MarkA8178 - Correct, the current Rathlin shareholders who opt for the equity swap wont be able to sell their new shiny RBD shares for 3 months.. presumably that'll be the end of Jan'20 if the deal all gets s/holder approval at the end of the month
The ii placees for the £16m don't appear to have any kind of lock-in.. that's the same as previous RBD placings as far back as I can remember
Sachin interview re fundraise
Ah yes, the CPR update had slipped my mind for some reason. They need to get that to BP for their funding model to finalise the $8m so hopefully they'll give us the delta to the current 2.6mboe of 2P reserves. The full CPR report will form part of the readmission pack.
levistubbs - hope all's well, good to see that BL has dusted off the old RNS writer.
2 pieces of Egypt info we are still awaiting, which I was hoping might get a mention on the RNS:
- The 3rd (of 4) new wells in the 2019 programme - Al Jahraa 12 - should have reached TD. Spud 4/8 with a 55 day estimate for drill and completion
- The 2nd new well - Al Jahraa 7 - a discovery in the summer, we still await the flow rates.. was still w.i.p in RKH's half yearly accounts recently
Touchwood both will add to the c.1100 bopd
Going off piste, any reason why UPL's topman has gone? Curious as i'm in RBD and we share the pain/gain of the Moray Firth licences
Thought I’d leave it for 24 hours or so before posting to avoid the noise and to give some time for clearer thinking.
Have to admit I was surprised at the timing of the planned raise as I was expecting it post EWT. However, S&S clearly have enough intel, unavailable to PI’s (who don’t have dubious friend’s who leak them info), to go to the market with a big ‘ta-dah’ presentation. They wouldn’t do that without extreme confidence and given the amounts of £ they are seeking to raise which is well in excess of their previous bandwidth. We will have to see how the II community reacts.
Still haven’t quite got my head round the sums they are seeking. Running some Rathlin cash projections, they had c.£5m on 1/1/19 and have raised £3m via advanced share subs and bringing in a new hnw investor during the year. Take off £1m for 2019’s G&A (in line with 2018 if you take out the legal bills for the UJO farm-in), gives £7m. From SP Angels research paper in the summer, projected drill/test costs for WN-A2 are around £8m gross, so £4m to Rathlin with their 50% cost carry. So they should have c.£3m in the bank on 31/12/19, to be prudent say £2m with the EWT start-stop delays.
For 2020, Rathlin’s cost carry for 2x WN-B wells would be 2x £4m-£5m = £8m-£10m, add £1m for G&A gives £9m-£11m of cash spend. If all runs to plan and Rathlin are approached by a major(s), add in £1m+ for updated CPR’s, legal bills etc for any formal sales process of either all/part of PEDL183 or Rathlin as a whole
If they have £2m on 1/1/20, it would mean Rathlin require ‘only’ c.£10m of new cash for 2020. From yesterday’s RNS it could be RBD are funding 100% of this for x new shares or there could be a parallel Rathlin advance subscription raise among its other 20+ shareholders funding part of it and RBD the majority.
So what’s the rest of the targeted raise for?
i, buying out some of the other Rathlin shareholders to increase their overall % stake in addition to the well funding route? Possible if they can find a willing seller(s)
Ii, Parta. The IM-2 option is for £2m, add £1m for RBDs share of well testing = £3m. How the Parta development funding is being paid for is still a bit fuzzy. Presentations and project economics for the 2 well appraisal programme have always been presented based on debt funding the development, however a recent ADX RNS made reference to possibly equity funding the pipeline for IM-1. I’m assuming they are still seeking to fund all/majority of the development via debt otherwise the project IRR/ payback gets clouted
Iii, The balance for a 2020 fighting fund? – to progress the Corallian portfolio (Curlew in H1?), new opps etc. S&S do historically like to try and ‘over raise’ so they have flex.
Interesting times, lets see what the next week brings.
Enjoy the rest of the weekend
Mike - UJO/Humber have no shares in Rathlin, they both have a share of the PEDL183 licence which Rathlin owns the remaining 2/3rds of.
Reabold & Connaught combined hold c.70% of Rathlin and there are about 20 other much smaller shareholders making up the balance
trytryandagain - its probably related to ADX's Austrian acquisition. They are trying to complete over the next few weeks and need to raise the balance of the cash (they've only paid the deposit to date). Doubt its Parta related.
korvet - from yesterdays half-yearly accounts: After EWT
'Following the integration and evaluation of the core, petrophysical, seismic and test data, the operator and partners intend to commission a revised and updated Competent Persons Report, in order to re-assess volumetrics and revise NPV10 values based on the information acquired from the West Newton A-2 well.'
Logic says that unless there's an absolutely urgent need for the partners to release a CPR pre EWT, it will be after so you have the latest data to present, otherwise the process gets very iterative and expensive paying a 3rd party for revisions.
For a complete CPR including a full set of project financials – NPV’s, sensitivity analysis etc, you need to have a flow rate in the modelling. An NPV calculation is the sum of the discounted project cashflows, so for your income / cash inflows you need an assumed flowrate in the financial model. The EWT flow rate for this A-2 well, combined with the knowledge from A-1 and their wider geological analysis will form the basis of the financial model and the new NPV10
They can then run ‘what-if’+/- variants of the financial model based on alternate flowrates, price of gas/oil, changes in capex/opex, different depletion rates etc. The CPR will then usually present a range of NPV outturns based on these sensitivities, in tables, graphs and charts. Any major ii or potential buyer will crawl all over these figures and the underlying model(s)
Will we get some nuggets ahead of the EWT/CPR? Sounds like we'll get some indicative reserve sizes, NPV (using an assumed flowrate) as the jigsaw pieces start to form a picture from the DB interview... i'm happy with both buns and pies, but I'm a gannet !
Enjoy the rest of the weekend
I wouldn't mind the presentation format if there was a note that clarified what was driving the NPV - eg. for MS 'NPV based upon x number of wells drilled over the next y years' otherwise its comparing apples & bananas ..
Jack - The original NPV10's per the acquisition RNS & presentations are definitely across the 3x licences in total
For Monroe Swell, there's no way 2 wells (MS1/2) chugging out c.100bopd net to Reabold would ever generate a NPV10 of $100m - it fails a basic maths sniff test. Figures are/were based on full licence development - ie. multi-wells
Good update RNS today, shame still no production figs for VG3/4
Half yearly accounts due imminently so hopefully addressed there
Interview with S&S on Vox released this am.
Substitute v o x m a r k e t s .co.uk for the asterisks below
Some more flesh on the bones of yesterday's RBD funding RNS
- Well testing
- Approvals & planning work for IM-2 (I assume that's local approvals only + applying to extend the production licence area to include IM-2)
- 2D seismic over the production licence area focussing on PA IV potential upside
- Review of opportunities in Romanian O&G licencing round
Option funding will cover drilling of IM-2 or the pipeline for IM-1
I wouldn't get overly excited about multiple drills in the short term. When they renewed the exploration licence (to Mid 2021) recently the phase 1 work programme was for 2 wells + a chunk of 2D/3D seismic. IM-2 qualifies as one of the 2 wells (even though its in the Sole Risk area), so it will potentially be IM-1/2 + 1 well by mid'21. Seismic shoot scheduled to start in Nov, so once that's been undertaken, processed, targets identified, permitting (which took ages for IM-1/2), PO's raised etc it'll be well into H2'20 .. plenty to do with IM-1/2 in the meantime to keep them busy
On the exploration licence, I believe ADX have about a dozen targets based on limited 2D seismic. Reading back through some old ADX RNS', a number of these leads are close to a number of old oil/gas fields that were in the licence block - so probably more appraisal'y in nature than pure exploration. Common geology, potential pay zones reading across to IM-1/2.
Its a chunky licence block (1200 sq km) and many times the size of the Sole Risk area containing the 2x appraisal wells
You were bloomin' close without the benefit of MS excel !
WN/Parta looking very promising and looking forward to the wobbly mobile phone camera footage from the hedge dwellers to let us know when the EWT kit is arriving at WN
On Parta, found this interview with ADX's Chairman (and SW's fellow Danube board member) at the weekend - he refers to $1.5m to tie into the local gas infra.