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You think TE-5 is worth more than 27p per share, S/O?
Maybe sounding...but then again maybe not...
Based on past performance of the failure I have no option but to look at worst case - he hasn't delivered anything he raved about to date...let alone on time, to budget or to specification. He is/was the project manager if you like for this company and he has failed miserably as someone said on here.
Indeed it will need time and money n4a, but relative to many developments, it'll be cheap and we've done much of the work despite what some may say. Given you've moved onto the wider area, I'm guessing you've moved on from our point.
wh0s- Of course it's risk vs discount, but I didn't want to complicate matters further. As I've said before, from the stage of development we're at the risking will be minimal from my research. The reserves are certified and the latest EWT provided the following:
'Sound Energy, the Moroccan focused upstream gas company, is pleased to provide a further update on the TE-7 well reservoir pressure, following the latest retrieval of the pressure gauge data. The measured pressure data provides further information on the extent and quality of the reservoir at TE-7 and provides additional confidence for the development plan of the Company's existing TE-5 Horst discovery, which remains subject to Final Investment Decision.
The latest pressure measurements reveal a current reservoir pressure of 413.4 bara at the TE-7 well location with the pressure continuing to increase towards the original reservoir pressure of 422.6 bara confirmed by the Company on 19 July 2017. The period of pressure monitoring has been extended to observe this continued pressure increase and will continue. The pressure build-up trend is important information as it allows the Company to estimate the connected volume of in place gas ("GOIP") accessible by the TE-7 well.
Analysis of the pressures measured in the well recorded over time has led to an increase in the Company's estimate of connected GOIP around TE-7 to a volume exceeding 115 Bscf. Historical analysis of the pressure trend, announced on 19 July 2017, had previously shown that the volume of connected GOIP around TE-7 exceeded 40 Bscf.
The significant increase in the Company's estimates of minimum GOIP connected to the TE-7 well provides support for the Company's field development plan consisting of a number of horizontal stimulated production wells spaced to optimise recovery.'
Just that one well provides 20% of the GOIP on the development. That will provide a material uplift to the NPV of the project. It's funny how you always miss that point? Maybe we'll end up with more for the Horst than the broker notes?
Soundingoff - it's not risked at 10%, as you know, it's DISCOUNTED at 10% and UNRISKED. Any potential buyer will not be paying unrisked NPV10 for TE-5, they will model the risks involved and offer an amount that they feel mitigates the very real risks still involved with developing TE-5.
Point taken, N4AP.
I'll have to settle for 50p per share instead of 100p.
With one more average-down, that would give me almost a hundred percent profit.
That wouldn't exactly be a disaster.
I appreciate that some may not be in such a 'fortunate' position, but one needs to keep open the option of being able to average down to a significant degree.
Soundingoff that's all well that under NORMAL circumstances it's accepted.
We have an area the size of Belgium that is notorious for poor permeability and porosity...proven by 2 high profile drills despite what 'leading' hydrocarbon geologist teams have found through seismic works.
Nobody expected te9 to flop, it was touted as the lowest risk drill - agreed?
Most expected te10 to flop with no reference to te9...but it showed a glimmer of hope that crucified us all
Tendrara is a scientific beast needing vast amounts of time, work, science and capital which demands a discount in any normal situation.
Couple that with 1-4 tcf verified by CPR, which hints at small pockets of gas not necesarily commercial and the discount argument is consolidated...
And frankly, I think those calculations are conservative. I think that stems from the production concession and of course the lack of data from previous production. Just look at the EWT- we worked on 40bcf per drill, but TE7 has already shown 3 times that.
It's very clear you get that part, but if you think a project at this stage of development is going to be significantly discounted, you are missing the point. Third party verification, EWTs, production concessions etc, blimey even an GSA offer. The calculations are an industry standard and it is accepted that the NPVs calculated are what should happen. Reality may differ, but that is the risk a buyer of these developments take. As I say, you are trying to discount something that the O&G industry accept should happen under normal circumstances and hence don't discount.
Sounding off, the 10% could relate to many things, namely the cost of capital to finance a project i.e. cost of borrowing money to fund the horst development or maybe the return that other projects could be offering at a similar level of risk or simply the return that the company wishes to risk the future cash flows at
I have a decent understanding of npv/irr/payback periods etc etc so am aware of what these calcs are all about.
If your understanding differs then do share....im confident in my understanding of numerical reasoning for projects in many industries
Pear Tree Partridge...
1st September couldn't come any sooner I think. I think your kind will be in rapid decline in a few days time.
JTF
Partridge do you have a chart on the percentage of bb posters whose pseudonyms start with either oil or gas that appear to know next to nothing on their chosen subject?
Pear tree partridge here. Did I complain about one of your facts? If so I humbly apologise. I thought I said I was was taken in by your ruse. For an aggressive poster you appear to be very defensive. A big hug from me.
n4a- If you plan to continue investing in O&G, I would suggest you look further into the process of field development and the use of NPV10. As an example, why is the asset risked at 10%?
oh please darkenergy - stop your deflection (or is it defacation?!) skills and enlightnen us with your prediction and rationale
pear tree partridge et al - anytime someone decides to shout out a few facts that set alarm bells ringing you ocme running to attack that person....least I have rationale behind my thoughts, based on facts and not speculation. Those days are gone for all unless you are of course deluded.
Soundingoff - how is it discounting a discounted asset? The NPV calcs are something any company analyst would have a look at to see if it is indeed a positive contribution project.
So the discount is on the future cashflows based on the time value of money giving a company/asset valuation today - for the layman, £1 today is worth more than £1 in x years time because of inflation/cost of cpaital/opportunity costs etc
So it is not actually discounting a discounted asset - it is a discount on the valuation of a company/asset based on discounted future cashflows....and those future cashflows are asusmptions anyway so why would you pay full whack on assumed outcomes? does not make business sense!
I suppose you have to put it in context Longwait. Seismic per se won't be worth much. However what we are trying to monetise is an inventory of assets ranging from TE5 and the associated prospective assets (total 1TCF GOIP), through appraisal and exploration targets and ending with what's left in the basin model and the associated seismic/grad. Sidi separate of course. It's pretty easy to risk those and decide what you're wiling to pay with reference to the risk and reward. As you know, suggesting those assets over and above the Horst are worthless is plain daft. Anyone with any experience in O&G will know they have value. They question is how much. And then it's complicated further by any contingency built into a deal.
N4,
Duh, I can see there's no point arguing with a smart guy like you...
...but if you're so smart why are you wasting time here rather than selling?
I went for the easy option too. When you said goodbye I thought you had left the board. How do you expect anyone to pay attention to your posts when you use ingenious ruses and subterfuge. Your cunningness is on a scale no ordinary person can understand. Alternatively, there are mediation services available that might bring yourself and Mr Parsons to a peaceable reconciliation.
Excellent news n4p. Glad you haven’t crystallised your loss yet. Do you intend to hold out for a bigger loss? Well done.
Ha, dark energy fell for it - went for the easy option just as I thought #zerosubstance
So, seeing as I haven't pressed the sell button, I'll bat the ball right back in your court for you to elaborate on your delusional £1/share horse poo valuation...come on, I need a laugh, let us in on your dark secret!!
What do you make of a conversation reported by one poster, that JP cut off a director who had just opined that the seismic would not be considered by a potential bidder to be of much value, S/O?
N4
Goodbye then...
(reading between the lines in your points I can tell you're not keen, so assume you have finally found the Sell button and are leaving)
Risked NPV calculations support these values, but of course a sale price could vary considerably from NPV, both up or down. Regarding the TE5 horst, there are many recent sales of similar developments where a small discount is applied to the NPV10 value. Discounting a discounted asset is incorrect as this stage of development.
dark energy - would you care to elaborate exactly how you think SOU shares could go for £1/share following this marketing process?
Things to bear in mind:
There is no more operational activity being carried out at present
CEO announced in one of the last FSC's that there will be no operational work planned after this summer
Prospect inventory is unverified due to drilling dusters which could not prove up 3 independent geological plays i.e. they were 3 mutually exclusive events, the result of any having no bearing on the results of the other(s)
Lack of any/full CPRs
Lack of work on sidi moktar and potential oil play at anoual
Sub-standard seismic mapping and interpretation of seismic lines due to fast tracking
Debt obligations to be settled before anything returned to ordinary shareholders
Director T's and C's to be settled before anything returned to ordinary shareholders
Only commerical prospect valued at 20-30p per share based on current shares in issue which could be subject to a potential buyer requiring a discount on purchase for any unforeseen circumstances or because they excel at negotiating deals far more than the failure we have who is a self proclaimed deal-making specialist
Thank you and goodbye
Cfds - who's a distressed seller?
Sound Energy has a plan if it doesn't t sell...
... As PIs we wouldn't like it!
More importantly Moroccan Government wouldn't like it
I think £1 per share is possible, but not likely - so delusional according to you
I equally think 2p or less is very possible in the case of no sell, so I agree 25p is much much better than 2p
However much underwater I am I would consider a credible offer considering we are a distressed seller of 25p and anything above that a bonus. I’m afraid anyone thinking they may get £1 are delusional.