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The company posted this with the previous RNS release, to quote from a great Talking Heads song, it’s the “same as it ever was”…
‘Zephyr is pleased to confirm that there have been no changes to the previous guidance regarding insurance and reiterates that it expects to recover substantially all State 36-2R well re-drill costs under the well control insurance policy.‘
https://x.com/zephyrenergyplc/status/1767183447112527991?s=46&t=ipW7IMp6GVgCsYSTs_Wd3g
(Courtesy of Tim on the TG group)
Gearing-up for the return to drilling in the
Paradox
• 4Q23 production in the Williston was 1,053 boe/d. This only reflects oil and natural gas production. Adding our estimates of NGL production (reported in previous periods but not in 4Q23) would lead to ~1,200 boe/d (we forecasted ~1,400 boe/d).
• While production reached 1,440 boe/d in late November (~1,650 boe/d including NGL), 4Q23 production was negatively impacted by the curtailment of production from the new Slawson wells in mid-December due to adverse weather condition and infrastructure constraints.
• Production from the Slawson wells resumed in late January.
• During February, ten additional wells were placed on production adding
~75 boe/d net production. The wells are performing ahead of expectations.
• With regulatory approvals in place, depending on rig availability, drilling of the State 36-2 well could start in April or May.
• We are cautiously reducing our production forecast in 1Q24 to
~1.1mboe/d by deferring 1/3 of 1Q24 production to 2Q24 and 3Q24.
• As we revisit our production forecast and activity assumptions for the Paradox in 2024, we have changed our target price to £0.12/sh in line with our new ReNAV.
• Overall production is expected to increase by 250% by 4Q24 (compared to the FY23 average production) and the drilling programme could unlock the Paradox (£0.13/sh unrisked just for the 2C contingent resources) and the Salt Wash helium (£0.03/sh unrisked for the 0.13 bcf of helium).
Revisiting our FY24 forecasts in the Paradox
We are now assuming that two wells will be drilled in the Paradox in 2024:
(1) the twinning of the State 36-2 well and (2) the Salt Wash helium well (50% WI). Further exploration wells targeting prospective resources in sands overlaying the Cane Creek are likely to be drilled from 2025. We assume that production in the Paradox will start in late 3Q24/early 4Q24 with 10 mmcf/d plus condensate. The growing production and limited capex (since the costs of the State 36-2 well will be covered by insurance, we carry only US$7.5 mm total capex in 2024) suggests an important cash build-up in 2024 with net debt dropping from ~US$25 mm at YE23 to ~US$2 mm at YE24.
Valuation
We have rolled forward our DCF by one year to YE24. We have increased our Core NAV from £0.03/sh to £0.04/sh as our new YE24 net cash is now higher (due to lower capex spend that we previously anticipated). We are excluding the value of an exploration well in one of the reservoirs overlaying the Cane
Creek (£0.04/sh) until we have better visibility on the timing of further exploration wells. Our new ReNAV is £0.12/sh.
They’ve got 15 days to submit. Not sure what happens after that.
I see TETE have been unable to file its Annual Report
https://app.quotemedia.com/data/downloadFiling?webmasterId=90423&ref=318114491&type=PDF&symbol=TETE&cdn=1adb1f6b5e4b5e3fac8d9ca4aef7a28f&companyName=Technology+%26+Telecommunication+Acquisition+Corporation&formType=NT+10-K&formDescription=Notification+of+inability+to+timely+file+Form+10-K+405%2C+10-K%2C+10-KSB+405%2C+10-KSB%2C+10-KT%2C+or+10-KT405&dateFiled=2024-02-28
Well, apart from the 400k, 2 x 300k, 2 x 200k 😂
Or rollover, or transfer. The fact that the timestamp is identical makes me think it’s not 2 sells
From the companies own presentation last year, the breakeven point was three years down the line.
Capex for the first three years was $85 million, revenue for the first three years was $85 million.
That was at a cost of $10 million per well, so after eight wells at least.
Appreciate the now looking at horizontal & vertical wells and some workovers, and the fact that the first $20 million is being paid by the JV partner, but we will still need to find another $25 million to contribute before we break even.
I still can’t find anything that says a horizontal well is only twice as effective as a vertical – the lowest is a multiple of six, which would give us around 700 MSCFD
Anybody with O&G experience shed light on the expectation of 2mmscfd from a vertical well compared to 4 from a horizontal?
Just reading up on it and keep seeing H-wells providing multiples of 6-12 times a vertical well. Hoping this isn’t another example of over-promising…
I guess they’re doing both to see what works best. Bearing in mind this is going to be a 30 well program (ideally) it’s best to know immediately at the beginning.
Our Market Is currently a little bit over the £10 million we will effectively be getting Via the JV (US$12.5 million), so it’s a no brainer at this price
Thanks - didn’t think to check there.
What kind of production do you think we will get from vertical wells? Would 2 vertical wells match a horizontal well? Will they do a vertical well with a view to then drilling out horizontally afterwards?
Trying to figure out how much we’ll be taking from these wells as revenue/profit, to see if the free carry will generate enough profit for us to be self-sufficient for the rest of the drills. Half of all revenue for these wells will be clear profit for us after all.
If they were expecting to be self-sufficient after 2 horizontal wells, it’ll be interesting to work out what the break-even point is for 1H and 2V wells. If it’s the same point then we shouldn’t ever have to raise funds for further drilling.
Gordon, could you point me in the direction of where they said this about 2 vertical wells, please?
TIA
Does feel like this is the bottom. People will start to come back in as we head into March, awaiting the GOI approval.
Just taken some at 0.1135p, have another order ready at 0.1p as well, but not expecting that to be hit now.
We only have today and tomorrow to be in it until the 7 days pre-test window closes:
“Final preparations including completion of the mobilisation of the rig and as well as remaining services to the Hickory-1 location is expected to be completed over the next 7-10 days.
Once mobilisation of Rig 111 is completed and rigged up at the well site, the Company will provide a further update on commencement of flow test operations.”
Scot, I pulled the info from the Quarterlies so there aren’t any line items as such. This is how I read it:
31/10/23 Quarterlies -
“Exploration and evaluation expenditure of A$2.1M (June 2023 quarter: A$15.5M) predominantly related to final Hickory-1 drilling payments as well as planning and permitting costs for Hickory-1 flow test program.”
Whilst there’s no breakdown, the costs for Hickory would be expected to be minimal this far down the line. Assumed 75% for Flow Test (US$1.02M)
“30/1/24 Quarterlies -
Exploration and evaluation expenditure of A$2.8M (September 2023 quarter: A$2.1M) predominantly related to Hickory-1 flow test program and Namibia farm-in payments.”
The only farm-in payment will be the 1st instalment of US$0.28M (A$0.43M). So the majority (all?) of the rest will be flow test costs (US$1.54M)
Numbers are subjective of course, hence “up to” in my comment, but they’ve certainly spent some of the costs associated with the flow test programme
Don’t forget that they’ve already allocated funds for the Flow Tests (possibly as much as US$2.6m) out of the published accounts over the last 2 quarters. The G&A costs are only a little more than that for the full year, once we include revs from Longhorn.
So, even if they have to cover the USD$1.7m owed by Burgundy, they are fine for another 12 months, barring further exploration costs. And they will get another 12.5% WI
Yeah, or you think you’ve placed an order for £3k in a micro-sp share that you end up buying 3000 shares by mistake worth £12, plus a £9.99 fee - been there, done that 😂
All trades must be published
Must be a hell of a buy for them to delay it so long 🤔
Got this back from the Cruz project engineer earlier:
“Cruz is currently planning on moving a rig on the Dalton on Saturday 2/17 from approximately 7 to 10 a.m. The road would only be closed as long as it takes to get a few impassable loads from Deadhorse to ~380 M.M. on the Dalton Hwy.”
So it’s all systems go for next week!
Soulec - there’s a slight update re dates in the Quarterlies from end of Jan 👍
Joint Venture Funding
On 5 December 2023, 88 Energy announced it had received US$2.0 million in funds from Burgundy as part settlement of the US$3.745 million in unpaid cash calls (represented by US$3,452,967 in relation to outstanding cash calls due plus interest of US$292,505).
The Company via its 100%-owned subsidiary Accumulate Energy Alaska, Inc (88E-Accumulate) also entered into a further standstill agreement with Burgundy on 5th December 2023, providing additional time for Burgundy to cure and pay the outstanding funds due of US$1.745 million by 31 January 2024. As at the time of this announcement Burgundy has not paid the remaining funds outstanding. The Company understands Burgundy is in the final stages of securing funding, with Burgundy requesting an extension of time until 15 February 2024 which the Company has agreed to. Burgundy understands there will be no further extensions and that non-payment by mid-February will require Burgundy to transfer to 88E-Accumulate 50% of Burgundy's working interest (approximately 12.5% working interest) in all of Burgundy's Project Phoenix's Toolik River Unit leases (Transfer Interest).
Burgundy will also (within 5 days after 15 February 2024), sign and return the Hickory-1 flow test AFE at the working interest level post the Transfer Interest. If Burgundy has not made payment for its share of the flow test AFE cost within six months after the due date of the AFE cash call then Burgundy will transfer 50% of its remaining working interest in the Toolik River Unit leases, post the Transfer Interest.
The Company maintains its rights under the joint operating agreement (JOA) should Burgundy not be able to pay any future cash calls, including exercising the option to require Burgundy to relinquish its working interests in Project Phoenix and the joint venture.