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Mcfcnige,
Sometimes itâs fixable, all depends on the specific circumstances.
As Ed says, they have almost certainly been testing the lower levels first and as we know it was the top 8m which flowed at 12,000 BODs.
Hopefully the historic flowing levels are the low hanging fruit. Iâd test them and pull back the well to say 2,000 BODs to limit watering out. At 2,000 BODs the well will produce cash flow of $3m a month.
Just my thoughts.
All we know from the RNS is:
Things are taking a long time. Still testing TO-14. TO-13 testing not started yet.
TO-14 is probably a carbonate rock issue ie when they start flow testing it, the well gets blocked up. Previous RNSs stated no water, only oil shows and pressure back to previous levels.
My guess is Sonangol thought it best for reservoir management reasons to test levels different to historic producing depths. But they found the carbonate is being pulled into the well and blocking it. So theyâve been trying to fix that with limited success so are now thinking they have to test the historic producing levels which may have better rock characteristics. They were prolific producers before.
Thatâs the only way I can reconcile the very positive previous RNSs with this latest negative RNS.
Wondering if they might do a sidetrack. Also maybe FFD will be horizontals in the historic producing levels to improve reservoir management.
Hi mcfcnige,
If I understand your questions correctly - the integrated production is the barrels of oil per day from all Corcelâs fields as adjusted for Corcelâs percentage and the cumulative production is a running total of all barrels produced by Corcel from start of Tobias this summer.
Youâll see Corcelâs cumulative production tops out at about 300m barrels as that is the total estimated available recoverable oil in all its blocks.
Obviously left and right hand y-axis for each.
Ed,
Iâm interpreting the vertical grey lines on page 11 to represent total Corcel barrels per day of production at any one time. Looking at these, end 2024 looks to be about 6,500. That must be from Tobias alone as Galinda probably wonât have been put on production by end of this year. The blue KON-12 Galinda cumulative production line doesnât start until Jan 2025.
The darker grey cumulative production horizontal Tobias line starts in 2024.
The light grey daily BOD lines begin in the summer. Thatâs why I thought Corcel might be saying Tobias will average 17,500 gross BODs (as per page 14) in 2024 and end at 36,000, giving 6,500 BODs net to Corcel on 31 Dec 2024 as per page 11âs vertical light grey lines.
Ed,
I haven't checked Brite's financials. They look to be US incorporated. From their website they have an office in Houston and look to be a lead generator. They mention two Angola blocks ( not KON-11) they are looking to partner for.
As for reconciling pages 11 and 14 of the recent presentation, I can only think of two ways:
Page 11 shows Corcel's end of 2024 BODs at about 6,5000 net being 36,000 gross. Page 14 shows average BOD for H2 2024. Beginning at 0 and ending at 36,000.
Or, page 11 includes some buying in of other NOP interests, but I don't think they would show that.
mcfcnige,
Not sure at what price a deal could be done. Obviously, very dependent on upcoming flow rates. But the Atlas transaction, completed before any well testing, showed the kind of structure which can be attractive to a NOP.
Ed,
Yes, I can't really see 36,000 BOD at year end from Tobias, although that is what the 27 Feb presentation suggests.
As much as anything just getting all the kit and trucks and pipe there by end of year would be a big logistics issue. Maybe by Spring it's possible.
Re buying in other NOPs interests - it's a completely different game funding one's share of FFD to generating leads. So I'm sure any conversations Corcel initiates will be listened to with interest by their partners. This sort of thing is one of AK's strengths. Just in theory, buying Brite's share 20% leaving them with a free carry on 5%, using cash and shares would be a good deal for them. It's a proof of their business model - monetising lead generation - and would give them a share of Tobias's ongoing success, Galinda, and the elephant KON-16. We would be diluted but our Tobias cash flow would more than double so worth it in my opinion.
Mcfcnige,
Just taking what we know of, i.e. no extra acquiring of field interests like Brite's. I'd suggest 6,500 barrels by end of year would suggest a share price of 8p.
Being 6,500 times $45 times 365 days times a 1.5 multiple. Equals 5.8p.
Plus Galinda producing 3,000 BOD but say 'only' a 40% chance of success. Equals 1.4p on the same basis. Galinda could be much higher as Corcel mentions possible horizontal wells.
Plus the elephant KON-16. Put that in at say ÂŁ20m value. How long is a piece of string for KON-16. It dwarfs Tobias and Galinda in size but is genuine exploration drilling. Equals 1p.
So 8p + a share by end of year. Maybe half that - 4p - within a month of good TO-13 and 14 news.
So, as ever, all depends on soon to be reported flow rates.
The rational of the above is if TO-14 and TO-13 come in good then the market is going to favour Corcel's chances with Galinda and KON-16.
Affc21,
Yes, good point about the 120m. I was just, hopefully, being conservative.
Presumably TO-14 is in the absolute sweetest spot in terms of pressure and permeability.
I'm just assuming TO-13 is in an 'average' spot.
It would be great if TO-13 has a higher flow rate than I've used.
Thanks. If flow rates are good, acquiring Brite's interest would be great.
Something along the lines of we'll buy 20%, you keep 5%, we'll pay your capex on the 5%. We can offer cash or cash and shares.
If Corcel can do a deal like that then they would have over 13,500 BOD by year end. $220m annual cash flow before capex at a $45 a barrel margin. Current market cap, assuming 2.1bn shares after warrants, of $22m.
Shows what could happen after decent flow rates and a deal.
Reading through the RNSs and the recent presentation looks like:
TO-14 initial flow of 6,000 BOD. Being maybe half of the 12,000 or more it should be capable of. Restricting to 6,000 being good reservoir management.
TO-13 initial flow of 2,500 BOD, as towards the edge of the reservoir as distinct from on the crest like TO-14 and similar to old wells.
That would give 1,500 BOD to Corcel's 18% interest as suggested by page 11 in the presentation. At a $45 a barrel margin, that would be cash flow of the current market cap per year from these first 2 wells. It's not obvious from the presentation if they'll add a well or two over the next 6 months during the EPS stage or if the increase to 6,500 BOD net to Corcel by the end of 2024 is a result of more trucking or oil pipes to the refinery. If it is due to more trucking then obviously Corcel expect the 2 existing wells to flow much higher. That seems unlikely in my opinion though we should expect modern completion techniques to improve flow rates. It's possible TO-14 could be an absolute gusher but getting 6,500 BOD from an 18% interest would mean 36,000 BOD gross from Tobias which seems highly unlikely. No reason why they couldn't drill 2 more wells during the EPS stage as each one seems to take 3 months including drilling testing and bad weather. Also 36,000 BOD from Tobias would mean 95 trucks doing two 150 km trip to the refinery each day which although theoretically possible is unlikely so H2 2024 must be FFD to reach that 6,500 target.
The good news is Corcel's 1,500 net BOD should pay for their share of a new well and more every couple of months. So hopefully modest dilution and has been pointed RBL may kick in after the CPR. It would make sense for Sonangol as financing could be put in place at the field level. Easier to get prompt payment for everyone's share of the FFD cost.
Obviously all depends on the flow rates but the RNSs and presentation support very little dilution. I'm also thinking Corcel might make an offer for Brite's share of Tobias as Brite's seem technical lead generators as distinct from producers.
Just thoughts.
I see Corcel have just retweeted their recent 'meet the management' video.
Very obvious observation:
Corcel are keen to communicate that the management are experienced in oil and gas and top class in governance etc.
From observations over the years, iffy AIM directors tend to lie low and not communicate in such an open personal way. Why would they. After their scam they could just fade away. We would hardly know what they even look like.
This type of video is very positive IMHO.
Good point Nige. I hadn't thought of that.
Trouble is we can't ask him. If he's been hacked the hacker will just lie and say the account hasn't been hacked.
Does anyone know Art ? Maybe we can ask the poster a question that only the real Art could answer.
Art,
As is well known, lots of posters post on boards they don't have shares in, but there's no need to get upset about that.
All is good and all the best.
Art,
Sorry to have to say it again but weâre not medically qualified. If youâre really worried about things then talk to your GP.
We obviously canât help you by explaining things to you rationally.
All the best.
Art,
These matters shouldnât upset you to the degree they seem to. The use of warrants to raise money is widespread. The considerable difference between the warrant exercise price and the current share price is simply due to the Angola project being acquired by Corcel and AK joining the board as Exec Chairman.
As the share price reflects, shareholders and the market are extremely pleased with these developments.
But if you continue to be upset, weâre not the ones to talk to. I would gently remind you most of us are not medically qualified.
All the best to you.
ROCKLAWN,
As Calder5 points out this has all been dealt with as detailed in the 23 Feb RNS. Segregation of duties.
If you read the company's RNSs it will give you a good handle on all things Corcel.
If you read the 29 Feb option RNS it will become obvious that only a 'good' well test result will result in an exercise of the option. In the event of a 'good' well test, Richard Jennings is happy to take some money off the table and take away any talk of a share overhang.
My guess is Corcel know the market knows Corcel will be receiving flow test results over the next week or two.
Corcel don't want to be accidentally seen as AK possibly 'insider trading' in the event of Corcel drawing down on the convertible facility then a day later announcing good Sonangol flow test results.
So they are just reminding the market that in the normal course of events Corcel and their loan provider are, as one would expect, discussing current requirements which may or may not lead to a drawdown irrespective of any flow test results received over the next week or two.
Thanks Ed. The recharging the reservoir bit really intrigues me. Could they run the wells flat out and then after say 3 years turn off the taps then start again a year or two later.
How long did the reservoir take to recharge over the 25 years the field has been closed ? I guess they'll have a better idea soon.
We're looking forward to a reserves figure if flow rates are good.
How about this for a first guess:
3,400 acre reservoir - so 1,400 acres - so 14,000,000 square meters.
80 m average depth - based off 80 to 120 m depth so far reported.
So 1,120,000,000 cubic meters of reservoir. So 6,720,000,000 barrels of oil by volume.
But porosity of 4 to 14% as reported to date. So an average of 7% (conservative). So 470,400,000 barrels in the pores of the reservoir rock.
But maybe only 80% of that, as only most of the reservoir showing oil as reported to date. So 376,000,000 barrels.
But maybe only 40% can be recovered. Although high permeability reported to date. So 150 m barrels recoverable. 29 m have been recovered to date. So 130 m left.
130 million times 18% gives 23 m barrels to Corcel. Against reported reserves of 12 m as of today.
All figures approximate and to the nearest million. No doubt there are some misconceptions in my thinking. Any comments.
Could be Newuncle. But you've got CIRT growing in a linear fashion whereas in 2023 it was growing exponentially until July. We could reasonably expect a network effect i.e. more doctors tell more doctors. So hopefully your figure is an underestimate.
As for PSE you have 6,500 tests in Dec. So 78,000 annualised. That's 0.39% of only the US market. Could be correct. Or could be 1% or more.