88E shareholders who were drawn to 88E to maintain exposure to the Phoenix asset then, *on the fundamentals and maths alone*, the lower downside risk/higher upside risk is to lock in that exposure via PANR equity. Naturally, I appreciate exposure to Project Phoenix may not be the primary motivation for some members of this forum. For those members whose primary motivation is indeed to remain exposed to Phoenix, the maths is incontrovertible. /end
Scot,
There you go again, in your little fantasy world. Using assumptions, comparing 88E to PANR in order to drum up business for PANR and trying to stop the sharp decline in the SP.
Give it a rest man.
01:05
No, chrisev1, still simply seeking price discovery. The fact that you don't like the content of my posts does not make them inaccurate. It is a statement of fact that the methodology I use has been employed by equity analysts for decades. The reason I know this is true is because I was one and did exactly this for around 25 years.
Enough of the personal nonsense, trying to bully me away from posting here. Why not post your own valuation model? Is it because you lack the capacity to build your own valuation models? Or is it because in so doing and then publishing the conclusions, you would be confirming exactly the point I am making?
Chrisev
How dare you question the immense wisdom of our beloved Scott on this board!?
Don’t you know by now that he knows far more about 88e than Ashley Gilbert does. 88e is a worthless duster and, anyway now, people here will finally realise Pantheon is the best share EVER and it will stop it’s endless price plummet.
He is the only person who understands updip/downdip (even on wells that don’t reach the “updip” side of the border.
In future, please mindlessly read part 1,2&3 and don’t question what is no doubt, solid investment advice. Just ask all those investors over at PANR. They will tell you how good his SP advice is.
I only see a green box but I’m 100% sure that following his financial advice will make everyone rich 💰
Scot126
You do go on a bit. You keep saying disappointing results, despite Ashley saying on many occasions how successful the results were. I have to say, I’m more inclined to believe him than you, no offence.
And you seem to keep saying the same points over and over. You have really said nothing new on here since pre-drill. Do you think if you say it enough times it will become truth?
.... and we are back to blah, blah and part 3 blah, yawn :-)
Hi Chris, Miner & Handspring - all spot on about our resident squatter Scot and his little band - they are so paranoid about 88E and trying to persuade people to switch to PANR that they just drone on and on hoping someone will believe their totally biased spew!! Can’t wait for the LSE to bring a rule in that says you can only comment on a share you are invested in with at least £1000. 🤞🤞
I can't wait for LSE to bring in a rule where it says folk can only comment on a share if they know what they're talking about.
Perhaps an aptitude test or questionnaire should be introduced?
Q1. Have you held 88e for years?
Q2. If yes, why?
88e is dead. Panr in deep trouble. Only an observation. Must be an awful lot of people underwater in both. This is AIM. tough.
Nice of you to hang round, how thoughtful when nothing is happening :-)