Firering Strategic Minerals: From explorer to producer. Watch the video here.
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Let us try and look at this dispassionately without the ramping and de ramping of this share as i see it.
The Mongolian Government was right about one thing and that is it is best to come from the Local Government office as much as possible and they will end up having to police it and live with it in the long run. However what we have at the moment is a mish mash between the Government and local government and PM is piggy in the middle completely unable to turn either way. If you like we are the child in the middle of a potentially messy divorce until the law takes over. At some point imo the law will take over hence the fact we have the LP so the rest will fall into place in time. The question is how much time. I think it will be through around the end of this month ie about 10 days from now tops.
Second question is do we sell and when is the best time for such a sale. As with any sale there are two sides and it is possible that talks have already started but if I was the buyer:
I would want to get the maximum amount of oil for as little as possible and of course MB wants to sell maximum amount of oil for as much as possible. Simples as they might say. Well not quite so simple.
After all that has gone on between MG and the local government regarding the LP the proof of the pudding is going to be in the eating so as i buyer i would want to see that this arrangement is working properly so no proper offer would be made for a couple of months after drilling has started. Now the problem with that from the buyers perspective is that by then we should have proven up Gazelle at the moment all we know is there is oil there the quantity is a bit hazy but it is a lot but we do not know recoverable amounts or API or flow rate from what i can tell. We get all three of those then we are talking serious money.
As a seller we would want to include Gazelle in the package as the two are very close together. So we would want to prove that up ASAP hence my confusion on why we cannot do that now.
Ok price To a certain degree the discounted future price of oil will play a factor in that but that is partly largely determined by current price of POO circa $80 a barrel. The larger the find and recoverable the higher the price per barrel would be. So proving up Gazelle essential for us not so essential for purchaser.
Then there is the unknown quantity in all of this and that how much to DQE and or PC want the oil that is under Heron and Gazelle and how much of a ;premium they are going to extract from Petro Matad for that oil. Ie what discount rate in play and at what levels as the only players in town. Well the west are not going to come in or India until the refinery is up and running and Russia are personna non grata at the moment almost everywhere.
As the seller we have one small backstop here and that is that in theory the Mongolian refinery will be up and running by 2025 and that gives us a bit of leverage.
As i see it there are at least three price levels and issues and very probably more. It is a lot more than us saying we have 2.2bn barrels or whatever the total field size is for both we want x per barrel. there will be at least three basic levels all with different values of POO.
1) Recoverable amount. Known for Heron and still unknown for Gazelle as i understand it.
2) Total size of field again known for Heron and still unknown for Gazelle as understand it.
3) Flow rates and API on both would help the sales team immensely.
4) What is the line in the sand for MB before he starts to put any serious offer if there is one to shareholders.
tbc...
So if DQE and PC want our oil that urgently i would suggest they come forward rapidly because the longer you wait the more this price is likely to go up and the closer Mongolia get to having a refinery.
On the other hand we should get more over time as recoverables and quantity on Gazelle will become known.
So pricing levels and time frame. imo.
Non of this is going to happen over night. There will not be an announcement one day regarding LP and an RNS next day on sales proposal not going to happen.
Time frame. Assuming LP finalised by end of July. Hopefully we can start drilling mid September at earliest. As a buyer i would want to ensure that there at least two to three months of data. Proving up the flow rate and API ease of extraction etc and most importantly that the on ground issues between the Govt and the LG is holding water.
In the meantime Gazelle is being proven up (I hope)
What price.
I will not go into this as just i think too complicated and quite frankly no one knows MB's line in the sand and how much DQE and or PC prepared to offer. Maybe even a partial sell off for an interest just too many variables. Personally for heron alone i would want around 50p per share minimum ie MC around £555m for Gazelle goodness knows hence the two together. I just hope that MB;s patience with the LP extends around negotiating table with PC if offer is there. They will try to wear him down it is their negotiating style.
Time frame for offer to come in March or April 2024 at the earliest imo.
If you are in this for the long haul this share will be very good and the long haul is down to everyones different time frame.
In the meantime there is everything else that PM is getting involved in and in time that in the short term could be the bigger winner to the SP but a sniff of a buyer and this share will rocket.
Ibiza - thanks for your insights. But why are you posting so early in the morning? Dontcha know it's frowned upon by the great and the good of this BB?
Mr Ibiza
Thank you for good discussion topics. Agree or disagree you put your logic down for reasons why.
I say again "formality" is just this and no vote or anything else require. Law change mean any interference of central Govt instruction can lead to imprisonment.
You look at "it will be through around 10 days from now tops". I think this is reasonable and mr Mike Buck already in discussion with service providers for operational timeline.
We know there is MULTIPLE newsflow / development so this will be Operational Update / Heron 1 workover / Production / DQE and other non Block XX related like Renewables / New Block Tenders.
Do not think anyone need to worry about lack of RNSs coming & key timeframe now in Q3 so Holding Level share price will be replace by Hard Bounce/Breakout.
Think this is very REASONABLE and EXPECTED!
Takeover?
Think almost everyone agree this is obvious & logical. Block XX in the middle of Petro China Blocks XIX & XXI with PC sister company setting up for partnership for full field development and Toson Uul extension which China Blocks already have 2 Billion Proven & Producing and Petro Matad share 50% bigger so estimate possiblity 3 BILLION bbls to be develop same time as Heron.
Q - Will they be allowed?
Q - How much?
Q - When?
- Will keep simple. Unless specific restriction in place think WILL happen. We do not know of any restriction at moment.
- Whatever amount Petro China / DQE offer will be HIGH MULTIPLE of current price. 50p sound low to lot if us with all happening but think you are right to say good place to start for minimum bid.
- With such obvious synergy sir do not think this is about BEST time to make offer but about strategic bids sir. First low offer very near term perhaps then higher offer if rejected but after more development. Like this
Any OFFER /INTEREST will have major impact on share price because people understand how bids build up & strategic value of buy out of Block XX.
This is simple summary but thank you for posts you contribute for this discussion.
People do not have to buy NATD share or not but think many can see where this will be heading.
Because sometimes it's easier to say what you think when all the noise is asleep BP. Imo Ibiza I don't think there will be a sell off or buy out for 1 I carn't imagine that the MG or Petrovis would allow it and 2 PM have been looking for oil in Mongolia for well over a decade and some to give it away now just as we're about to become a producer but we know PM do do things their own way. Ops update soon please Mr MB 😁 GLA
Tend to agree Jimi. Block XX / Heron oil is of "national importance" i.e. destined for domestic oil refinery and therefore no PC takeover.
Business is Business!!
Mr Mike Buck already have mention this in interview. Something like "price have to be right for company & shareholder to reflect asset & work done"
This was before IOM meeting which maybe have some importance for this but my guess IOM meeting to do with JV partnerships of foreign companies into new exploration with Mongol Govt as partner also (to add to PSC revenue on find).
Mongolia the "new Saudi Arabia" with some bl9cks bigger then Quatar??
Tend to agree, I just don't see the MG allowing it to happen. I do believe as said before, the changes to the PSC's in IOM IMO - was MG's decision to safeguard the Heron oil for the refinery. I would not be surprised if the MG said the LP will be granted but you have to agree to the changes in the PSC. I just cannot see with the oil refinery coming on stream in 2025, that the MG would risk all the Heron oil going over the border to China. More so now V1 was a duster. You would not trust PC with anything. Therefore as much as 50p plus for a takeover would be nice, I don't think it will happen. Perhaps if PM struck oil elsewhere from 2025 onwards then this might change. Let's just get the ruddy oil at Heron out the ground first and look at it later
If there is restriction takeover WILL NOT happen. If there is no restriction takeover WILL happen.
This think sum it up but whatever happen think most expect price to multiply :)
I personally think that there will be NO RNS ref the PM & MG agreement until the DQE deal is signed and oil is coming out the ground. As said i wouldn't trust PC one bit.
I too am on the NO takeover side. Cant see the Mongolians letting china own their country unless a bit of corporate greed involved. As regards Russia, the people still prefer Russia to the West. This was in a survey taken a couple of months ago.
Chance of PC being allowed to take MATD over... 1% IMO.
It would be interesting to see what the MG did if say a Shell or large oil company came in. Obviously there's a bit of history with Shell/BG if IIRC?
But if there are certain stipulations the MG have put on MATD, then maybe another company wouldn't want to touch it anyway.
A sniff of a takeover from anybody and this will set the sp on fire. Now that PM has the LP all eyes will be on PM. GLA
"Now that PM has the LP all eyes will be on PM."
We don't have the LP just yet. And I think that's part of the problem for the SP. Formalities, maybe. But the fact remains that as at this very moment, we are still not allowed to park up a tanker and start extracting oil.
//we do not have LP//
That’s not correct. If you read the RNS on the LP it states that we have to register the land for special purposes and sign contracts relating to the management of the area. It doesn’t state that any of this stops us from commencing work.
The RNS is also clear on this by saying:
“The certification of Block XX as special purpose land gives the Company the legal right of access to the entire area for the purpose of hydrocarbon exploration and exploitation.”
Mike Buck also added:
“. This important step has been a very long time coming but now provides a firm legal standing to the Company to execute the approved plan of development for Heron and to explore the exciting potential around it. “
Either way, the market doesn't seem overly impressed with the current situation. Some more clarity on the short and mid-term plans for PM wouldn't go amiss to allay shareholders' nervousness.
GLA.
I agree, the market isn't impressed and LP isn't finalized.
Should SELL and go.
Bye bye.
Real investors will be happy to wait till retate and more.
ThePOF - that’s patently incorrect. Contracts and paperwork are still required to be signed.
That is a big assumption to say we can start extracting oil just because in your words it doesn’t state “that any of this stops us from commencing work.”
To me, it is quite clear that by law we are required to complete these formalities before doing anything:
“The Cabinet approved the certification and also instructed officials to conclude the follow up formalities required under the Land Law. The Company will now work with the central Land Agency and local authorities to complete the registration of the area ***and to sign the necessary contracts required by the regulations on the management of special purpose land.“***
I will say that I do think it will all be sorted. But I do not agree we can start working to extract oil just yet.
Hamm - bore off you flip flopping pathetic excuse of an investor.
As you have stated Doc83. They are merely formalities. I am not incorrect as I have simply quoted the RNS which is clear that we now have a legal right to exploitation over the entire block XX area.
I think MB should take 'em to court!
As always with PMs RNSs there is doubt.... it does indeed say we have a legal right to expoitation over the entire block xx area but elsewhere is says the government has approved certification (NB not granted certification) and that suggest there is a condition subsequent, i.e. the 'formalities'.
Basically we just need clarification on:
1. Whether there is or is not any risk regarding the formalities being finalised; and
2. whether DQE can start work prior to the formalities being finalised.
ThePOF: Cabinet have approved it, but there are still legal "formalities", as per below. Legally, how can we extract oil when this has not yet been done?
"The Cabinet approved the certification and also instructed officials to conclude the follow up formalities required under the Land Law"