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Jag, I wondered about that too, but they were consecutive sentences by JJ, so it wasn’t clear. Probably have to look at Wood Mackenzie research note on Sound to find out as it will also be making assumptions about extent of TE-10 discovery in the event of testing success
JP “no comment” on Sound New Company. Recent GSA RNS was for compliance purposes. GSA is taking longer than expected but they still expect it to be in the $7 to $9 dollar range. Timeline of GSA is “out of our control” but it isn’t at the critical stage yet (it will be critical at FID stage). If GSA doesn’t happen could sell to Europe/trader or local industry, but preference is for GSA with One. LE pricing for buyer based on: 1. proven resources 2. Half drilled (e.g. TE-10 where if test successful someone - not Sound - will have to do an appraisal well. Will find out results of TE-10 test in 3 weeks. JP “LE won’t be in 12 - 18 months” - inference was sooner. Sidi - discussions ongoing but ‘cos of TE-10 it isn’t ultra-important. JJ - Wood Mackenzie day TE-5 alone is worth 25p share price. Success at TE-10: £1.10 Will TE-11 be drilled? JP: plan for TE-9/10/11 was to drill “up to 3 wells” & won’t decide on TE-11 drill until after TE-10 results. FWIW my take on this is that if TE-10 is successful there won’t be a TE-11 - but I could be wrong.
A few out-takes from the event: The equipment needed to test TE-10 will all be on-site next week & the testing will commence then. There will be an unstimulated test on the lower section & a stimulated test on the upper zone with latter confined to a 30 meter interval to combine the thin bedded pay. BM: “schlum & the engineers believe it will flow because of the (NVT ?) result. TE-11 Defined the target in January. As it sits outside the target impact sector they applied for an EIA in January & hope to get it in April. Will then take another month to prepare the site. If TE-10 is successful it will have a big impact on the basin model & seismic has helped. The Sound team have identified 6 prospective sites (each of 300 - 600 bcf typically) & will probably have another 6 identified sites by next month. The pipeline for TE-5 will make other discoveries in the area more easily economic. Part 2 to follow.
“Footasylum removes ‘stab vest’ jackets from store” https://www.bbc.co.uk/news/uk-england-nottinghamshire-47308465
Based on the vitriol on this board today I have real sympathy for the targets of it. OK, we’ve all lost out financially, but as we know it’s O&G & it’s risky. Yes, I’m desperately disappointed by TE-9. I also dread to think what sort of content some of the Sound management got in emails etc this week. That may well explain BM’s responses during the FSC which, in fairness, should somewhere have iterated his disappointment about the TE-9 results. I’ve no doubt that team Sound are hurting badly & desperately want drilling success. In adversity now is the time to support them.
Looked at the RNS first thing - thoroughly disappointed obviously - and didn’t look at this board or the SP at all, still no idea what it ended up at (& don’t want to, tho’ may have a peak tomorrow) but this is my take - apologies if it repeats what may have been said by others. - everyone (apart from the shorters/trolls etc.) must be devastated, morale in Sevenoaks must be on the floor. - we all know, or should know, that O&G is high risk/high reward. For whatever reason this one didn’t work, but, that said, TE-9 was apparently was the least risky of the 3 back-to-back drills announced (a year ago that took a year to commence). - ignoring the Sidi drill, which was an obligation & proved nothing beyond an large expense for licensing obligations for no other seemingly worthwhile reasons, we’ve unfortunately now had 3 failures in row. It happens. - got loads of seismic which is presumably OK, what are lessons from the interpretation? - 30% (?) COS on TE-9 which is “as good as it gets” (BM), which, in fairness, means more chance of the failure. - what does this say about the seismic interpretation & the modelling of the rest of the area? was it worth all the drilling inactivity? - I took a pretty laissez faire attitude of JP’s trading plan - now wish i’d done the same - but, with the benefit of hindsight (being then unaware of the lack of drilling activity for months thereafter). - Was heartened by BM’s quote on the boat in Oct 2017 - I can’t remember the exact words but is was something along the lines of - I hope to be standing here in a year’s time with 6 tcf. I am still broadly supportive of the Sound management (& obviously personally gutted) but there is one thing that they seemingly need to sort out: the decline in the share price during the drill (ok, markets generally did & oil stocks in particular) suggest that word got out to the select few. In that regard I am concerned by the timing of last week’s RNS about drilling depth during market hours & I do remember JP saying shareholders will be the last to know in future. Some, including me, bought more on the SP weakness, whilst others seemingly had advance info that the drill was a duster. Seriously unimpressed by that. Also, and I hate to say this, but, from a PI perspective, when the 2018 accounts come out there had better not be any bonuses/share options given/granted. I am genuinely sorry for the Sound team about TE-9, & here’s hoping that TE-10 & 11 do the business.
Thank you Crude & all the others that have kept us informed with news from Morocco - it seems to have been a hugely enjoyable trip - and I really wish work commitments had enabled me to be there. Next time maybe - if there is a next time! Keep the faith in JP, BM, JJ, Jason & the team. Let’s hope that the gas (or oil) shows over the next few months are transformational.