If as an investor of BMN you believe that energy storage will be a success and that VRFBs will play a healthy part in that success, then there simply isn't enough vanadium being produced in the world to satisfy even a fraction of that success.
So something will have to give and whatever it is, with 2 of the world's 4 active processors under their control, and a considerable high grade resource to support them, BMN will be front and centre when said something does indeed give.
That will take time but said time will in my view, come with an excellent hourly rate of return.
@Compass0007 I believe a little more patience (yes more of it) is required here. All BMN need to do is keep building up their arsenal, by developing their assets, and supporting and taking part in the energy storage market, making ready for the day that will inevitably going to come.
It may take high(er) vanadium prices. It may take a demonstration of the profits those prices deliver. It may take a demonstration of the sort of profits their stake in the energy storage market offers. It may take a combination of all 3 or indeed something else all together.
The most important thing it is coming. It is going to happen. It is about when, not if, and so it is about remaining patient, and 'simply' waiting it out.
I sincerely trust and hope all LTHs are able to do that because it is going to be worth the wait.
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With Vanchem now acquired, BMN management and their advisors, can use the experiences gained at Vametco (good and bad), in order to carry out a meaner and leaner refurbishment of Vanchem. I am sure they will have built up some very good contacts with contractors and consultants they now trust, and will employ these advantages in their mission to make Vanchem a second serious weight in their vanadium arsenal.
Finally, whilst the sales figures for Q3 were down, for the first time I am not too concerned about it. Vanchem automatically boosts production by circa 35% but also the closure of the debt facilities and the revised Vanchem payment terms, mean that BMN can afford to hold back a little, when it suits the business.
We have demonstrated clearly before that Vametco has built up a good stock pile in finished products these last few quarters. If they ever need to boost sales then it is there, and the fact they aren't selling everything they have, is supportive of a business that does not have cash flow issues.
Long may it continue. Infact I trust they will continue to stockpile vanadium and wait for a better pricing environment, be it next year or even later. That is the advantage they have as the future largest supplier of vanadium outside of China.
The boy has most certainly become a man now.
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Whilst I am absolutely delighted with the Vanchem deal and its punctuality, it is the Q3 update that I find most notable.
Key quotes ;
"Vametco achieved record monthly production of circa 310 mtV during September."
"Vametco's production for the nine months ended 30 September 2019 was 1,953 mtV"
"Vametco is on track to meet its production guidance of 2,800 mtV to 2,900 mtV for the 2019 financial year, underpinned by its improved operational performance."
"Unit production cost of US$18.90/KgV to US$19.50/KgV for the 2019 financial remains on track."
"The maintenance programme was completed in 22 days, two days ahead of schedule. No further shutdowns are planned for the current financial year."
What BMN are saying in a nutshell, is that when given a free run (no shutdowns), Vametco will produce minimum 847mtV in Q4 2019 but with the possibility of pushing this to circa 900mtV and beyond (2,850 mid guidance - 1,953 production for 2019 to date).
At 900mtV per quarter and assuming a 3 week shutdown per annum, that will deliver circa 3,325mtV per annum,which is not far off the "steady state production run rate of 3,400 mtVp.a. during the course of 2020" figure, and further supports why "during" is being employed.
Even at 3,325mtV, that would mean a c.475mtV uplift in production, which is circa 16.7% improvement on the average 2,850 mtV figure expected in 2019.
One would expect that said 2,850 mtV figure ties into the average production cost figure of $19.20 per kg (guidance $18.90 - $19.50), which means in very simple terms, that the production cost for 2020, should reduce by circa 16.7%, to c. $16 per kg.
Such savings will be most welcome if vanadium prices continue to hold their lower levels. It is also a clear example of what existing producers can do to protect their bottom line, whilst continuing to produce at the same or indeed increased levels. An advantage that works directly against junior vanadium plays, who need higher prices in order to secure finance.
What it means is that BMN are able to continue to fine tune their operations and their production, even during a downturn in prices, ready for the next upward cycle, where they will be meaner, leaner and a whole lot bigger.
What this update also delivers is the final piece of evidence that Vametco, and more importantly BMN, have learnt from their errors back in 2017/18, and have acted decisively to turn around what was a black mark, in terms of their promises to the market not being met (Phase 2 3,750 mtV), and demonstrated that they can be trusted, and that their plans can be achieved.
That is something I am particularly happy to see unfold.
@mcbride.c No I do not believe so. One should not confuse "first refusal" with an actual contract to carry out something. I believe I3E have confirmed said first refusal to ensure that they are able to conclude A2, whatever the weather brings, and nothing more.
They have previously talked at length about good weather windows keeping down costs and with money a tad tight, given that want to appraise Serenity next Summer too, a further well in Winter is too risky and unnecessary at this time. My view only.
Well as it turns out my theory has no grounds due to a good source confirming to me that the survey is not for I3E.
So feel feel to ignore those 2 lengthy posts from just earlier. Shame, it was a really good theory too.
I won't say anymore on the subject or (out of courtesy) entertain questions on why I have changed my mind. Sorry but just trying to be respectful to all.
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The 2 main areas currently being surveyed by the Ocean Observer sit within an area that has never been drilled before. The nearest identified completed well is 13/23a-4 but that is well outside the survey area.
Key opening line that comes immediately above the quotes I included earlier from te Serenity Prospect document ;
"Blake does not close structurally."
What is strongly implied is that there is a connection between the 3 wells, between which I3E 2 blocks both sit.
The evidence to date is indicating that I3E potentially believe ( and I stress this is merely my investigations to date), they have another prospect directly West of the Blake field, which sits within these K50.2 zone, that is interpreted as being shared between the 3 stated wells.
What is interesting is that I3E included this as page 1 of the Serenity Prospect document, prior to then going on to talk about the Serenity prospect. Whats more this survey is being conducted immediately after I3E have made a confirmed discovery on Serenity, which they state has performed pretty much in line with all anticipated outcomes, from the modelling.
It should not be forgotten that I3E produced a regional model across this whole area, and have claimed all along, that it demonstrates that sizeable quantities of oil have been dispersed across this region, which are yet to be found. Serenity clearly has some, but perhaps, just perhaps, I3E believe their blocks hold more, and the Serenity success, has given them the knowledge needed to push on and find out.
I may be wrong here, and much mlore research is required. I question why they would need to survey now,so soon after Serenity was discovered. Desopite the fact that the survey hip has visited both Tain and the Bleoheim, I am struggling with the notion that such a survey could/would be activated so quickly. There is the question of weather and perhaps the need to survey prior to Winter, but Serenity only has 1 well drilled in it, so identifying pipe runs etc looks premature.
There is the possibility that the LIB phase 1 development plan is being adjusted, due to the new layout of Liberator but having looked at it, I don't see the need to be surveying so far North of Liberator (the lower survey is 4km North Of A2, which is maximum 1km South of the highest Northern point of the LIB channel), so I don't buy that right now.
So i am back to my new prospect theory driven by the knowledge that I3E have already called these sands, have identified that Blake does not close, and are surveying an area of their block that has not been drilled.
If I am right, then "we are going to need a bigger boat" and any discussions with Repsol/RRE cannot truly come to a conclusion, until we know just how many connections I3E blocks have to their neighbour, be it Tain, Blake or both.
To be clear this is just my theory. I cannot say for certain that I am right, and investors should check all details for themselves.
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Further to my earlier post, I would offer this ;
The survey being conducted right now by the Ocean Observer, has two main survey areas approximately 4km in length, which very close (and I mean essentially touching) to 2 Blake development wells (13/24a-7 and 13/24b-9).
These can be viewed on page 10 of the enclosed I3E Energy FDP plan.
The survey can be viewed via the following link, by searching for Ocean Observer, clicking on it, and hitting "Past Track." A reference of the co-ordinates on the Marinetraffic interactive map, to said plan in the I3E FDP, should enable readers to reach the same conclusion.
The width of these 2 main survey areas are circa 450m and 300m. So I struggle to conclude that they are pipeline surveys. This is demonstrated by the fact that Ocean Observer has had a run upto the Tain discovery and down to the Bleoheim, and these runs were far narrower. This is further supported by the fact that the anticipated production pipeline for Liberator phase 1 is just 10 inches wide.
Moving on. Enclosed below is a copy of the Serenity Prospect presentation, dated 12-.12.2018.
In there I3E stated the following on page 1 ;
"Interpretation suggests that the 13/24-9 Blake injection well, and the 13/22-20 and 13/23a-7Z northern wells encountered a different Captain facies to the Blake Liberator Channel"
"In these Northern wells, the Captian sand is a series of different stacked sands separated by several shale intervals."
Now the third well mentioned in that document, 13/22-20, is actually 13/22b-20. We know this because directly below the above words is a comparison log, and the well in question is identified correctly as 13/22b-20. Also, it is in that set of logs that the difference between the sands is noted (K50.1 and K50.2).
13/22b-20 location was a little difficult to pin down, because the OGA tend to update and sometimes mash together, their blocks. The following link is for the OGA Public well bore search site. I have enclosed a direct link to the 13/22b-20 well bore, but it may not work. Therefore, readers may have to search for it themselves.
When found, one will note that the well bore sits right in the middle of what is now Block 13/22c, which is the block immediately South of the Captain field, and a field which sits immediately West of I3E's 2 blocks, which incidentally sit directly between the 3 wells in question.
They been the 2 Blake wells 13/23a-7A and 13/24b-9 and the well (that has itself just been acquired by Chrysaor from ConocoPhilips) 13/22b-20.
A better understanding of the geography involved and the relationship of the wells to I3E's blocks, can be got from the diagram on page 2 of the Serenity Prospect document.
Good morning Oldandwiser.
In connection with your post, I would offer the following that I just posted on Twitter.
The plot continues to thicken with the Ocean Observer.
Its first task today was to take a run up to to the Tain discovery, which means it has now visited both Tain and effectively the Bleoheim FPSO.
Its now busy surveying a section North of its main survey area, which effectively sits along the line designated "Captain 8in Gas Export" in the #I3E Field Development Plan.
This area is right on the Southern border of the Tain block.
So much so that the survey is now cutting through the bottom left hand corner of that Tain block.
Given the Serenity discovery was only announced on 29th Oct, somebody is an awful hurry to establish something.
What that is, I am still very much mulling over, but given that the Serenity discovery has highly likely placed I3E in a unitised development, that itself undermines the FDP currently being produced for Tain, then the appearance of a survey ship, running between Tain and the Bleoheim, is very interesting indeed.
More so for the fact that it is focusing it main survey around two West to East stretches, both around 4km long, and both sitting mainly within the I3E owned but penetrating into the Repsol controlled block 13/24b. The home of the Blake field.
Early days and we must be careful not to fall too far down the rabbit hole, but this survey does not smack of an I3E that is working on its own, or at the very least is working towards working with someone else, connected to those blocks.
Scratch that last post. The survey area is some 4km North of the A2 well site. That places it too far North to be a pipeline for A4/A2 because it is well outside the Liberator field area.
Something is driving I3E to survey so far North, prior to the A2 result. Thinking caps firmly on.
Borgland Dolphin has arrived at the A2 well site now.
A2 position is markedly South of the area currently being focused on by the Ocean Observer.
It is c.10km from the Serenity drill site to the A2 drill site.
The Ocean Observer has been concentrating on a West to East section approx 4km North of the A2 site.
My initial view is that it has been surveying a route for a future pipeline from A4 location to A2 North zone, as these are planned to be the first 2 wells, and the engineering needs to be completed over the Winter, ready for install next Summer.
Its a very positive sign from a team that is supposedly under pressure. It doe snot look like they believe that half as much as the market is trying to do.
Further to a discussion I have been having on Twitter, the Ocean Observer ship is currently surveying the Liberator area once more, having done so for the 2019 drilling programme and pipeline routes, back in March/April 2019.
Clearly the re-mapping has led to this being necessary.
What I find interesting is that I3E have committed to this survey after having met with the RBL lenders at the end of last week.
To survey now means a need to hurry up, given there are better weather windows to be had. It also indicates strongly that said discussions with the RBL lenders, were positive to the extent that a push for 2020, has worth, and that the current works by I3E have their backing.
What is interesting about the past track of the Ocean Observer, is that it has also surveyed directly down to the Bleoheim, when the connection is East of Liberator, at the Blake field. A point that maybe nothing but certainly of interest.
@Ophidian Yes I did see a post stating something along those lines. There is no mention of this in the presentation, so personally, until I see actual proof I will take said quote with a pinch of salt.
I do feel very strongly that I3E know they have a bigger asset on their hands. They are merely playing it with caution until further details are known. That may be as late as the potential appraisal next Summer.
@Olderandwiser Good morning.
To date I3E are playing Serenity with a very straight bat. To be clear, nowhere in the RNS have they stated that the resources in place will be significantly upgraded.
In the interview and the Oil Capital Conference presentation, they laid out the result and talked about the expectation of 4-5ft and achieving not only 10ft in well developed sands.
The fact that the Serenity RNS stated "preliminary well results that are consistent with i3 Energy's pre-drill estimate of 197 MMbbls STOIIP for the entire Serenity closure within the Company's licence area," but that management reported a thicker oil column but also the "pleasant surprise" that was the Coracle sands, says to me that they are playing it conservative but that the 197MMbbls STOIIP should be the base case.
The field needs to be appraised in order to determine exactly what they have, but there is sufficient evidence to at least support he 197MMbbl STOIIP, which is a very significant find, given its proximity to low cost infrastructure and connection with the neighbouring block.
If Tain is indeed c.50MMbbl STOIIP, then at 12MMbbl 2C, they are currently booking 24% recovery.
If Tain were to achieve 35% (WH Ireland target for I3E Serenity), the that would make it 17.5MMbbl.
At 70MMbbl recoverable, Serenity would be 4 times bigger than Tain, based on those anticipated figures, with a strong chance that appraisal of Serenity will further widen that gap.
Good morning all,
Now that the anchor handlers are on site and already busy preparing the Borgland for its move to Liberator, I thought I would update my not to be taken too seriously set of key dates for the A2 drill.
5th November anchor handlers set sail.
7th November anchor handlers complete move.
10th November spud 11th
29th November preliminary result if duster.
3rd December if oil found.
10th December Borgland Dolphin sets sail for home.
Please remember that I have produced this list more as a challenge as opposed to saying that it is 100% accurate.
10th November is a Sunday so the spud would be announced on Monday 11th Nov.
As for value, which I am giving a wide berth right now because the focus should really be on getting the last drill over the line and closing out the RBL.
However, in a recent RRE broker note, the Tain 2C resources of 6.1mmbbl, were valued at $5 per barrel.
WH Ireland in their Jan 2019 broker note, valued Serenity at $7.50 per barrel, which gave a post tax NPV10 of $518m. This was calculated against Brent $55 per barrel and included for a new FPSO, which likely won't be employed because the Bleoheim has sufficient capacity for the unitised development.
Based on that new FPSO, WH Ireland had the Serenity CAPEX at a whopping $490m. If the Bleoheim were to be available (which the I3E CPR of 3rd November clearly demonstrates it should be - See page 49 onwards), then that CAPEX figure should be well under $200m.
That would push up the NPV10 figure considerably.
Note - The Bleoheim FPSO has a crude oil capacity of 100k bopd. by 2020 Blake/Ross are expected to be employing 8,300 bopd per day. Liberator phase 1 adds a further 20,000 bopd. Tain on its own has a peak oil per day figure of 6,700 bopd. Even if Serenity added 10,000 bopd across 3 wells, we are talking maximum 45,000 bopd. So less than half the capacity.
There are other factors such as fluid capacity and produced water, but would that really place that 45,000 bopd under threat? I feel not.
So there looks to be a great deal of value in Serenity, based on the figures we have to date, and circa 35% recovery factor.
If through the appraisal programme, Serenity firms up greater volume, then that figure at the very least is protected, if not substantially improved.
This is why I feel talk of I3E being in trouble or under pressure, if they 'only' had Serenity, is built on very shakey ground, be it I understand that time would be needed to see it all come to fruition.
@Oldandwiser I assume you are responding to my first post of the day here but just to be clear, at no point have I said that Serenity would/could be 4 times bigger than currently mapped.
What I said is that ;
"they have acquired a block right on the doorstep of Tain and proved up a minimum 200m STOIIP, that is connected to Tain, and throws its plans right up in the air, because Serenity is at least 4 times bigger than it."
That being 4 times bigger than Tain.
I3E in their presentation on 31st October 2019 (see around 19 mins in), stated that Tain had around 50m barrels of oil in it. I would assume that to be STOIIP, because throughout the presentation on Serenity, he talks only about oil in place only. In addition, if he were referring to recoverable oil, then given the area size and sands thickness in Tain (circa 4-5ft only), that would automatically make Serenity (average 40ft thickness) a lot bigger than the to date circa 69mmbbl recoverable oil allows for. So it cannot be both.
If so then that places the Serenity STOIIP at 'minimum' 4x that of Tain. hence my 4x larger reference.
In addition, right now Tain currently has confirmed total 2C resources of 12mmbbl.
WH Ireland in their January 2019 note, stated that upon success, Serenity should have 69mmbbl recoverable oil (at 35% recovery factor).
If as suspected the 50m reference for Tain is indeed STOIIP, then they are currently assuming a recovery rate of around 24%, which ties in very well with a 2C resource level. Liberator Phase 1 with much thicker sands, is stated in the CPR as having 28% recovery at 2P.
The above thinking was why I stated the 4x figure, be it there is much work ahead to establish the reality on the ground.
Even if the 50m figure is too low, I feel the 4x figure is heavily supported by the fact that Serneity is showing clear signs of being considerably bigger than the to date stated 197mm STOIIP. Plus the recovery rate has every chance of being bettered.
On that, it is important to remember that all 4 potential/active fields (assumes Serenity/Tain are unitised), in this area, have the same base characteristics, in that they are all accessing the Captain sands. Therefore, it is reasonable to expect that the 35% recovery factor can be improved upon, because Blake is at 50% and is expected to achieve closer to 60%, according to the previous I3E June presentation.