The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Following the comments of Bandlex in ADVFN, my understanding is that, drill to permit also give permissions to sidetrack. If that’s the case, then this new application is more likely for another appraisal well (S-3)
https://twitter.com/sadaatumar/status/1573260788508536832
Petrofac applied to drill another Appraisal well at Serenity. This is now an interesting development. The application was made on 22 Sept, Thursday (Yesterday)
Tony,
UJO CEO believe WN can be transformative but it failed to flow oil in the last wells. Similarly, EOG CEO also, believe SERENITY is transformational for shareholders.
In whatever way, I believe EOG is undervalued compare to UJO & EDR.
Oil,
We have been provided the numbers related to GCoS different sources, and all of them believe that GCoS is over 50%, first have a look to broker report for I3E from last year or so, they believe that Serenity CoS is better than 50%; then refer to Simon Oddie interview, he referred SA-01 as low risk with better than 50% CoS. So, based on those numbers, I strongly believe, the CoS is over 50%. If we go through old proactive presentation by Majid (back in 2018/19), acc to Majid Shafiq, CoS for Serenity is 70% (but that was for S-1 well).
Also, if we go through the regional history, we believe that the region have compelling drill records. Tain has 100% success rate with 4 out 4 oil commercial discoveries, altough net pay was thin. Then S-1 was significant oil discovery with better thickness of 11 feet than Tain. Only, one well (Magnolia), which was drilled off-structure and 8 Km to the west of SA-01 was failed. Magnolia did find excellent reservoir quality in captain sand with 120 feet thick sand, but it was water wet (due to off-structure).
I3 have done all desktop analysis to derisk this prospect as much as they could do. Including the simulator test for Blake; Tain, Liberator & Serenity which again confirmed that all Blake, Tain, Liberator and Serenity have same OWC 5270 feet and are connected. So, the management have done everything they could do to derisk prior to drill.
So far, the region have tremendous drill record of 100% success rate 5 out of 5; SA02 is located just 3-4km to the west of SA-02 and in the middle of structure, there is a very good chance that it will find thick oil sand, 30-40 feet net pay. If we do the analysis, I personally believe the GCoS is over 80% but management don’t want to create hype, therefore they are conservative with their GCoS numbers
IMO, the purpose of the drill to examine the western extension of the field and then side track it. Once they confirm the western extension, then they can analyse the results with their 3D data and determine the optimal place and solution & sweet spot for the production.
50/50 was already quoted by Simon Oddie in the last interview. Low risk with 50% probability of success.
You have missed the valuation part of the report. The broker has given $986m success case value to I3E based on 75% working interest. Based on these numbers, Serenity success is worth $328m net to EOG, which is nearly 10 baggers from current valuation. Low risk appraisal well, with 10 baggers upside potential.
With regards to CoS, there is a broker report from last year, they have explained that they are giving 25% CCOS due to the fact that there is no official CoS numbers from the company. So they are using 25% on conservative side. Whereas, the existing serenity discovery is already declared commercial by the operator with tie-up with Tain field.
“ Executed a Farm-in Agreement with Europa Oil and Gas ("Europa") for a 25% working interest ("WI") in i3's Block 13/23c North (Licence P.2358) which contains the Serenity oil discovery, in exchange for Europa funding 46.25% of the cost of the upcoming appraisal well up to a gross capped cost of GBP15 million, above which any costs will be funded in proportion to the respective working interest of each company”
This is from I3E presentation. EOG has farm-in into the serenity license (P2358), which contain an oil discovery. So it is very clear that EOG will get 25% from that discovery
From I3E presentation, copy paste from ADVFN (posted by King Suarez in I3E board, post: 1759)
“Very little detail on Serenity, but highlighted that they are quite confident they can prove up the 'high case' estime of oil in place, if so, that will be a standalone FPSO development. Worse case there will still be something economic, which can be tied into infrastructure from nearby Tain development. Think he mentioned that another nearby development was doing 5k bpd from just one well? So highly economic.“
Based on previous side-track being drilled by other companies, my believe is that, Sidetrack will take max 7 days to reach TD (25% of 30 days). In that context, I can assume that total cost of sidetrack will be 25% of total drill cost.
Total drill cost: £15m
Expected sidetrack cost (25%): £4m
Net cost to EOG (25%): £4m x 25% = £1m
I think, total net cost to sidetrack to EOG is nearly £1m
From ADVFN, Simon Oddie email
“ Below extract email reply from SO, courtesy of another board….
“Thank you for your enquiry regarding today's announcement of the loan from UJO.
The Company must be properly financed for the growth period that is coming. With a potential side-track at Serenity, further developments at Wressle and certain other opportunities that we are evaluating, it is prudent to hold more cash in reserve. Wressle is continuing to generate
significant cash which would normally be
sufficient for our needs but we feel that having some further funds will ensure that the Company stays on a firm footing for the immediate future.
I have no doubt that you will agree once you see the fruits of our endeavours coming through over the next few months.
Additional cash call is mainly from operator (I3E). Sidetrack might not be the part of original plan. But, operator might have decided to drill sidetrack as well as a part of early development scheme. Thus, there might be additional cash call from I3E, in case of success. Overall all looking good. No more risk of placing, if they need to drill sidetrack
https://twitter.com/sadaatumar/status/1565721011378688001?s=21&t=frpRQsQoSpul9QvDJ8gLHg