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"looking at the poor state of i3e’s finances" - Are you sure poor financial situation of i3e? I think their current year capital budget is nearly $50m from the existing cash balance. They are generating substantial cash flows from their Canadian assets.
Tony,
"EOG dont seem to have the funds to pay for its share of the drill here. how they going to pay for it?"
Daft was clearly asking about the drill. He didn't ask anything about development. His question was directly and clearly about funds to cover the drill.
Draft, you need to spend some time and do research before posting anything in BB.
EOG already raised enough cash in March/April to cover drill cost for Serenity. Also, EOG is generating cash of over $10m/year from its onshore assets (Wressle et al.).
EOG are in very comfortable position and also, looks very comfortable to cover for future drill cost
GP, From Serenity Discovery RNS
“The well was drilled down dip from the Repsol Sinopec operated Tain discovery and encountered a sequence of Captain and Coracle sands with oil confirmed in the interval from 4740ft total vertical depth subsea ("TVDSS") to as deep as 5252ft TVDSS. The oil water contact is estimated to be at 5270ft TVDSS based on pressure measurements, the same level as seen in the Blake and Liberator fields. The interval contained circa 339ft measured depth ("MD"), 165ft TVD of sand in total, with oil in the uppermost Captain sand and in the Coracle sands at the base of the interval, and, if connected to the Tain field as i3 anticipates, represents a mapped oil column of approximately 622ft TVD in the Captain sand alone. The net oil interval in the Captain sand was c.10ft of high porosity (30%) sand and thicker than in the up-dip Tain discovery consistent with the Company's expectation that the Captain sands thicken to the west in Serenity (as demonstrated by the c.150 ft of sand seen in the offset 13/23a-7A well situated to the west of Serenity). Reservoir quality is expected to be equivalent to that seen in the Tain wells, one of which (13/23b-5Z) tested at an estimated 2750 bopd from a 5ft interval in the Captain sand.”
Regional drill history indicating thicker sand, as it moves to west. Tain was 5 feet, Serenity was 10 feet, Magnolia was 120 feet (to the west of Serenity). But, Magnolia was off structure and was water-wet HC. Now, upcoming appraisal is drilling between Serenity discovery well & Magnolia well, and in the middle of structure.
Based on above assumptions, there is very good chances of thicker sand at downdip location to the west, also 30-40 feet is what JV are looking for to justify their 200 mbbls model. It can be more than that as well.
GP, the upcoming well is looking for 30-40 feet pay zone to confirm their model of 200 mbbls oil. If the appraisal well hit oil, they will need another appraisal well further to the west.
So, the well is looking for 30-40 feet (3-4 times thicker than original discovery well) …
Given the cash flows from the production assets (>300 BOPD production), Wressle at el.; EOG is making nearly $11 million a year at a $100 brent price. By the time JV need to drill another appraisal well next year, EOG's absolute cash generation would be in the range of $15-20m, which is surplus to their net cost ($4m or so), based on the assumption that the total cost to drill serenity is $14-15m. I think EOG are also in a very comfortable financial position, for the next appraisal well (if they need to, and I hope they do).
What are expectations for the upcoming serenity appraisal well?
How confident is everyone about the drill results?
£7m for 2.5 Mbbls (proven) + 25 mbbls recoverable prospective resources, with over 50% CoS to prove these perspective resources. As of now, the NPV for serenity is $15/b, which translates 2.5 mbbls to $37m or £31m; not a bad deal.
GP,
I may politely disagree with your analysis about the commerciality of Serenity well. Serenity is already a oil discovery with potential of 10-15 mbbls recoverable. That discovery can put on production using the Tain oilfield facilities.
They will be drilling an appraisal well to find the extant of discovery and test their geological model that sand gets thick to the west. There objective is to find nearly 30-40 feet of net pay zone to validate their 200 mbbls OiP (or 100 mbbls recoverable oil). If the well intersect 40 feet oil, this will be the best outcome, and confirm the field size of min. 100 mbbls recoverable and will be commercial on standalone basis. In that case, they will need more appraisal well further to the west to find the western extension.
Also, if upcoming well find another 10 feet of oil, this will translate into 25 mbbls recoverable well, whereas, 15 feet would result 37.5 mbbls recoverable and so on, based on simplistic straight-line approach.
shares have been diluted from 350m to 957m, but significant change has been made since then. Wressle is producing substantial cash for EOG & then very big, low-risk serenity well to be drilled, which alone worth over 21p on success case, based on a conservative recovery factor of 35%. If 60% RF applies based on i3 assumptions, then Serenity likely to worth over 35p net to EOG
Did anyone has any idea about the CoS or any comments from Board in the recent AGM? How confident are they for Serenity?
Comparison with CHAR makes sense in the way that both are involved with gas. However, there are big differences between the assets of both companies.
For Example, CHAR was targeting nearly 1 TCF gas (best case) in all 5 zones (A B C O), while, AEX is looking for up to 8 TCF gas (2 TCF net to AEX).
CHAR need project funds to monetise the discovery, maybe $300-500m capital is required to start the first gas; while, AEX is fully carried by the partner till the first gas production. No, the financial risk to AEX.
CHAR did 10x from low, if that applies to AEX, then 10x from low (0.45p) may be 4.5p;
CHAR discovery was made, when gas prices were under $5; whereas, current gas prices is nearly $9; the economics is much more lucrative then it used to be
Anchois is an offshore project, which required significant capital & technical skills compared to Ruvuma onshore basin, which is low cost & easy to process for early production.
In a broad game, both companies are winners in their respective way. But, based on certain factors; Aminex looks much more compelling investment than Chariot (with the exception of Tanzanian/African delay time).