Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Tony, the Kuparuk was PANR’s second flow test. Alkaid was successfully flow tested, all be it over a small interval and duration. It looks like the Alkaid sands tested correlate to the SMD.
Get your points but just wanted to highlight this.
Scott,
Not everything you have stated is fact - some is supposition. Let me expand a little on what I stated previously:
1) PANR have no proven reserves. As you yourself have mentioned - Pikka has a lot more drilling data to "prove up" their resources which is very significant when it comes to selling assets. How long will it take PANR to acquire similar data at their current rate of progress?
2) Flow Test / Commerciality. I'm not sure how many flow tests that PIKKA have done, but I suspect from your reference to "long term flow tests" that they have done at least a couple. However, my point was that PANR have done one flow test which in terms of proving commerciality was a failure. Agreed that there were issues with the type of reservoir (oil wet) that may be overcome in future, but as it stands now - the results are disappointing.
3) Environmental / Demand Issues will impact all Oil Companies one way or another in the coming years. Being on State Land v Federal provides no guarantees. However, projects that are more advanced have less risk in general than those that are still years away from production. I think that this is just common sense. Development on Pikka has already started and is reportedly only a year or two away from producing 30,000 bopd. Where is PANR?
"The political stuff won't affect an asset sale in the next 1 - 5 years minimum" - This clearly is very questionable - politics and the green agenda can move very quickly and is unlikely to get any easier in the future - just look at the keystone pipeline, construction 95% complete, over $8B spent and cancelled overnight with a stroke of Joe Bidens pen.
I hold a few shares in PANR and favour it over 88E which I owned previously but I think there is considerable risk here and there are probably some better risk / reward plays out there - one of them is just about to start paying a dividend !
I wish all shareholders particularly long term holders good luck!
Tonynorstrom1 - you're trying to be balanced and objective, which is good, but you've got the facts wrong I'm afraid.
1) Horseshoe/Pikka has no reserves, all contingent resources. Chiefly due to absence of Long Term Production Tests as lack of infrastructure means they're unable to facilitate the LTPT.
2) Where Pikka unquestionably is ahead on data collection is the number of wells drilled (12 verticals plus 7 laterals from memory). PANR could make an argument for 3 - 5 verticals. Fully accept there's a data differential there.
3) Commerciality. OSH are devoting a huge amount of energy and human resource at reducing the capex required to produce first oil. The company is guiding towards reasonable progress on that front but their cost per barrel and NPV per barrel in the ground look to be notably higher and lower respectively v's PANR's. How come? Lots of factors but the main factor by a country mile is PANR's proximity to the two major pieces of legacy infrastructure on the North Slope: TAPS and the Dalton Highway, both of which *literally* intersecting PANR's leases.
4) Environmental. The corridor stretching outwards for 2.5 miles in each direction from the Dalton is classed as historically disturbed land due to the presence of TAPS/Highway. Thus the environmental impact of the development of PANR's assets v's OSH's Pikka asset is far, far, far lower because Pikka is all virgin territory. ESG assessment will see PANR score many, many more plus points than OSH's Pikka due to the proximity of this vital legacy infrastructure. Luck or design by management (mostly luck IMHO) but it doesn't matter, net effect is the same in favour of PANR.
5) Demand. Think you're refering to political macro trends here. POO and the strip price (forward price curve) will be sole determinant on that front when PANR comes to sell the asset. The political stuff won't affect an asset sale in the next 1 - 5 years minimum, price will be main (only?) factor once commercial viability empirically established.
Trust that helps readers.
there are a few reasons for the difference in valuation:
1) Proven reserves's
2) Flow Test / Commerciality.
3) Environmental / Future Demand
And, in comparison, PANR have, in just the Basin Floor Fan Complex, 1.41 billion barrels of Recoverable oil
And mkt cap currently ~ £195million (~US$273mil)
That I make as being just ~19.4cents/barrel
That’s nearly 16x less than the $3.1/bbl of the Armstrong/Oil Search deal.
16 x our current ~30p share price = £4.80 !!
And that’s just for our Basement Floor Fans
What about the Slope Fan, the Kurparuk, The Shelf Margin Deltaic and Alkaid?
And the price of oil is now higher than the deal price, in 2017, by about $18/bbl
Amazing!!
Truly Amazing!!
As always DYOR.
Interesting articles:
Armstrong Oil & Gas discovered (from the articles looks like in 2017) believed to be at least 500 million barrels - and a deal price of ~ US$3.1 per barrel of discovered resource. And that's with WTI in 2017 looking to have averaged only about $51/bbl.
https://www.hartenergy.com/exclusives/armstrong-selling-stake-largest-us-oil-discovery-decades-30487
https://www.oilsearch.com/__data/assets/pdf_file/0005/13676/171101-Strategic-acquisition-of-interests-in-the-Alaska-North-Slope.pdf
https://www.nsenergybusiness.com/projects/pikka-nanushuk-development-north-slope-alaska/