Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Someone were raising question that why, Burgandy not funding the project (red flag for project, so and so). Now, Burgandy have managed to raised $2m and fully committed to project.
What’s their views now, about project Phoenix?
Big players are not touching AIM listed company (in most of the cases. 88E has no exceptions). However, 88E is mostly traded based on hyped and sentiment. Just few years back, it did 10 times in a week just on anticipation of oil discovery (later on duster). Recently, UKOG did 100% just on indication of test of oil shows.
UPL did 5-10 bags on no discovery but due to sentiment and hype.
So, if we get successful test results, there seems to be hype. Also, success in one zone means, more buyers for more zones.. this is not overvalue, they are looking of 600-800 million barrels of oil, and this is worth much much higher (if successful)
What flow rates company is aiming for? I think, anything more than 50 BOPD in vertical well is highly commercial, and horizontal well has potential to flow 500-750 BOPD (IP30), that’s what PANR flowed and it was declared highly commercial and exceeded expectations. (PANR did 100%+) on such flow rates
A year or two back, 88E skyrocketed 4p from 0.50p in less than a week time just on anticipation of oil discovery. (Can’t expect this time but….)
So, anything can happen in stock market especially in AIM.
PANR had been valued over billion last year on Alkaid & Theta discovery. So, £250m market cap is not impossible but they need to flow the oil at commercial rate, just like a PANR.
Probably, £150m could be the area, where valuation can be settled (on success case).
Over 350m volume today, total volume traded in LSE in last three days is nearly 1 billion. Some, huge buys going through. Sooner or later, the supply of shares under 0.25p will be gone! Hopefully, £150-200m market caps on successful flow test
Agreed LTI, we had more or less similar numbers, and that’s why share price did multibag on anticipation of success but everytime they failed to find commercial oil.
This time, they are testing rather than exploring. Maybe good time to declare commercial discovery? How much PANR valued last year on success at Alkaid & Theta? Maybe over billion ? I am not saying this will do 10-20 baggers, but will defo attract big buys on success case ?
This is a normal practice for Business. They have to raise funds to run business.
Usually, stock are traded based on valuation rather than shares in issue. Currently, company is valued under 60m, and imagine, if the flow test is successful and derisk 1 billion barrel of oil., and book 1 billion of 2C reserves, how much it will worth?
Maybe, 2C are valued $0.5 - $1 a barrel, and let’s say it value at $0.5 after discounting several factors, 1 billion x 0.5 = $500m or £420m (7 bags from current value). Even, if further 50% discount applies, still it worth £200-250m (1p a share).
Also, compare to PANR, the development cost is relatively low as the location is optimally located near to main pipeline.
Probably price may held at this level for few days or so due to overhang, but once the overhang clear, then price is expected to move up freely.
2 billion new shares issued, and more than 0.5b already traded since yesterday across three exchange. Won’t take long to churn overhang
Can anyone explain the business case for today fundraise to acquire additional 25% WI?
Based on broker report, 75% of WI interest net worth 9p per share, which equates to 3p per share per 25% WI.
Can we safely say, by raising additional £5.5m, the net worth of the company has been increased significantly by 3p per share (£500m) “on success case only - if Flow test is successful”
Anyone can comment on it?
Although it was disappointing capital raise but on the positive side, company is fully funded for flow test & Namibian asset.
Price can now freely move on success at flow test (IF SUCCESSFUL), no more worry for fundraise.
Company now own 100% WI, so NAV to 88E increased. Based on 75%, the asset worth 9p or so, and now it may add additional 2-3p
Recently, BCE was underperforming during the drill (rig issue) and what happened after success? 200% rise….
Again, it is disappointing RNS but this is how the stock market is, but company is now heading towards transformational flow test periods
Bandit,
In my opinion, this time this is different in a number of ways!
1. This time they will be flow testing, rather than drilling. Flow test next to PANR, where they already flowed oil at commercial rate from same reservoir
2. They are operating under new management, (minus D Wall)
3. They are or will be producing oil from other assets (small quantity of oil, could be enough to cover NWC)
4. Diversified portfolio to Namibia
5. Booked 2C resources (confirmed discovery)
There is no guarantee of success but this time, good chance of success (flow rates)
Probably they may need to drill few more wells, and flow at commercial rate (ideally horizontal well), and then convert 2C to 2P reserve.
Historically, deal in North Slope Alaska has been executed at $3.5/b during low oil price environments (under $40 a barrel). Maybe, we could be deal price in the range of $5/b in current environment. Over 600 mbbls at $5/b ??
Redbeard,
Yes, PANR was a good buy at 11 (at an all-time low or near ATL), and money could be made at that point on the flow test.
It is the same with 88E, currently at 0.325p (nearly at an all-time low), and money could be made on upcoming flow tests. Since it will be the first-ever commercial discovery for 88E, I believe any success in the flow test will have a significant impact on share price due to sentiment.