Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Ps - an an honorable mention to Howard Marks too. He's written a couple of fascinating books and I'd also highly recommend his memos, which are free via:
https://www.oaktreecapital.com/insights/memos
Morning Welshspread44,
I’d say ‘Richer, Wiser, Happier’ by William Green is the best investing book I’ve read. His podcast of the same name (via The Investors Podcast Network) is also terrific and he’s worth following on Twitter, too.
I’d also highly recommend all books by Robert Hagstrom, on Buffett /Munger. (In fact, pretty much any book on these two legends will be worth a read, IMO.)
I’m currently reading “Boom and Bust” by Quinn & Turner, an interesting cautionary tale about stock market bubbles over the centuries. With PRD’s recent significant rise in sp, it reminds you to not get too ahead of yourself and to have a healthy dose of scepticism…
But of course, PRD is no bubble! The current Mcap is simply reflecting newsflow and it’s on its journey to representing true value. On that note, I really liked Sefton’s analogy the other day that we’re still just in the foothills of PRD’s rise to the summit of a huge mountain… there’s a long way to go yet!
Hope these suggestions are of interest. Happy reading...
What I’m posting is, of course, just a very brief introduction to the concepts, there’s lots more research out there in the medical literature. But I’m convinced that both KD and HBOT have considerable merit – I’ve been on a KD myself for the best part of ten years and, as I say, have also had HBOT in the past (and will probably have more in the future) – and so I hope this may be of interest to you and perhaps be worth discussing with your rehabilitation physicians as potential adjuvant therapies for you. As I say, I can’t give you specific medical advice, but I can confidently say that, were I in your position, I’d be doing both KD and HBOT in the hope of optimising my long-term recovery.
Again, I wish you the very best in your recovery, and please just let me know if I can be of any help in these matters.
ATB
BRV
(ps – equally, please feel free to ignore the above… I won’t be offended!)
2/2
Good evening Caterham,
I’m so sorry to hear of your recent serious road accident and, like everyone else who has already posted, send you my very best wishes for a speedy and full recovery.
You may not has seen this but we were actually discussing your posts only a few weeks ago (GRH had recommended we all review your posting history, and for good reason!) so even in your absence, you’ve actually still been keeping us all informed and helping to expand our understanding of the Guercif basin… so THANK YOU!
Considering your invaluable input to my understanding of geology and PRD, I wonder if I may be able to, in some small way, partly return the favour. My own background’s in medicine (degree in pharmacology) and, although I can’t of course give you specific medical advice, there are a couple of topics I thought I’d mention that may be of interest to you with regard to optimising your recovery, particularly relating to your cranial fracture (and presumed traumatic brain injury) and, indeed, other fractures:
1. Ketogenic Diet (KD)
As I’ve mentioned on here before, I’m intrigued by the therapeutic possibilities of KD, particularly relating to the central nervous system. The pharmacological mechanism of action of ketone bodies (the main one being B-hydroxybutyrate) is compelling in my opinion and I’ve seen many people benefit considerably from this nutritional protocol (often when conventional medicine has failed). Of note, there are ketogenic protocols for all neurological conditions (e.g. Alzheimer’s; Parkinson's; MS etc) and it’s a recognised treatment for epilepsy.
Specifically relating to traumatic brain injury, this blog by Prof Dominic D’Agostino (an expert in the field) is an informative read, with a link to his meta-analysis paper on TBI from 2021:
https://ketonutrition.org/can-ketones-protect-against-brain-injury/
2. Hyperbaric Oxygen Therapy (HBOT)
I’ve actually undergone this myself and, anecdotally, also met a number of people with traumatic injuries (mainly bone fractures) who significantly improved both the speed and quality of their recovery using HBOT.
This website, by Dr Scott Sherr, provides a very nice summary of the therapeutic rationale behind HBOT which I hope will be of interest:
https://www.hyperbaricmedicalsolutions.com/the-complete-guide-to-hyperbaric-oxygen-therapy
There are HBOT chambers across the country (mainly private, unfortunately) including, for example, this one in London:
https://numaoxygen.com/
The leading expert in the HBOT field is Prof Shai Efrati and you’ll find many of his papers / presentations online if you’d like to read more (the Israelis are very positive in HBOT and actually use it as preventative medicine to slow the ageing process!)
1/2
Morning PT,
Apologies if you've already seen this, but Eytan made reference to PRD and CO2 EOR in his chat with LSE last month. See from 30m 45s onwards:
https://youtu.be/Zl_-obMxPLc
“[PRD’s] processes, things that they’re good at [i.e. CO2 EOR], are applicable not just at one field but at several… As people will know, we had a little spat with Predator a while back but we’ve all kissed and made up, we’re now friends again, and we’re working very collaboratively and well together. And the ultimate aim of everybody is to see production growth because, you know, that’s money.”
So hopefully a productive collaboration with CEG on CO2 EOR is firmly on the agenda...
Morning all
Just catching up with things after being out-and-about yesterday…
Firstly, re the issuance of shares owed to Paul and Lonny, by my calcs - taken from p55 of the 2021 Annual Report, p69 of the 2022 AR, and yesterday’s RNS – the total shares owed to Paul and Lonny is 46,975,280 (500k to Lonny, the remainder to Paul).
So, upon returning these shares next month, the TVR will be 473,378,698.
I was keeping an eye on the board yesterday and there seemed to be much wailing and gnashing of teeth (from certain posters anyway) about what actually constitutes, in total, only an ~11% increase in the number of shares in issue. Considering what these funds have achieved to date (and more to come with MOU-4, testing etc) that seems a price well worth paying, IMO. In other words, all much ado about nothing…
And a quick question to our industry experts (Keith / Jimmy / others) if I may…
Post MOU-1, the Nutech analysis took about 5 months to be released to the market (the MOU-1 update RNS was 6/7/21, and the Nutech data was released in the RNS of 15/12/21).
However, with the new CPR now expected “in the coming weeks” is it feasible that the Nutech analysis will be fast-tracked sufficiently quickly to be incorporated into the new CPR? Without getting too ahead of myself, I suspect (hope!) that the Nutech analysis will likely add increasing sand thickness to what was released on Tuesday, especially in the thinner TGB-4 sands so, ideally, we’d want that data to be available for the CPR in order to maximise the impact.
Thanks in advance for any thoughts on this 👍
PoC, you say “The RNS is missing the crucial words gas discovery.”
I’m assuming you've obviously not read Paul’s comments in the RNS:
"It has increased our inventory of potential gas reservoirs for a CNG development with the discovery of very shallow over-pressured gas."
I think the clue is in the use of the word "discovery"
Also, please note the use of the term “over-pressured gas”
That's how I read it...
A VERY GOOD morning all!
As the drilling / testing order has been changed, presumably the funds originally allocated for testing are now to be used for drilling MOU-4?
The rig is already at the MOU-4 location as per:
“Star Valley Rig 101 HAS MOVED on to the MOU-4 well location and drilling operations are anticipated to commence shortly.”
So the cash must be available to start drilling asap.
Then:
“Once the MOU-4 drilling is complete, results from all the wells drilled in 2023 will be quickly assessed and compared and a comprehensive and expanded rigless testing programme will then commence during July.”
So we might need a few quid at that stage for testing, but surely that won't be a problem considering today’s announcement… I think we can be pretty confident that the sp will be much higher than it was at yesterday’s close!
BTW, are my calcs correct that the net/gross in the Moulouya fan is around 86%!!?? (previous Rharb basin welsl e.g. Anchois around 60%)
And a reminder of what Paul said previously:
“our biggest concern as directors is that, in a success case, we immediately become a target for a takeover”
And also of what GRH said?:
“This is the biggest race to the finish any will ever see…”
Many thanks Keith. And I’m even more grateful for your reply as I realise it’s your Saturday evening 👍
I really hope Paul takes your advice and enjoys a bit of well-deserved RnR at some point... though I have a feeling he'll be itching to make both T&T and IRL success stories too so may never actually retire!
ATB
BRV
Hi Keith
Great discussion as always, thanks. I’ve said this before but your ability to describe complex geological concepts in easy-to-understand terms is a rare talent!
Our current focus is on the Tertiary and, with the upcoming MOU-4 drill, then the Jurassic as well.
But, to date, there’s not been much discussion about the Triassic prospectivity and I wonder if you have any thoughts on this? It’s likely that our Guercif licence will be sold prior to the Triassic ever being drilled by PRD, hence the potential importance of stub equity / royalty as you mentioned. What I’m really trying to get at is would any potential purchaser of our Guercif licence be keen to drill the Triassic asap?
From the 2020 CPR:
“A sub-salt Triassic prospect [TR-1] with an area of closure of 38 km2 has also been identified by Predator” with mid-estimate net resources of 155Bcf @RF of 40% (not be sniffed at!)
The Triassic is then later compared in the CPR to “the famous TAGI sands of Algeria” so presumably there’s significant potential for many other Triassic prospects within our licence area?
So I realise the Triassic is far from a current priority for us (and I suspect there’s more than enough to be getting on with in the Tertiary +/- Jurassic already!) but it’s an issue I’ve been wondering about. Do you think the Triassic holds significant potential and would you expect the next owner to be keen to test its potential at some point in the near future (perhaps by deepening a production well)?
Thanks in advance for any insights you may have on this.
Cheers
BRV
This new article from Bloomberg also nicely highlights the importance of gas (and mentions the Eni / Neptune deal too). There seems to be have been a genuine emphasis change recently in that gas is now not just seen a vital part of the energy transition per se, but that will play a key role in energy production for decades to come. [Minister Ryan take note!]
“Gas Is Here to Stay for Decades, Say Fossil Fuel Heavyweights”
https://uk.finance.yahoo.com/news/gas-stay-decades-fossil-fuel-010000495.html?soc_src=social-sh&soc_trk=ma
The article pretty much speaks for itself, but a few highlights:
• The biggest fossil fuel players are making the message clear: the transition to a green future will require much more natural gas.
• This momentum marks a turning point for gas. The “cleanest” fossil fuel was seen as a short-term bridge to greener energy sources, and environmentalists have sought to phase it out amid worries that gas is far dirtier than advertised. Now, the idea that gas demand will peak anytime soon is disappearing.
• “LNG sellers look around this market and feel pretty confident that gas demand will be with us for decades to come,” said Ben Cahill, senior fellow with the Center for Strategic and International Studies, a Washington think tank.”
• Doubling down on gas also makes sense for shareholders, said Saul Kavonic, a Sydney-based energy analyst at Credit Suisse Group AG. The fuel has been profitable over the last few years while the pursuit of green energy targets has been more of a struggle, he said.
• Gas has been the main earnings driver for energy companies including Shell and BP Plc over the past few years. Producers had plunged into the lower-margin renewable power business years before, but are now rethinking those investments due to lackluster returns.
• “Liquefied natural gas will play an even bigger role in the energy system of the future than it plays today,” Shell’s Chief Executive Officer Wael Sawan told investors this month...
From the Fox-Davies report (p9):
"MOU-2 drilled in Decembre 2022 / January 2023 was an appraisal of the main body of fan to the northeast and although the well encountered 26m of gross displaced reservoir sequence, drilling operations were interrupted below this section due to soft mobile clays preventing traction and causing very slow rates of penetration. This zone of mobile clay is characterised by poor definition which can now be identified on seismic data by integrating the MOU-2 well results."
Hi Silverfoil,
It’s an interesting point you raise about taking profits on the way up (at certain price levels) and one I’ve mulled over a fair bit over the years.
But let’s take the scenario of PRD @£1 that you mention and assume that RKH remains at its current sp of 12p, equating to Mcaps of £426M and £72M respectively. Even though RKH would then have the lower Mcap, does this mean that it automatically becomes a better investment than PRD?
Ultimately, I think the answer is… that it depends on the fundamentals.
Let’s think about a very positive (though perhaps not totally unrealistic) outcome for PRD and assume that:
• All 6 targets of MOU-3 come in (in addition to the ‘bonus’ shallow 11m already announced) with high reservoir thickness, over-pressured gas and high poroperm.
• AND MOU-4 tertiary finds thick gas-bearing sands.
• AND MOU-4 Jurasssic finds hydrocarbon-bearing reservoirs with VUGS etc
• AND then Paul decides to complete MOU-2 and the reservoir thickness below the slump is very significant (hitting the sweetspot of the basin)
• AND all sections flow-test at over 1mmcfgpd per metre of net pay
• PLUS a GSA forward-selling to local industry is confirmed to fund the CNG development
• etc., etc.
(BTW, I'll admit that I'm slightly drooling as I type such possible outcomes!!🤤🤣)
At this point, the recoverable proven reserves (likely multi Tcf) and potential overall flow rates would be such that a take-over by a super-major / major / NOC would be highly probable. So it’s likely that, given that scenario, PRD @£1ps would still be a better investment than RKH, IMO.
Hence why I’m personally reluctant to take profits at pre-defined share price levels. It’s the fundamentals that count, IMO, and the value that can be assigned to such assets in relation to the Mcap (or EV).
As for Rocky, I also ended up making a loss having first bought around 180p (admittedly, not having a clue what I was doing as a newbie investor… really more akin to gambling than investing!). Although I’ll admit that I’m not following the story too closely these days, RKH reminds me a little of CHAR in that the high development costs mean that the ultimate return to shareholders may well be limited, IMO, at least in comparison to what I consider to be the far superior investment potential of PRD.
Hopefully, whichever way we end up playing this, we’ll all make a few bob!💰
Talking of CHAR, I see in its FY’s today that there’s been plenty of interest in its Anchois field:
“The partnering process has been competitive; with approximately 40 companies having accessed a data room and multiple offers were received from significantly larger E&P companies. This process both technically validated Chariot's development plan as well as the exploration potential within Lixus and Rissana and selection of the preferred bidder is now in the final stages. The offers, should they proceed to completion, anticipate that Chariot would retain a material stake in the licences and that there would be an upfront cash consideration. Further, any farmout may provide the financing of the anticipated development capital expenditure to first gas and updates will be provided as soon as possible.”
The ‘chalk and cheese’ comparison between PRD/CHAR has been discussed on here many times (onshore; cost of development; time to first gas; shares in issue etc) so it’ll be interesting to see what deal CHAR can get and the potential read-across to our assets. Of course, and despite CHAR’s partnering process being in the ‘final stages’, it’s still entirely feasible that PRD will confirm a deal (full Moroccan subsidiary sale?) before CHAR as Paul did previously mention - during the infamous Sunday Roast podcast - getting a deal done by the end of the summer (assuming +ve drilling and testing results, of course).
Morning Silverfoil,
A couple of very brief thoughts on your posts from yesterday evening re your holdings, which I’ve personally found very useful in improving my own decision-making process over the years.
1. The Endowment Effect:
i.e. we attribute more value to things that we already own.
To counter this cognitive bias, and to help me assess my portfolio holdings more dispassionately, I regularly imagine that I’ve sold all the stocks in my portfolio and that I hold only cash. I then consider which of those stocks would I genuinely re-buy based on the current prospects (and relative benefits) of each company. And if I wouldn't re-buy it, is it really worth holding?
2. Buffett recommends having an ‘inner scorecard’:
i.e. you’re not competing with anyone else and it’s irrelevant what anyone else thinks of your portfolio performance.
For this reason, I almost never discuss my current holdings with family and friends (in fact, most people I know are completely unaware that I even invest in the markets) which ensures that I can focus solely on making decisions unencumbered by thoughts of whether I need to prove to others that I have been right or not.
I realise these points are not directly answering the questions you posed about your own holdings but I hope they may help you in your own decision-making – as I say, I’ve personally found these ideas / concepts to be very useful.
(Saying that, I still make many mistakes, so please feel free to take the above with a hefty pinch of salt!)
ATB
BRV
ps – I’m an ex-shareholder in RKH/FOGL/DES from back in the day (indeed, they were my first forays into the O&G sector). Now 100% PRD... which, btw, passes the ‘endowment effect’ test with flying colours!😁
Article in Shares Mag this week on O&G sector, with a few mentions of KIST:
“Our list of worst performers in the oil and gas space includes two prominent names with assets in the North Sea, Kistos (KIST:AIM) and EnQuest (ENQ), reflecting the impact UK windfall taxes have had on sentiment towards the sector.
As Kistos CEO Andrew Austin observes, the first version of the EPL (energy profits levy) put in place by Rishi Sunak when he was still chancellor had a mechanism by which it would drop away if hydrocarbon prices returned to the pre-invasion levels. The updated levy subsequently introduced by Jeremy Hunt once he entered Number 11 had no such get-out.”
“Kistos has assets in the West of Shetland section of the UK North Sea and Andrew Austin says: ‘Taxing the industry is seen as a victimless crime but it is very short-sighted.’”
For his part, Austin says: ‘We went from making 65p to 20p in the pound. It is incredibly risky to invest in the UK right now, there is too much uncertainty to make rational decisions.’ The company has already added to its UK and Netherlands assets with an acquisition in Norway, which has a more stable tax regime and generous incentives for exploration and appraisal drilling, and Austin says he is ‘not ruling out anything out’ in terms of future deals in other geographies. ‘We can’t afford to,’ he concludes.”
Afternoon all,
Cracking news this morning, the investment case for Predator is now clearly significantly de-risked as per Paul’s comments that:
“We are very encouraged by what we have found to date, which we believe at this early stage is material in the context of our CNG development plans…”
Methodology had previously calculated a commercial COS for a CNG development (based on the MOU-1 drill results and desk-top studies) of ~85%, and GRH subsequently mentioned that his personal estimate was, in fact, higher than this. Today’s RNS has surely only added considerably to this figure.
It’s also worth remembering what Paul said back in September of last year:
1m45s: “our biggest concern as directors is that, in a success case, we immediately become a target for a takeover”
https://youtu.be/WYx9MV6wRv4
With full drilling results from MOU-3 likely next week and a very good chance now that all 6 other targets will be gas-charged, the start of any potential M&A ‘games’ may not be very far away.
A 30% rise today seems well under-done, IMO, so I’ve added more – the market clearly hasn’t fully digested the significance of today’s news but, more than likely, it will over the coming days and I’m expecting large daily rises into next week’s results.
As we all know, we clearly have a superb management and drilling team and it feels like a genuine privilege to have this "once-in-a-lifetime" opportunity be a PRD shareholder.
GLA, and safe drilling Lonny, Moyra and team 🤞
Morning all,
It’s worth remembering that those figures are based on a RF of 66%.
From Methodology's ‘The Sleeping Giant’ (Section 14: Conclusion):
“Also interesting to note: The resource estimates of 295BCF to 708BCF Net for the current discovery use a conservative 66% recovery. "The recovery rate for deposits in the Rharb Basin is around 90%" -ONHYM. That would provide upside to 402BCF to 965BCF NET PRD - If the similarities of geology carry through to recovery.”
https://www.reddit.com/r/PredatorOilandGasPRD/comments/xqaeza/prd_the_sleeping_giant/
Afternoon GRH,
Just having a peruse of Caterham7's history as you suggested, and this post in particular stood out from 26th Jan 👍
"Good proven analogue for Guercif and MOU2 -
Paul / Lonny, I have a very nice proven geological analogue model for the Guercif licence, and in particular the slumped mud unit encountered in MOU2. The Central North Sea, Captain Sandstone fairway is a Cretaceous elongate structural trough, very similar to the Rifian Corridor (Figure 3 of CPR). A number of large produced fields have been discovered in the stacked sandy turbidites that flowed axially (similar to Figure 5 of CPR)) along the trough - Blake Field, Goldeneye Field, Hannay Field, West Rochelle and East Rochelle Fields. The real similarity for me, is that a number of slumped ‘chaotic debrites’ have been drilled / mapped, and these represent the final ‘capping’ abandonment phase of the trough fill. These chaotic debrites sit above the proven turbidite discoveries, and have been shed from the Halibut Horst that forms northern margin of the Captain trough (very similar to debrites slumped off southern margin of Rifian Trough - as in Figure 5 of CPR). These chaotic debrites are slumped mud bodies containing entrained sand, and sound very similar to the slumped mud unit encountered in MOU2. Captain Sand fairway has been one of the UK’s MOST PROLIFIC petroleum systems. Lot of info in public domain."
[my emphasis]
Keith, thanks for your additional thoughts, really interesting stuff...
As I’ve mentioned a few times previously, my personal focus is always firmly on simply achieving the absolute minimum level of flow for a CNG development, a level that would underpin all of our investments in PRD… and then the huge upside potential will hopefully reveal itself in due course.
As has been discussed here before, and I believe Lonny also specifically mentioned to an attendee at the recent Proactive event, the LAM-1 data provides a significant degree of optimism that these minimum flow rates (at least) will be achieved, so the 50% risking for 1mmcfgpd seems, as you say, pretty conservative. So hopefully we can tick that one off over the coming weeks! (I wonder if MOU-1 testing might start next week, perhaps?)
Risks still exist of course but the R/R is one I’m personally comfortable with and, indeed, I added more this week at just over 6p.
As Charlie Munger said (and GRH mentioned something similar on Twitter a while back):
“The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don't. It's just that simple.”
And to quote Seabright (I’ve mentioned this before also, but I think it warrants repeating):
“The opportunity of a lifetime must be taken during the lifetime of the opportunity”
With drilling now underway, the window of opportunity to buy at these levels is rapidly closing, IMO.
Have a good weekend all (the sun’s out even here in Yorkshire this morning!😎)