RE: SP ...13 Aug 2018 17:31
Hi boyzee,
Thanks for that. Here's en extract of dspp's thoughts re a possible script (his 104523 of 16th Dec 2017), which seeks a way through to optimising the monetisation of HUR's resource :
"...To reduce the other risks they need to as soon as reasonably possible re-enter Halifax well; drill a Warwick well; and test both of these plus Lincoln, i.e. three well tests in all. That will mean that all the data sets can be properly valued for FFD and farm-out purposes. For Whirlwind the aim should be to drill & test it, but likely as late as reasonably possible.
If things go as are hoped then they will find that the four fields are better considered as two pairs: LancHal + LinWar, and should be developed as a quad. The Whirlwind development is probably dependent on those but would be devalued if sold separately later so it would be better (from HUR's perspective) if it were offloaded at the same time.
The earlier HUR exit the greater the level of uncertainty will be and the lower the price. The later they exit the lower the uncertainty and the higher the price ought to be. In between money is spent to reduce risk, HUR's money. There is a tradespace between these, and a common way to manage that is with multiround buy-outs which a first round and an option for a subsequent second round. The other thing that can be done is a 'carry' of the explorer (HUR)'s share of development costs that can be negotiated as part of the valuation package. It will really depend on the risk appetite of the buying consortium, and of HUR's ability to value what could be very differently structured proposals.
My best guess is that a consortium of 3-4 majors would probably buy the quad for 4 x 20% with 20% left in HUR, with a carry of HUR through the initial phase of FFD. The farm-in would be done with a mix of shares & cash. That would leave HUR to return the bulk of cash to shareholders and work up Whirlwind (plus other exploration opportunities) with the balance.
Re Strathmore it looks to me as if that is best hung on to until it can be definitively ruled out from a FFD perspective. There are pathways to FFD where a short pipeline from LinWar over to Solan with the use of Solan as a storage and offtake point might be atractive. So one would tend to swap Strathmore for that export option if one ended up in a DIY-FFD of a low case. Until that can be ruled out there is no need to surrender it early. The other thought I have is that there may be opportunities to use Rona Ridge fluids to get a better sweep of the Strathmore reservoir (and for that matter, perhaps the Typhoon prospect one day). But those are less likely development pathways...."
Makes sense to me, for what litlle that's worth.
More importantly, I don't think I've seen much in the way of counter-argument to-date from our more informed posters, here, there (Lemonfool) or elsewhere...
ATB
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