Cheers hasiba. Take a look at PRD it's very interesting especially its two segments - one is low risk TCF scale gas drill coming up (think TXP) and another is recently proven CO2 capture and sequestration business. Recall your calls on GENL board on CWR ITM other new energy cos.
All IMO dyor
Tony - I think he meant that assets will go for 4-5 times ebitda post $60 wti.
Ggg - spot on. The acquisition should not be the first option especially if value has already been inflated due to the surge in oil prices. Not sure how much management hold equity here. Does the CEO hold sizable equity here or did he buy anytime last year? Any one knows of management I3e holdings?
Cheers
All IMO dyor
Hasiba - also take a look at PRD I3E PHAR.
You might find them interesting.
All IMO Dyor
There are much better junior plays like PRD I3E SAVE PHAR IMO
Tony - the acquisition has been brilliant right at the bottom of the market. Not sure if we will get a good deal for another acquisition given the rise in oil price. Based on the current assets market cap should be above £120 mn already. Just hope the management doesn't end up going after another acquisition thats a lot pricier than the last one just for the sake of growth at the cost of eps. There's enough to be drilled and focused on already in the current c. 50 mnboe 2p reserves. They should focus on organic growth if there's no other deal thats 1 time cash flow or slightly higher.
All IMO dyor
Agree Sefton - most are happy to see proof in the pudding even though the pudding arrives on its own time, nothing wrong with it, just different opinions.
Btw Morocco seems to be lifting covid restrictions soon in March and travel should resume soon too... Looks like Guercif drill first gas might be much sooner than chars offshore gas from 2024?
All IMO dyor
Too tricky to get a quote to buy or sell.
And cheers all for your insights.
Seems too big of a prize with multi TCF scale net resources. With drill in July, we should see some traction going forward especially post the IG mess. Never bet against an engineer with unlimited resources.
Btw if anyone is interested in another gas play, take a look at PRD which has a drill coming up in Q2 that's targeting TCF scale gas resources onshore Morocco.
All IMO dyor
Cheers all for the inputs.
MEM - thank you for the insights. From what I can see from your comments the business model is impressive - Imo impressive enough to spin off into a new green IPO onto the market to the green investors and let them set a price for a business model that can be scaled across the globe to other onshore producing countries such as UAE, Colombia who are pretty keen to show the green credentials for every barrel they produce. Maybe too far fetched but an intriguing possibility.
Sefton /Matt - there is no doubt PG provides brilliant amount of information via RNS and interviews but what I meant was that getting the message out shouldn't fall completely on the CEOs shoulders. More specifically what I meant was given we have not one but two brokers is it not possible or is it that expensive for them to take a stab at valuing PRDs potential at risked and unrisked basis? Surely costs are important so..why have two brokers instead of one especially when none of them can help with a preliminary valuation note for their client as a pointer? I'm sure theres a good enough reason for couple of the segments but would have thought EOR derisking would get the ball rolling at least for that segment with some hard numbers based off net backs and wti sensitivities. Anyways will leave it with PG as he knows best given he's the biggest shareholder...
All IMO dyor
Hi Sefton - not sure how not having a broker note is helpful. New investors might think there is nothing special in the company if there's no one bothered to cover the company, especially if you want the market cap to grow which is basically a function of how well known the company is and it's value proposition. I would think having a price target with sum of parts valuation anchors investors sentiment and can underpin market caps in micro caps and possibly put a floor on the market cap if the market knows what the current value is and potential value could be post derisking of say Morocco or IE prospects.
As you say it's probably the case of PRD waiting around for the market to reflect it's true value based on proven and potential value on its own or PRD gets out there via brokers and sells the story of transformational value creation via the 3 segments. I'd choose the second option any day. You see around the market where absolute junk and pigs with a lipstick stocks are promoted to kingdom come, by brokers or their IRs. While some of the real alpha generating plays are dislocated because they don't want to evolve in a new social media investment world where majority of the investors choose to press buy or sell button based on what they research on Twitter or other platforms. Platform culture is what matters for value creation in micro caps if no other broker or big ir firm is fighting your corner for the investor £s. Rest assured Asset value creation will win out at the end...
All IMO dyor
A lot were expecting a hike in CGT and had started reducing their positions across the UK market. Might see a bounce across market going into 5th April given no CGT hike ...
Lancy- "Capitalising upon this proven, fully integrated, working business model, expertise, and the exclusivity of liquid CO2 supply by introducing a fee-paying and profits-sharing service under the commercial model established by the Company for Inniss-Trinity CO2 EOR, is now a practical near-term objective of the Company. Five in-country operators and two international State oil companies have made initial exploratory approaches to assess suitability of CO2 EOR for some of their producing, mature, oil field assets." so valuation will also include exclusivity of co2 supply along with contracts. In Recent malcy interview, PG mentioned economics of one co2 project so based on that assuming a profit of 1.5 mn at $50 wti per project and assuming 8 projects you have a profit of $12 mn per year and let's say ebitda of $15 MN per year and at 4.5x times ebitda would value the segment at $67 million? assuming PG values it that way and not just project costs and EOR experience? It would make sense to get upto 8 projects and get a valuation of $60 mn or so and then sell it as a standalone business?
Maybe PG can spin off the co2 EOR segment into a green IPO and it will be valued at multiples of what PRDs market cap is today?! Such is the market sentiment towards green businesses today!
Sefton - agree. Enough content here and Twitter to get a decent note out. Still don't understand why the house brokers Optiva and the another one don't provide the additional service to PRD? Such a note can easily be marketed to wider clients by the brokers, even smaller ones maybe like Mirabaud, finncap etc. Might come up with a decent price target that can be marketed to wider clients. Surely there are those investors who look at what's the average analyst price target on a stock vs where it's trading at the moment I e. Upside?
All IMO dyor
Do we know roughly when PG thinks would be the best time to monetize it? I.e. Will we hear a lot of project additions to the segment before he puts up for sale sign or do we scale it and sell it for higher price and possibly a bit later? I think in one of the interviews he mentioned 2022 (might be wrong on this?)...
Morocco gas prospects has been valued decently with NPV calculations through CPR but does anyone have any idea what the NPVs like for co2 EOR business segment if its to be offloaded? Does anyone have any estimates they have worked with, different from the way I did last time which was pretty crude and possibly off the mark?
Also I've not seen any price target for PRD by any brokers, any reason we Don't have them on board especially when we are main market listed?
Cheers BillyRay.
Hi BillyRay - Cheers for your response. Good to see you are in PRD as well.
PRD and Char seem a lot similar in terms of their TCF scale prospects and geography.
Apologies for basic questions but in terms of char, is it already declared a commercial discovery I.e. has it been drilled and confirmed commercial previous to the latest CPR or is it similar to PRDs where there have been gas shows and CPR created but full drill and commercial discovery yet to be confirmed and announced? Both can be termed as appraisal depending on who you ask...
But the main difference between the two seems to be that PRD is onshore and Char being offshore Morocco which might explain why the drill costs are so different. But honestly, surprised it's that high for CHAR I.e. $30mn+ seems pretty high in comparison to drill cost that PRD is looking at of $2.5 mm, and especially comparing the drill costs to their respective market caps.
$30 mn in the current rig climate is definitely high and do you think it's gross or net to char? Also if a partner comes in I'm guessing char will have to reduce its 75% stake in exchange for drill carry/ flow testing?
And Chars new ventures move is very intriguing - it will be very ironic if they enter CO2 EOR business, which is what PRD has just proven in Trinidad! It's very strange though that char is looking to move in to new ventures when they have such a big development to focus on? Surely you would want to focus all the companys energy on such a big project if it's as valuable as they say - why would you move to a new venture when you already have such a big potential project to deliver value from unless you are hedging your bets against the gas project?
Cheers for your response.
All IMO dyor
A few questions on Char - can anyone help with these please?
Is there an estimate for the appraisal well drilling cost? The CEO seems to suggest char doesn't have enough cash and doesn't rule out raising money if no partner to drill? Any rough idea what the appraisal drill will be looking to flow and how much it could cost? At 22 Mins in this video he seems to suggest about the appraisal drilling but no specific cost estimate?
https://youtu.be/OAIVFNtn0Qg
MEM - Normally pre-spud for most explorers market cap hits c£30 mn and those are usually one trick ponys i.e only an exploration play. But PRD has, in addition to the drill, a proven CO2 EOR business and IE.
Even in your example of £45mn market cap, pre spud would value CO2 EOR and IE at c.£15mn which is too low imo, assuming c.£30mn value attributed to pre-spud run. Anywhere between £60-80 mn (25p-33p) is more sensible pre spud assuming CO2 EOR segment gets valued fairly as it should along side the IE potential.
All imo dyor
So are we looking at another TCF of gas , given that Corrib South should be able to go ahead given this Upstream article?
Farmout news for Corrib South prospect exploration drill also due ?
"The Irish Offshore Operator’s Association (IOOA), which represents the oil industry, said it welcomed the “renewed commitment” by the Irish government to honour existing licences.
As a result, it said projects around the Barryroe and Corrib fields will be able to proceed."
https://www.upstreamonline.com/energy-transition/greener-isle-ireland-enshrines-into-law-ban-on-new-oil-and-gas-exploration/2-1-956646
"Corrib South
- located 18km from the Producing Corrib Gas Field Production
- Application submitted to convert Licensing Option into a Frontier Exploration Licence.
- Predator looking to farm down interest for a carry on exploration drilling
- The best estimate prospective resource for Corrib South is 424.8 BCF and the high estimate is almost 1TCF.
Celtic Sea – Ram Head
- contains the Ram Head Prospect, formerly identified and drilled by Marathon in 1984 when dry gas was discovered in 49/19-1 well.
- Ram Head reservoir engineering study shows potential development via 10 wells capable of delivering 400 mm cfgpd and recovering over 1 TCF of gas in 11 years.
Screening study to assess the technical feasibility and commercial viability of re-entering the 49/19-1 well to test discovered gas in order to calibrate the proposed scoping development plan. Results indicate that the re-entry is feasible and very cost effective compared to drilling a new well.
-Planning for a well re-entry will be undertaken during 2019 with a view to executing the programme in 2021, subject to all fully compliant regulatory consents and approvals."
https://www.predatoroilandgas.com/operations/ireland/
Another hymn for the choir?
All imo dyor
And this right kind could result in exponential price action that can be held and consolidated without a significant retrace at much higher levels depending on whats the max price you think is worth paying for PRDs share when you take into account all 3 segments and sum of parts. For example as word spreads regarding PRDs proven and potential transformational segments - more PIS research over the weekends and see how big the prize could be and is (in terms of co2 EOR) and think anything under let's say £50 mn market cap is cheap and a good entry for PRD. That new holder ideally would hold and keep the free float off the market because it's a sticky position given their valuation estimates for all 3 segments or a sum of parts valuation and buying in or adding more as long as PRDs market cap is under say £50mn and post that hold for full valuation estimate to crystalise.
So for them the downside case could be PRDs market cap valued at a minimum of say £50mn market cap which is underpinned by just Co2 EOR business segment and without taking into account Morocco or IE. So basically you are getting into a business which has proven value of say £50mn mcap without Morocco and IE taken into account and are add ons to the current proven CO2 EOR segment.
For that value to be underpinned would need proper valuation to be undertaken for each project added in the EOR business and depending on net backs and wti price and how easy is it to scale and potential cash flows from such a a scaled business.
All IMO dyor
Might as well aim to attract the full tulip crowd by renaming to Predator Crypto-CBD-SPAC Renewable Energy hldgs. Market cap would be £1bn + just like that!
(Of course the above is a joke although defines the state of market mania in some segments of the wider market)
Dyor
Sefton - you and I sing from the same sheet.
It's all about trying to get spotlight on PRDs proven and potential value . There is a lot of capital flowing around looking for a half decent home - it's a shame not to make an effort to attract it, especially when it's landing on junk.
You can see the change in sentiment on this bb from past few weeks as more PIs have discovered PRD - guess what it will be like if we have a sizeable new holder coming in. And there is nothing like price that changes sentiment. Look at Mmm, got frustrated with CLN induced depressing price action, a lot might have given up over the past year under 4p. Most like myself stumbled across PRD when it was mentioned on some other board or by some other poster we follow. Is there a better way to discover PRDs and it's potential?
All IMO dyor