RE: Thoughts15 Oct 2021 16:11
My 2 cents, nothing more. Its impossible to dive deep as we don't have data therefore a critique at best. i hold just a few shares, a bit less than SGF and SI, but not far.
Firstly, not all CPR's are equal. I know RISC well, but generally have a stronger lean towards DeGolyer, ERCE or the now defunct LR Senergy.
The CPR also don't address operational and contract risks correctly. RISC in their CPR attempted this very poorly.
I recently raised the point that well construction program for a 3000+m well usually / generally takes up to ~70 days, all in (planned program, NPT, WoW, etcs). Drilling is part of a well construction program. Now both Carnarvon and ADV seemed to think they can do it in 30+ days. If they do, great. if they don't and the time it takes to complete the program runs to 60-70 days as is generally what i see here in UK and US for those depth, i won't be losing sleep. Its fine.
Operationally, the rig is still with another party. JSE is doing workovers, and the nature of workovers in general is you will come across both known-unknowns, and unknown-unknowns. In short , expect delays so you will be happy if its on time. This has no bearing on the project fundamentals. So don't get spooked by delays. Expect it.
Other risks:
1. This is a new team (ADV), they have no track record as a team. So be mindful things may take a bit more effort than where they were in their old cushier positions and likely more impediment to address now in their current seat. If you believe in their ability, stick with them. Before you shoot me, i bought ~1MM shares just on the back of their CV before due dil and big buys later.
2. Carnarvon has no operator experience on production and development, therefore another risk that i see on the timeline.
3. RISC turned a blind eye on CO2 content and issues related to it. Poor from RISC in my view.
On outcome of appraisal, the CPR fails to address re-segregation and flush during the long shut in period. Therefore, based on the limited public data i have, i expect much better outcome than the CPR eg better oil column, saturation.
HODL is best. It will get to where it needs to get. I am aiming 5.1p by xmas, and 50p by end of 2023, anything above that i am forever grateful. Thats a >25x on my sp average.
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