I agree Sefton.
HFs eyes on PRD and being on the register would bolster liquidity for all and invite more players although volatility will increase as well. What's troublesome is if you see other junk on London market priced at multiples only on mention of some green or exploration potential - this is what makes PRD unique in terms of dislocated alpha. Sadly MMs have no clue how to price the stock so they drift from buys to sells and back and forth, happy with their spread earnings. For example, having some CO2 EOR growth projections and valuation will give hard numbers to the market and MMs to work with and that can underpin that part of the market cap irrespective of other segments. Hard to know if to price PRD as a growth stock(co2 EOR growth/ scalability) or a value stock(E&P) if no broker/etc. takes a stab at the numbers to begin with.
All IMO dyor
Sefton - good to see you back in full swing. Strangely the positivity in the graph seems to correlate with your posting on here - it's correlation I suppose and not causation although would not be surprised given your positivity and conviction gets PIs to increase their conviction and suck the free float off the market by buying/adding in more.
Given that PRD is coming in PIs radar via Twitter especially for its Morocco drill transformational prospect - the free float would be sucked out fast as more PIs research over the weekend and get to the grips of the size of the price. Although the quality of discussions on this bb will also go down as more yellers at the daily price movements overwhelm the board content.
Maybe the IIs and HFs be rather comfortable to take PRDs market cap from 100 to 300mn+ for their 200% rather than 20 to 100mn mcaps.
MEM - good to see you back. Guessing you didn't get a response from PG yet, for your email...
Btw hope you derisked OMI on the recent assays results... Looks like the aegos poster was bang on on his VMS prospect prediction. Didn't like his resource estimates for the area that he shared back in 2018/2019 I guess. Anyways atb with OMI in case you still in.
All IMO dyor
Sefton - brilliantly put as always.
We need some additional cornerstone investor who can give confidence so others join in. Maybe HFs arrive in packs - one being in gives confidence to others to research and take positions. As of now PG is the only biggest shareholder and of course the most important one that matters but to drive the shareholder register would need big liquidity and obviously much bigger market cap that can let HFs take 5-10% positions without driving the price crazy. Have not seen a single Holdings Rns/Tr1s in PRD in the past year I think, which shows how under the radar PRD is.
My thoughts are the same as before - value doesn't come to you always, you need to get out there knock a few doors and drive it yourself. Dislocated alpha is valuable for a new buyer while for the old buyer it's an opportunity cost while waiting for the market to do its price discovery and introduce the old buyer to the new one. That gap between old and new buyers can be narrowed down via getting out there and telling the story. PGs video interviews have done that to an extent and have convinced most here to build conviction in their holdings and also attract new investors to build and add positions. If those interviews weren't there telling PRDs story - a lot of new holders wouldnt be here and the alpha would have stayed dislocated as it is still by a wide margin. When you see the junk out there in the market priced at multiples for less than a tenth of PRDs potential - it tells you there is a massive opportunity cost by not giving a store of value for those PIs HFs money that's looking for a home especially based on the proven green CO2 EOR segment.
All IMO dyor
None of it is representative. Neither sol nor gold. Copper is the primary resource and it's in Ecuador not Solomon Islands.
A small £2-3mn buyback can hover up a nice chunk of shares outstanding compared to its market cap... Divi might keep the big holders happy and voting for the current bod.
The acquisition was extremely cheap and right at the bottom of the oil market cycle and to sell it again now would mean at least 3 times ebitda valuation which is what I3e should be valued at, at least. From the CEO comment it seemed I3e is still keen on more acquisitions - Imo they should focus on extracting the current 50mmboe reserves first in this oil and gas price environment and add reserves incrementally
All IMO..dyor
Sefton - good to see you back posting.
Spawny - this 6 pay zone target is very similar to PANRs multiple stacked drills(although theirs is for oil). Market priced it's success way before the first drill and think it's NPV estimates are very similar to PRDs success case estimates I.e.$1bn +.
PG has worked onshore ME for a long time and I'm sure he has seen a lot of prospects and given 40 years of experience he is very comfortable with the geology of Mou 1 especially given the cost of $2.5 million for potential of getting a TCF of gas.
And remember that TXPs first drill had a CoS of 34% as well for its first C deep well. So CoS in crude terms is pretty decent for two 400 Bcf pay zones (although not sure how good SLRs estimates are historically and whether TXP had a similar consulting who estimated their first drills 34% CoS)
All IMO dyor
Given sdx is looking at a 2 BCF sized discovery to be commercial(might be close to existing production infrastructure?), would be interesting to see what's the minimum sized discovery that could be commercial for Mou 1...
Japan mulls financial support for upstream CCS projects
Japan is drawing up plans to provide domestic upstream oil and gas developers with financial support for carbon capture and storage (CCS) projects, targeting to reduce potential financial risks in fulfilling costly CCS requirements in upstream operations and lure additional overseas oil and gas investments.
https://www.argusmedia.com/en/news/2188525-japan-mulls-financial-support-for-upstream-ccs-projects
PRD is aiming 4 target zones... two zones have c. 60% CoS upto 0.2 TCF
3rd one - CoS of 34%, 0.5 TCF +
Quite similar to TXPs first drill...
dyor
There is wider market liquidity being sucked out since Friday last week possibly due to IG changes in margins for a range of PI favorites and the likes of OMI getting hit today due to poor mining assay results. It has a cascading effect on the micro caps although not all get affected. Given the recent rise in PRD it's natural for old short term buyers to exit and run with their %s although at £16mn market cap PRD compares awfully low to some of the junk being priced at multiples for awfully less potential.
All IMO dyor
Dewar prospect farmout will give a massive oil prospect to drill for and it's in addition to the massive 600 Bcf Selene prospect with 70% CoS (appraisal?) play...
Some valuation estimate for Dewar
https://www.insider.co.uk/news/cluff-natural-resources-calculates-value-17284381
"An early stage feasibility study, carried out by io oil and gas consulting, has identified a viable development based on a two-well subsea development, tied back to the BP operated Eastern Trough Area Project Central Processing Facility located approximately 5km to the north west of the prospect.
Other potential offtake options have also been identified as part of this study. On this basis, the Dewar project is estimated to have a post-tax value of £555 million and a post-tax project IRR of 123%.
The company will now look to reduce its 100% working interest in the Dewar Prospect and has commenced a formal farm-out process with the aim of attracting one or more partners to provide funding for future exploration of the block.
The company believes the prospect to be drill ready and expects a farm-out to be supported by a commitment to drill an exploration well on Dewar.
The Dewar Prospect is estimated to contain up to 272 million barrels of light oil with prospective resources of 39.5 million barrels in the Forties Sandstone. The geological model is supported by a clear anomaly with a geological chance of success estimated at 41%.
Cluff's chief executive Graham Swindells said: “The Dewar prospect represents a significant and valuable exploration target which is located in close proximity to existing production infrastructure. The successful farm-out of two of our Southern North Sea licences to Shell earlier this year has led to a growing recognition of our technical team within the industry and provides a great platform from which to launch this next farm-out process.’’
All IMO dyor
... The market keeps moving and now its .75 bid 1.00 offered. Now he has to make a decision.
Just like investors, MM Hate to take a loss. So 9 times out of 10 he will now sell 2000 at 1.00 making him short 4000 but with an average .81. At this time he would love to see a seller at .75 so he can cover his short and make a few bucks.
But instead the market keeps moving up. Now it is 1.00 to 1.25 and here comes the buyer again at 1.25. He doesn't want to lose the call so now he needs to sell 4,000 at 1.25 to keep his break even point above the bid. Now he is short 8,000. Market moves up to 1.25 bid 1.50 offer here comes the buyer now he feels he must sell 8000 here because "stocks don't go up forever".
Now he is short 16,000. And so on and so on. If the stock keeps moving up, before he realizes it he could be short 50k or 100k shares (depending how big his bank is).
Finally the market closes for the day and on paper he may look all right in that his "break even" price may be around the closing price. But now he has to figure out how to entice sellers so he can cover this short. It is important to note that if this happened to one MM it has probably happened to most all of them.
Some ways MM's entice sellers; Run the stock up with a "tight spread" in a fast market, then "open" up the spread to slow down the buying interest. After it has "cooled off" for a little while lower the offer below the last trade right after a small piece trades on the offer then tighten the spread so that the sellers feel they can take a "quick profit" by "hitting the bid" on the tight spread.
Once the selling starts the MM's will walk it down quickly by only making small prints on the way down with the tight spread. Another way is by running the stock up in the morning, averaging up their short then use the above technique to walk it down in the afternoon.
Hopefully after doing this for several days, it will demoralize the buyers. The volume will dry up and the sellers will materialize thinking that the game is over.
Contrary to popular opinion, MM usually Do Not Cover in Fast moving markets either Up or Down if they are short. They Short More. They usually try to cover after the frenzy is out of the market. There are many other techniques they use but the above are the most popular.
This technique works about 9 times out of 10 particularly in a BB market. However that is because 9 out of 10 BB stocks are BS. Remember what I said above. Most MM's don't have a clue as to the value of a Company until they get trapped. If the Company has solid fundementals and a bright future. Then the stock will do very well. And the activity that caused the situation will prove to even help the future stock activity because it created an audience."
Stumbled across this article on one of the advn bb. Maybe it might be educational to some on MM workings;
"Market Maker Speaks Out: "Ways of a Market Maker"
Market Maker Speaks Out: Ways of a Market Maker 10:08 PM Learn, Story
I was an OTC MM for about 10 years ending in the late 80's. Since then I have been strictly an investor. Since I have not been that up to date in MM rules I will only make statements that I feel fairly confident are still accurate regarding these activities. By and large most MM don't have a clue nor do they care to learn, about the fundamentals of the stocks they trade.
They just try to make orderly markets. When dealing with BB stocks it is very easy for a MM to get trapped into being short in dealing in a fast moving market. Reason being; most of the MM's in this stock are what are called "wholesalers" this means they don't have retail brokers "working" the stocks.
So they have to rely on what's known as the "call" from larger retail houses. If a "Big" retail firm like an E-trade calls up a market maker to purchase say 5,000 shares of a stock, they expect to get an "execution" from that market maker. If he turns them down, or only gives a partial then the "Big" firm will go to another MM.
If this second MM "fills the order" then that "Big" firm has a moral obligation to continue to give future "business" in that stock to that MM who performed (his life blood). This will go on until he "fails" to perform and so on.
Contrary to popular opinion the "Big" firms Do NOT neccessarily go to the "Low Offer" to fill a buy order (Or high bid for a sell). They "Go" to who they think will perform to fill the order and expect that MM to "match" the "low offer" in the case of a buy (bid in the case of a sell). Even though this MM might in fact be the "high bid" and not really want to sell any more.
As a wholesaler he must perform or he will get a reputation as a "non-performer" with the "Big" houses and will cease getting "calls" which means he will soon go out of business. I mentioned above that this activity is very significant to BB stocks. I say this because most of the trades in these BB stocks are "unsolicited" and are done through discount houses.
With the above groundwork laid, let me try to explain how market makers get short even if they like the Company; Lets say that a stock (shell) has been lying quietly at $.25 bid $.50 offered. A limit order comes into one of the MM's to Buy at $.50 for a thousand shares. Prior to this trade that MM may be "flat" (neither long or short any shares). He fills the order and is now short 1,000 shares. He may raise his bid hoping to find a seller to "flatten" out his position. But before he realizes it a wave of buyers have come in and cleared out all the $.50 offers. Now the stock is $.50 bid .75 offered. Here comes that "Big" firm he just sold the 1,000 shares to at .50 with another bid for 1000 at .75. He makes this print. Now he is short 2,000 at an average of .62
Staffy - totally agree. Sefton has some great insights on his experience / expertise and it's a shame passive aggressiveness on these boards drives away good contributors who genuinely share expertise than hoard it.
Sefton - there are many who like to read your posts... Don't have to agree with everyone, that's what makes a market. Seller thinks he is calling the top and buyer thinks he's calling the bottom - in the short-term both could be right, but mid to long term only the main drivers of value (PRD/PG) will deliver it. We are just individual participants on the same bus... Hope to read your posts again.
IMO dyor
MEM,
Did you hear back from PG yet on your emailed questions to him, assuming you can share his reply...
Cheers
Same with most like hlf iwb. Need to try for hours to get a quote...
Morocco drill upcoming with a good geological shot at commercial level 1 TCF gas at a cost of $2.5 mn with 4-5 drills possible given rig on site is ridiculous risk reward for a sub 20mn market cap company. Need weak holders to exit as consolidation takes place for new buyers to step in, who see the transformational opportunity.
CEOs confidence regarding the prospects is immense. He's got some interesting views on the sp as well given he's a 20% shareholder ;
https://www.youtube.com/watch?v=_EX-YlrQWnY
All IMO dyor
Might help to keep an eye on sdxs Morocco program...
Zebra- agree. Sefton should continue to share views on the board. People always have a choice to filter views on this bb they consider shouting - someone contributing views/suggestions based on their unique experience is always helpful. What use is a sundial in the shade... So stand by suggestion that if PRD has already shared netbacks for co2 EOR business, might as well ask the brokers /analysts to take a stab at estimating the valuation of the segment given its proven.
PG obviously has the same interest of all shareholders.
All IMO dyor
Sefton - you have valuable comments to share so we would all benefit from your thoughts regularly...
In a market trading pit someone can choose to sit quitely and whisper or shout and get deals done - having different ways of achieving value is what makes a market. No one's wrong as long as value is created.
All IMO dyor
GRH - PG obviously won't be disclosing any commercial terms given negotiations with counterparts but if you are the only proven CO2 EOR business in Trinidad in 25 years and which you have achieved in a years time, surely there will be a premium net back to your service.
Private companies can whisper all they want but good "publicity" is always valuable if you are a "public" company, afterall its the investment "public" that's setting your value in the "public" markets.
All IMO dyor