Member Info for Exploration

It’s pretty basic, A1m1

If CNRL trades 15% of its interest in 2252 in return for a free carry on a well, then it costs us nothing but we get 15% of a discovery. This is the strategy - never use shareholders cash on exploration drilling. No ‘spin’ involved - it’s how successful companies cope with the risks involved.

Of course if the drilling risk is very low a company may elect to participate.

If more money is needed, then it’s up to shareholders to decide what to do. Investing in oil/gas does not follow simple business logic - there is a powerful technical influence based on petroleum geology which is why companies select the acreage they do.

Wrong again on all counts.

We’re investing on basis that one or more wells is a discovery. That’s the whole point.

Largely irrelevant A1m1

Of course CNRL has to raise money, but in small increments to enable investors to stay in the game with minimal dilution. What’s wrong with that?

The next ‘raise’ could be more, probably to participate in drilling the Selene Prospect to be drilled by Shell. This is ‘drill ready’ with PSDM 3D seismic. The 25 million dollar cost cap implies CNRL would need 6.25 million up to the cap and then 50/50 thereafter. Although not announced a 25 million dollar well on Selene suggests a horizontal well followed by fracking of Leman Sandstone reservoir. CNRL can afford to trade down from 50% in return for Shell picking up a share.

Anyway, we’ll find out soon whether Shell elects to take up their option.

Ddboy

In a word - yes, higher pressure in the reservoir means more gas at surface.

In calculating reserves the gas volume at reservoir conditions divided by gas volume at standard surface temperature and pressure conditions. This ‘formation volume factor’ is used to convert surface measured volumes to reservoir conditions.

It’s just Boyle's law which states that the pressure and volume of a gas have an inverse relationship, when temperature is held constant. If volume increases, then pressure decreases and vice versa, when temperature is held constant.

It follows that if the pressure and temperature decrease, as they do with gas production, the volume increases.

But Boyle’s law works for an ‘ideal gas’, but not our gas which is a cocktail of carbon dioxide, methane and other gaseous petroleum. BHFP must be carefully managed to avoid bottom hole pressure declining to the dew point of condensates. If condensation occurs in the reservoir the condensation near the well-bore will clog the pore spaces and restrict gas production. Ideally, the condensate should form at the surface and stored in tanks for shipment to the refinery.

Maldini1

Most of the Tagi petroleum system in Tendrara is ‘over-pressured’ meaning that the fluid pressure in the reservoir exceeds hydrostatic pressure. Hydrostatic pressure increases at 0.44 psi per foot - it’s just the weight of a water column.

Over pressures occur when burial of rock and fluids happens quickly and Fluids cannot escape to the surface. In Tendrara the low permeability tends to confine the gas in the subsurface.

Extreme over pressures sometimes exceed the fracture pressure of the rock and vertical, open fractures develop which enhance reservoir performance. That could be happening in the thin beds in TE-10. Tendrara was much more deeply buried than today when the gas was generated, and that’s when the fractures developed. As in similar naturally fractured reservoirs in the NW Europe gas basin, hydraulic stimulation provides a ‘nudge’ to increase and connect the fractures. The ramifications of a successful stimulation at TE-10 are far reaching.

See Schlumberger link below.

https://www.glossary.oilfield.slb.com/en/Terms/o/overpressure.aspx

When a basin develops the gas and oil sometimes erupt at the surface driven by over pressure at depth. This happens in Trinidad, Indonesian, the Caspian area and many other places.

https://www.google.com/url?sa=t&source=web&cd=10&ved=2ahUKEwjFzpfr_ZLhAhXYWhUIHSNKBOkQtwIwCXoECAEQAQ&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DFjzYUdlSs5w%26autoplay%3D1&usg=AOvVaw1604HLf2AW-Z7NYjFgntr5

Ducati

Good spot. The award was made last November - so only 4 months for ministers approval!

Predator had to borrow to pay some of the bank guarantee.

Here is the 2012 cpr

http://www.fastnetoilandgas.com/~/media/Files/F/Fastnet-Oil-and-Gas/financial-and-other-reports/cpr-report-pathfinder.pdf

http://www.fastnetoilandgas.com/~/media/Files/F/Fastnet-Oil-and-Gas/financial-and-other-reports/cpr-report-pathfinder.pdf

That’s true polar bear,

I sense PIs in aim companies invest with a ~5 year strategic time span. It follows that an exit strategy by a company needs to be aligned. Otherwise, investors are trapped in a ‘lobster stock’ - easy to get into but hard to get out.

All I’m saying is that the business environment dictates when to exit, but spotting the signs it is happening are hard to recognise. UKs gas business is huge and CNRL is a small component. Turnover of UK’s gas supply industry annually is over £300 billion. Compare this with NHS; £110 billion, £40 billion for defense or 460 billion for automotive industry.

Furthermore, UK’s gas consumption is declining year on year, not because of shortages but rather global warming and the arrival of price competitive renewables.

This is not to say small cap aim companies are a bad investment, but those which accumulate a competitive portfolio will be a great demand.

Did Algy Cluff carry on exploring after developing the Buchan Field in 1977? Of course not - he sold it for a tidy sum to BP when prices surged after the Iranian Revolution, and explored for gold in Africa and found a big deposit which he promptly sold when gold prices were high.

To put it another way, there’s more to this oil and gas lark than you think!

Wrong again a1m1 - you must try harder.

It’s all part of the oil and gas business cycle which happens when the commercial environment triggers these events.

This time it’s genuine improved efficiency and conservation in energy markets.

Joe reed

TE-1, TE-2, TE-3, TE-4, TE-5 and SBK-1 all penetrated Paleozoic (Carboniferous)

TE-1 penetrated 25m, TE-2 136m and TE-3 a whopping 1400m.

In practical terms the base of the TAGI defines the Hercynian Unconformity, but what lies beneath is largely unknown and un-mappable However, the subcrop under the uncornformity is important because it defines the migration route of oil/gas into the TAGI.

You may have noticed that a couple of weeks ago, the Norwegian Sovereign Wealth Fund (worth >$1 trillion) publicized its previously announced call for a full divestment of the oil and gas sector.

Now it is approving the sale of smaller exploration companies while sparing the biggest producers. In the ‘for sale’ list are E&P companies that include mid-sized producers.The proposal would see the fund sell about $8 billion in stocks, over a wide range of market sizes.

The decision to retain the bigger, integrated, companies seems to be based on their having declared energy transition strategies and the scale and operational skills to implement them.

This move might encourage more of the same from other influential investors and also have unintended consequences, for example stimulating another round of industry consolidation in UKCS and overcome fragmentation which arises from too many small companies chasing scarce money for smaller and smaller fields.

So why is the P2437 option so dismal, a1m1?

Who posted this 12 months ago?

“Always good when trolls appear, posting about selling up, placings etc, means interest is picking up and they trying to fool less experienced/secure investors into selling so they can pick up at a lower price. I imagine all the recent press coverage of how investment is set to grow massively in the north sea, exploration success and the CLNR tweeter feed suddenly coming online is getting them panicking that things are about to kick off here and they won't get in lower.

If a farm in is announced they will not get a look in at this price as it will be marked up on the open and there'll be a scramble to pick any up. So many investors waiting on the sidelines to pile in here that when it goes off, they'll be no holding it back.

Lets see what posts appear every time we have a blue day from now on :)”

Wrong again a1m1 - you just can’t get anything right.

Centrica upstream became Spirit Energy and has pulled out of exploration and is even letting its licences expire, on instructions from its major shareholder, Centrica.

Fellrunner

There’s a difference between a ‘sub-horizontal well’ which I mentionedand a ‘horizontal well’ which you mention.

Suggest you check your posts on Google before posting misleading information. Happy to help you with industry terminology.

Correction - should be 23.9 million dollars per bcf

Lelo-gas

Liked your post and got me thinking. In 2013 SLR’s CPR of Fastnet’s version of Tendrara calculated gross recoverable NPV of 23.9 dollars per bcf @ 8 dollars - so more of less the same. It’s in the old Edison note on Fastnet.

Coincidence? Not really, because the base case assessment is on John Tingas’s 12-well + CPF + export pipeline model with 10-year plateau of 60 mmscfd - same as the Onhym-sponsored model for Sound’s TE5 base case. This seems quite conservative because the producers are specified as high-angle wells with up to 6 staged fracs per well.

Regarding TE-10 let’s hope the hydraulic stimulation delivers as expected. But surely the next step is not to drill another risky exploration well, but rather drill a sub-horizontal well from the TE-10 location and complete it with a hydraulic stimulation job to demonstrate the Tagi can deliver from any ‘conventional’ TAgi prospect. TE10 is a pilot hole, from which a deviated well can kick off to a seismically defined BHL target.

That would de-risk the Tagi reservoir over a wide area and enhance the value of Sound’s holdings.

D0berman

Yes, some get paid. In years gone by ‘protest’ groups realized that direct action against energy companies (i.e. chaining themselves to railings out offices, stopping traffic to drilling sites and so on) hit the headlines but that was all.

Subsequently, and following the example of protesters against dams and hydroelectric projects, which was highly successful in cutting off funding by likes of the World Bank. The ‘World Commission on Dams’ effectively wrecked funding for hydro projects.

These same groups, using political leverage of World Bank shareholders (i.e contributing countries) managed to launch the Extractive Industries Review with the objective of cutting off finance to petroleum and mining ventures.

What we see is a mini, local version of the same thing using the internet. A concerted effort to spook investors in petroleum sector. In business, if you want to stop a project you can 1) cut off the money or 2) tie it up in so much red tape that it cannot move.

D0berman

We see a new breed of posters on this bulletin board.

It’s called ‘Shitposting’ and you can look it up on Wikipedia or even Bellingcat.

Shitposting is the act of posting huge amounts of content, most of it poorly informed, low-quality assertions, for the purpose of provoking an emotional reaction in less Internet-savvy readers.

The ultimate goal is to derail productive discussion and distract readers. It’s a free way to ‘protest’ without fear of the law involved in direct action which can land protesters in the clink with a criminal record.

The recommended response strategy is to disqualify the shitposter with well=informed feedback.

aim1 - no, wrong again.

Let’s be clear about the terminology

A ‘sunk cost’ you started to rave about is any past cost that has already been paid and cannot be recovered. But you seem to accept that deductible allowances can be recovered against corporation tax so they are not lost forever - so not ‘sunk costs’. I strongly recommend you brush up your knowledge on how to run a business and apply it to your posts.

For Shell, drilling a well costs them 81 cents for each dollar spent because corporation tax is 19%.

For CNRL, I agree its unlikely they will stick around for development and production - life is too short. So they might sell the company for cash - in which case their deductible allowances will reduce any capital gain. So, contrary to your original assertion ‘losses’ cannot be recovered.