Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Abatt1-The J2 discovery (14-43 million barrels recoverable) has been very well drilled, reserached and even successfully flow tested by Repsol Sinopec that made the discovery. From their drill tests and log books we know the geology, depth, location etc. If you look at the maps I have mentioned in my previous post (http://www.rns-pdf.londonstockexchange.com/rns/4835Z_1-2019-5-19.pdf) you can see how Verbier and J2 overlap with our sidetrack (13Z) well and the 10y well sitting literally in the middle of it all. As far as I understand the context so far its not proven that they are connected but extremely likely due to the info mentioned. From that we can calculate that Verbier (so far a minimum 25 million barrels recoverable) and J2 (14-43) together are 39-68 million barrels. If the 3D seismic however allows Equinor and partners to increase the Volume of Verbier to say 25-50 mill.barrels then we would be already between 39-93 million barrels without any further drills...which should be enough for a standalone development (estimates vary that we need between 60-80 million barrels for that) but definitely enough for a commercial tieback to a Greater Buchan Area hub in the future. Of course that does not yet include Verbier North nor Verbier deep nor Cortina nor Meribel! This is how I understand the statements from Repsol Sinopec, JOG and OGA. DYOR. Hope this helps.
Abatt1-I like many others am in the same boat like you and yes its been a very tough two months but it is good to show loyalty to the management as they certainly suffered as well and didn't have an enjoyable time. We know there are many more partners in this game than Management and shareholders of JOG which will have a massive influence on the outcome. Equinor as operator, Cieco as junior partner and the OGA as the most important government body for us will make the decisions and we can only hope they are good ones. What keeps me calm (well as far as that is possible), and I don't know if that helps you as well, is sticking to the facts and looking at 2 maps: The Greater Buchan Area map of the OGA and their statement about it plus JOGs map of discovery and prospects across our 2 blocks. Looking at them and adding up the volumes of existing discoveries plus prospects is what counts not just to me as a shareholder but also all partners as we all want to make money and these maps and volumes scream commercially viable especially with a hub development across companies in the Greater Buchan Area. We will know more in the next few months! Good luck all holders.
I posted this on the other board earlier but thought maybe someone her hss got an opinion or insight about it as well? Its in regards to the 31st Supplementary Lic.Rd. which os the important one for us... I didn't expect them (Jog) bidding for a frontier block. The question in regards to the suppl.round is will they bid as a conglomerate (JOG/Equinor/Cieco) or will Equinor go its own way on that one. I hope they did let the junior partners in on the bid since these blocks are closely linked to Verbier and the rest of P2170 and because the OGA was encouraging companies to work together and come up with creative ideas for exploration/development, not sure how much it helps JOG being an actual UK company while the others are from overseas? But only time will tell. It could be a game changer though if they get the block/blocks where J2 and Buchan sits on - even without a further drill this would increase the reserves by multiples...interesting 2-4 months ahead.
Noix, you are right J2 is the discovery containing the 14-43 million barrels, my mistake. I always considered it somewhat 'separate' from 10y since its part of a different licensed block and as such would contain further reserves. It doesn't effect my view on the potential though as my main point was that between Verbier and J2 we have very likely a commercial reserve. And that word commercial is exactly what makes the difference between the share price trading below cash value or a fair value if you ask me. Dick you are spot on...logic doesn't always apply and also your point in saying that the failed appraisal well shocked the market so strongly that they now don't even see it being commercial anymore. The market wants reassurance about exactly that and only the operator can give us that in saying they see it as commercial or simply just by continuing with appraisal and or new exploration drills within our license P2170. However if they would start talking about a cooperation with neighbours to develop the field then this will have a similar effect...which is where the 31st sup.round will come into play I guess.
I can only assume that JOG did not bid on any of these licenses but focuses on the really interesting ones from the supplementary round that are bordering onto our current licensed block P2170. Simply because it would be too much to take on at this time. The slide in the share price still baffles me...current nett cash in the bank (GBP15.5 to 16.5 million) is worth between 71 and 76 pence alone. It might be the 15- 20% decline in Brent over the last 3 weeks a but but still doesn't make sense at all. Looking at the release of data from Equinor for Verbier being a minimum of 25 million barrels (probably some more - say 25 to 40 to be conservative) plus the 10 year well from Repsol Sinoptech being flowtested with 14 to 43 million barrels makes already today a volume of 39 to 83 million barrels for the Verbier/10 year well combined - since it is believed that the 10 year well is the easterly flank of Verbier. That alone would make it commercial, all is needed is that these 2 operators/conglomerates work together and sharing the costs. I can imagine that they already have been in talks to each other about this, why wouldn't they its a win win. That does not include the J2 discovery nor Verbier northwest or Verbier deep, let alone Cortina, Meribel or the remaining 40-90 million barrels in the old Buchan field next door. What I am trying to say is that a hub development is the logic thing to happen bringing this jigsaw puzzle together and combining the individual discoveries/reserves...we could easily talk 200-300 million barrels in the above mentioned areas alone. It will take some time of course to come together but its a great opportunity in my opinion. Good luck all holders.
I am with you Dick! Nice start to the week and I can only assume there is more to come...we got a while to go until we reach a fair value again but we knew this would be the case...but I am very certain this will happen within the next 3-4 months.
Thx Dick. Shame 20/5e with the 10 year well is excluded...I guess it is still owned by Repsol Sinoptech and they only handed back the block where the J2 prospects sits on. In any case the owner of that block (20/5e) will be very happy to see a GBA hub coming up to make a development/production for the 10 year well also commercial...who knows our group (JOG, Equinor and Cieco) might have already discussed with them how to work together across all the blocks...it would be a win win. As I posted before they (Repsol Sinoptech) tried to sell Buchan/10year well and J2 a while back when they still held all the licenses but obviously couldn't find a farm in partner at that time. But now there is a completely new spin to this driven by the OGA and of course healthier oil prices. All looks very good and exciting to me.
You are right Noix...the West Phoenix now only shows booked until Nov19 for Equinor Norway/UK however I have seen on Seadrills homepage under the fleet status report (updated 23rd May) that the West Hercules has now an option for Apr20 til June20 for Equinor, it doesn't say if its UK or Norway yet though...they already got it booked for Equinor Norway from now until Mar20 but the option for Apr til June is new. So what I am trying to say is that there are plenty of options for further drills. The West Hercules is the same class as the West Phoenix. I am too are very optimistic since the current share price only factors in the cash value and as there are several catalysts that can bring us back up to a) fair value around the 230 pence mark and b) beyond that in case of new discoveries or increased recoverable oil amounts in the existing discoveries: - purchase of a producing asset could happen anytime really as we know they are trying hard, and we know it will be a good deal since they are very selective to make sure its good value. The tax credits we got are GBP30 milllion, that is a huge benefit and turns into cash once we produce - full results of the 3D seismic analyzed with the well results etc will allow Equinor/JOG/Cieco a full evaluation of the block and beyond and commit tp further appraisal drills and or exploration drills, maybe a multiwell program even? - 31 Licencing Round with possible new blocks and licenses for the group. This could easily increase the oil reserves at least on P10 and P50 levels. - OGA pushing forward with a hub development. I wouldn't be surprised if it is a condition for the bidders to commit in driving this hub forward in case of a successful bid. Exciting times ahead.
Yes Ajax there were a lot of details in the reports of the chairman and ceo, another one I found significant was mentioning the 10 year well on numerous times plus the new map. I cannot compare it directly with last years reports but it felt very thought through and brings to the point what makes shareholders concerned etc. I think they did realize that communication wasn't their stronghold recently and that there was some criticism in regards to that - so maybe that was the reason but this is just my personal and subjective opinion. Important for me was that I felt well informed afterwards and that it addressed a lot of important matters in great detail. It made me feel very positive.
Shredders...it was in the last RNS under the CEO statement...here the copied paragraph... 'The Company bid competitively on the sales of multiple producing assets during the year, but on each occasion, we were outbid. One exception was an acquisition that was agreed but was withdrawn by the vendor at the last minute due to vendor tax considerations.'
I cannot get over it how close we were to having a producing assets...all agreed on and then the vendor pulled out last minute due to tax reasons...ggrrrr! Imagine the GBP30 million tax credit finally being able to put to work and good use...it would have been a real game changer. Well at least it shows how hard they tried and that we shouldn't give up hope on that front either as they will keep trying - we are all in the same boat. Onwards and upwards...
Thx Dick...just seen it as I read the RNS on my phone and overlooked it. Saw it on the other board first and was stunned. Never seen the map being layed out like that with the proximities etc. Not sure how deep the 10 year well was exactly but I think it wasn't too far of from our sidetrack at Verbier. Not wanna make any assumptions but it would only make sense if JOG alone or with partners would get that license next door since they already have spent a lot in discovering Verbier and doing the 3D seismic on their block. If the OGA wants to drive a hub forward than this would be the only logic way to achieve that or am I completely wrong in thinking that? Can they just award a license because it makes sense to do so or does it have to go via bids etc? Any experts who can help with some knowledge out there?
Here is an interesting pdf in regards to the mentioned discoveries, explorations and existing fields. The close proximity of the 10 year well to Verbier (or shall we call it 'connection ') which was flow tested and got approx 14 million barrels is staggering. If our consortium would receive the available license where the 10 year sits on would catapult us from a min of 25 million barrels to 39 million barrels and that is the absolute bottom size...and we know as a fact that Equinor was very conservative in their estimate. That plus future upside of Verbier North west and Verbier deep could be huge. Cortina and all other prospects on top plus tax credits and a bit! Very positive for 2019/2020. I had to download the pdf to open it: https://www.rns-pdf.londonstockexchange.com/rns/4835Z_1-2019-5-19.pdf
A good summary RNS. Most of the information was already know but I think it reflects the situation very well. For me the immediate future and the cash position is viable and that looks good to me. From the RNS Strong Cash Position: Ended 2018 with £19.8 million of which approximately £4-5 million will be utilised through H1 2019, principally to settle our share of the Verbier appraisal well costs.
Also very good points notperfect. Thx Dick, I think fairdealer meant that Equinor does not have to answer / be accountable towards shareholders of JOG (ie us lot ;). What always keeps me calm is the fact that Equinor needs and wants to find oil as much as we do, therefore they will do whatever is necessary to accomplish exactly that, why would they have sunk several million dollars into a 3d seismic survey for an entire block just to stop after one dry well during an appraisal program? That wouldn't make any sense unless the survey was so bad that they see no future in it. However their timeline might be a bit different from ours/JOGs management team...they can take their time. Of course we all hope and most of us believe that they see a lot more potential in Verbier (and Verbier deep), Cortina, Meribel and any new prospect they might find in the data set. One other thought is the general idea of a hub in the greater buchan area. This idea and multi company developments comes not just from JOG but also from the OGA. What I am trying to say is that it will be very exciting to see who else comes onto the table in the greater buchan area and we definitely will find that out in the next 3-6 months as well. From the OGA podcast we learned that other companies such as Total etc are also very interested in sharing the work load and work more closely together and the reason is simple - its more efficient and brings the cost per barrel down making smaller discoveries also commercial.
That's a fair comment fairdealer. What I do know is that they finished shooting the survey in June 18 but according to PGS website it then takes a considerable time for this data to be delivered to the client...the fast track (which was a small part of it) can be delivered in 3-6 months but the full version takes longer. Based on that delivery the operator starts their analysis of the data package. Ie the fast track was delivered in Dec18 and they stated in the RNS at that time that they now analize it. So from that process and the info on PGS website I drew my conclusion that a similar thing will happen once the full data set will be delivered end of Q2. I don't think Equinor is holding anything back or tries to cheat their partners out of information but they certainly are very conservative on scare of information they pass onto the market...simply because they don't have to and don't really wanna share everything with the world and potentially other bidders for certain licenses, right? I am sure however the JOG and Cieco are well informed if news flows and have also access to the data as they paid their share on it. That's just my opinion.
I do agree with most comments recently made about the next 3-6 months and what to look out for. I understood the 3D Seismic being delivered sometime end of Q2 (lets say June) and that the partners then start analyzing the data because the analysis isn't dine by PGS whom shot the 3d survey but the Operator and its partners. So results of that analysis I expect in the months after June. This and the knowledge they gathered during the appraisal well program will tell them more about the existing Verbier discovery and what to do next - which could be another appraisal drill or new exploration Verbier deep. Cortina is then also on the cards and we should know more about the chances of them drilling it...maybe a multiwell program? The OGA results for the licencing round will be exiting too, especially around the 10 year well. Equinor got the WP booked til March 20 so a rig would be available if necessary. I think they just need to gather all the information first, analize it and then plan next 12 months. I hope Equinor will declare Verbier / and or P2170 as commercial which would bring an end to the speculation and the full valuation of the block could lead to exactly that which is what we need - the commitment of the operator. Money hopefully around GBP12 million should last for another 12-18 months for expenses and drilling program so we got some space there but good news certainly would help massively moving forward.