a few thoughts30 Jan 2020 13:06
To me, the most likely reason Equinor (Eq) didn’t take up the 50% option was that it didn’t come with the title: ‘operator’. For JOG to have offered this to Eq would have been an act of folly, with JOG losing control of concept, timing, degree of control – its whole destiny.
Eq is a political animal, 2/3rds owned by the Norwegian Gov’t. It has the economic clout of some small countries. It is logical to assume it regards it as crucial, to the maximum extent possible, at all times to be in control of its own affairs. The idea of playing second fiddle to a minnow (presently, but not for long I would wager) like JOG cannot have sat comfortably with Eq’s politically motivated leaders. A partner with an operator’s interest in a significant area not that far off from Norway potentially causing embarrassment were it to decide to press the button on the extraction of 140m barrels+ (obliging Eq to follow in tandem) just at a time 100 billionaires at Davos decide everything stated by a 9 year old Norwegian female cousin of the freak known as Thunberg should be slavishly adhered to? “No, thank you - we want retain the ability immediately to shout loudly how many windfarms we’re invested in and how we’re scaling back on dirty oil”.
Eq has done JOG a big favour by selling its 70% interest in Licence P2170on such good terms (for JOG). Reading between the lines, it would seem the expectation of the parties is that Verbier holds c.35MMboe, rather than the 25MMboe everyone talks of (25MMboe alone was discovered in the immediate vicinity of the wellbore). Otherwise why construct a royalties agreement based on the first 35MMboe lifted?
What also seems significant to me, given JOG’s limited availability of cash, is the removal of the possibility of JOG (and CIECO) being called upon to contribute their share of drilling and other costs should Eq have decided to sink an exploration well in Cortina, say later this year or early next, or perhaps carrying out a further appraisal drill in a different part of Verbier. JOG is now fully in control of its own destiny in this regard.
I’ll continue this a bit later covering, inter alia, Buchan - and comments made by various clowns in relation to what it actually contains, the reason the licences fell back into the OGA’s coffers and how ludicrous it is to imagine that reserves of the magnitude JOG has – all of which are known to exist and are concentrated in a prolific area of the CNS – should be valued at 20 cents a barrel.
dyor
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