Member Info for Exploration

FD - thanks.

To a certain extent it could be argued that CLNR’s management set themselves up for criticism by failing to explain the logic behind timing of forthcoming wells. Rather than ‘delays’ wells are drilled when they are needed in mature areas where access to existing infrastructure determines timing. Drilling too soon means money in the ground doing nothing whereas drilling too late may lead to delayed revenue by missing a slot to supply gas to infrastructure with ullage. For Shell, each well in their programme competes with other opportunities to optimise their portfolio. It follows the commercial analysis for 48/8 and the optimum timing is determined largely by Shell - not CLNR.

So we’re left waiting for a couple of wells to be drilled which is why we invested in the first place after the 28th Round awards in 2015. Looking back, there was downturn in UKCS drilling at the time, but the quality of CLNR’s acreage eventually shone through with the arrival of Shell.

This all started 5 years ago, so what have we gained during the wait?

For a start, technology has moved on and other successful wells, like Andromeda, Pegasus and Darach validate CNRL’s early assessments of the area. We’ve also seen the widespread adoption of offshore hydraulic stimulation in gas fields like Clipper South, Ensign and Breagh which have rejuvenated this part of the North Sea leading to a big upgrade of the Clipper export system and the Bacton shore terminal. 3D seismic processing such as in the link I provided earlier has also advanced in leaps and bounds. Taking all this into account the RENAV of CLNR’s own portfolio will have increased, although CNRL’s passive approach means it is not apparent in the share price.

Whilst we might have gained some underlying value as we wait for drilling to start, what have we lost?

In a word, CASH - Mssrs Nunn and Swindells are now each paying themselves £200,000 per year to run a tiny company. Does anyone know what do they actually do every day to justify these absurd salaries?

Milankovitch Cycles; another contribution to climate change

https://youtu.be/iA788usYNWA

Timing of a well in 48/8 depends not so much on subsurface work but rather on capacity availability in Shell’s Clipper pipeline system. You can see from link below that Shell is anticipating reduced ullage in 2021 due to more gas availability from Selene prospect and surrounding features.

https://www.shell.co.uk/promos/clipper/_jcr_content.stream/1576758315041/4c41401e5e36a2b01afac45b85ad8b95f9b72d6d/clipper.pdf

Also of note to subsurface the De Keyser fault systems in this area which tend to compartmentalise the Rotliegendes gas reservoir and show zones of increased productivity are now becoming visible using latest AI assisted seismic processing. See link to example below. From Canning basin, but similar to Sole Pit Basin in UKCS;

https://www.geoteric.com/canningbasin-case-study?hsCtaTracking=19691e78-5f18-4831-8ae9-ca92dcc8e581%7Cebdc1c80-674c-4401-a59c-8e5409e3ff8c

If Paul Griffiths had taken on Tendrara the venture would have been a great success. He is a first-rate geo-scientist with excellent personal contacts in Rabat. Quite unlike the overpaid nincompoops running Sound’s Disastrous exploration programme.

I think you’ll do well with PRD, Mr Market.

Mr Market

Mr Griffiths’ company, Fastnet, never took up the option to farm into Tendrara - so they were never directly involved.

Sound came along later and farmed into Tendrara which was licenced to Maghreb Petroleum, effectively OGIF.

Fasnet’s board pulled the plug on Tendrara after their offshore well - the appropriately named FA-1 was abandoned as a dry hole.

just shows how out of date you are.

this technology is in use in many areas now-a-days.

https://www.osti.gov/biblio/153738-underbalanced-coiled-tubing-sidetrack-successful

- and they've deleted >2 tcf using similar approach.

Mirasol,

Shell made it work onshore Netherlands using under-balanced, horizontal drilling. So it went from ‘drilling hazard’ to productive reservoir as technology advanced. Amoco tried an early horizontal well in the 1970s in Q41 which flowed in excess of 100 mmscfd, but gave up due to low gas prices in UK at the time, before the NBP hub price regime was established.

Mirasol,

It’s worth standing back and looking what Shell is up to in the area. They, and the industry, have realised the fractured Zechstein gas play, which has been developed by Shell in the Dalen area onshore Netherlands since the 1980s, extends over a large area - onshore and offshore.

Northeast of Egdon’s blocks, Shell has farmed in to Simwell’s Blocks 41/4 and 41/9 by acquiring 3D seismic with an option to drill. They’ve done the same with Cluff Natural Resources in Blocks 41/5 and 41/10 where an exploration well is expected later this year. And late last year Oranje Nassau found gas and liquids in the Zechstein in the Darach Central-1 well in Block 42/4 40km further east. The prospective trend extends further east into Quadrant 37 where Simwell has a multi-block position.

South of Egdon’s blocks Union Jack found Zechstein gas and condensate in West Newton and the Lockton gas field has produced gas from a Zechstein reservoir for years.

Added up, the whole trend is turning into completely new, extensive play fairway illuminated by modern 3D seismic and accessible today using horizontal drilling technology.

Depends on whether Parsnips was a ‘good leaver’ or ‘bad leaver’.

The 1.5 years salary thing applies when there is a ‘change of control’ which hasn’t happened yet.

Others who have have left with wheelbarrow/suitcase of golden tickets.

With map/analysis - good news for CLNR

https://www.edisongroup.com/publication/resolution-cpr-published-ahead-of-farm-out/24002/

Last week Shell farmed into Egdon’s UKCS licences offshore Scarborough. The licences contain existing Zechstein reservoir gas discoveries. Shell has committed to acquire 3D seismic in return for 70% interest in the licences. Another signal of Shell’s belief in the fractured Zechstein gas play in the North Sea.

Sounding Off - if I may, I suggest you’re the one confusing things.

The Moroccan ‘AFG’ and the UK ‘AFG’ are both called ‘Advisory and Finance Group. Both are run by Mohamed Benslimane. Looks to me like they’re connected.

And Benslimane runs OGIF and has been involved with Tendrara since Lone Star, Maghreb Petroleum, Fastnet and lastly, Sound.

But, Sound’s lawyer told us on the last phone-in there is no related party in the new transaction. Well, we were told 31tcf, can’t lose money etc.

Perhaps.

Sound Energy's country leader, Mohammed Seghiri, previously held senior positions at Advisory & Finance Group Investment Bank (AFG), which is advising the firm for the financing of the pipeline construction. AFG is owned by Mohamed Benslimane, husband of Lalla Zineb, a cousin of King Mohammed VI. AFG also oversaw the sale of Sound Energy's 20% stake in Tendrara to Oil & Gas Investment Fund (OGIF) in 2017. Seghiri had been the deputy director of OGIF.

Pontcana

The ‘UK company’ is probably;

https://beta.companieshouse.gov.uk/company/05647739/officers

Benslimane has just changed the correspondence address to Dubai from Rabat.

Does anyone think Advisory and Finance Group might have actually fired Parsons, Traynor and Mitchener for failing to perform.

Leaving their man in place to take over the whole business on behalf of Mohammed Benslimane? i.e. OGIF.

It’s the Moroccan shareholders who can now ‘rinse and repeat’

Does anyone think Advisory and Finance Group might have actually fired Parsons, Traynor and Mitchener for failing to perform.

Leaving their man in place to take over the whole business on behalf of Mohammed Benslimane? i.e. OGIF.

It’s the Moroccan shareholders who can now ‘rinse and repeat’

Maldini

ONEE has several more crucial negotiations going on simultaneously. Supposedly, ONEE is being privatised - but this talk has been going on for years. Also, the water and electricity grid organisations were originally separate but were merged a few years ago. But they still operate as separate entities. It’s all very confused. Relations between ONEE and sustainable energy agency Masen have recently become electric to say the least. The two public sector bodies are tearing strips off each other over the price for the transportation of electricity.

The ONEE, which is heavily in debt, wants to generate a profit from the national grid, which it runs. Masen, which operates the country's main solar power plants in Noor Ouarzazate and elsewhere, is naturally demanding a lower price for distribution of their power from ONEE. The cost of electricity transportation increases the selling price for its electricity, which is negotiated via power purchase agreements (PPA). Masen's kilowatt-hours are already more expensive than those of the big coal-fired power stations in Jorf Lasfar (operated by Taqa) and Safi (operated by Nareva, Engie and Mitsui).

The row has compounded the dispute over the transfer of wind farms and other wind projects from the ONEE to Masen. This operation, which was decided in 2016, has been brought to a standstill by the rivalry between the two operators. The balance of power is more favourable to Masen boss Mustapha Bakkoury, an eminent member of the Makhzen, whereas ONEE chairman Abderrahim Hafidi is short of connections. The question must be settled before the planned restructuring of the ONEE. Its future contract with the state could involve its transportation, production and distribution businesses being separated.

So what? The problem facing whoever signs the Tendrara GSA is that, according to the concession agreement, the moment the GSA is signed the operator of the TE5 gas field must commence development ‘without delay’ - i.e. advance to the execution phase of the project. Parsons probably knew that but never told shareholders while he stalled on the GSA signature since he could not commit the a development project.

Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas Company, is pleased to provide an update on its drilling plans for the Guercif Permits I, II, III and IV ("Guercif") onshore Morocco. Predator (75%) operates Guercif in joint venture with the Office National des Hydrocarbures et des Mines ("ONHYM") acting on behalf of the State (25%).

Rig Option Agreement executed

Predator Gas Ventures Ltd. ("PGVL"), a wholly owned subsidiary of the Company, has entered into a Rig Option Agreement (the "Option") with Star Valley Drilling Ltd. ("Star"), together the "Parties", a Canadian drilling company currently undertaking an extensive drilling programme for SDX Energy Plc in the Rharb Basin west of the Guercif using its Rig No. 101.

The Option is to 31 January 2020, unless otherwise mutually agreed by the Parties, to allow for negotiation and execution of a legally binding Rig Contract.

The Rig Option Agreement provides for a rig mobilisation date within a window commencing 15 March 2020 and ending 30 April 2020 unless otherwise agreed by mutual consent of the Parties.

The initial drilling programme shall comprise the drilling of the Moulouya-1 Prospect, subject to all regulatory consents and approvals, to a depth of 2,000 metres. The drilling rig mobilisation and drilling operations are expected to take up to 30 days.

Completion of the first well will release US$ 1 million of PGVL's US$ 1.5 million bank guarantee with ONHYM, subject to final delivery of all the data from the well to ONHYM.

At PGVL's sole option, and subject to ONHYM approval and all regulatory consents being received, PGVL shall have the option to extend the drilling programme by the drilling of either an appraisal well, if required, or a follow-up exploration well to a depth of 2,000 metres to capitalise on significantly reduced mobilisation and well services costs attributable to having an active rig available for immediate use.

A further update in 2020 will be given on the progress of the finalising of the commercial terms for the Rig Contract which will include PGVL's contribution to mobilisation and demobilisation costs.

Rig 101 is small than the old Saipem rig used by Sound. It has a single mast and needs only 14 loads to move it.

https://starvalleydrilling.ca/wp-content/uploads/2019/01/Rig-Specifications-101.pdf

Gregory1yz

Shell/Repsol has an 8-year Exploration Agreement. This is split into three period lasting 3 years, 3 years and 2 years, each with its own work programme.

The first period involves work to define a drilling location using seismic etc. The second period requires a well. Shell/Repsol can back out at the end of the first period with no penalty if they decide not to drill.

Based on the above drilling is unlikely before 2021 earliest.