Re: 26.4p29 Oct 2019 15:23
Too many people wasting far too much time arguing the toss with those with an opposing view, concentrate on the facts.
Fact one - Company value
Back in January when oil prices were much the same as they are today Mike Buck stated that a 15 million barrel strike would raise the market cap to £72m. That sets a share price of around 11p. On that basis, a 25 million barrel strike has a market cap of £125m, raising the share price to 18p. Now as we are going purely on basic facts we cannot assume that any of these figures are conservative, however, we can know for sure that we have as yet a tested and proven oil baring zone of 12 metres (DST2) and an untested oil baring zone of 70 metres (DST1), the latter of which could be artificially pumped to produce a commercial success. These zones are presently being analysed and results could be with us very soon.
Fact two - Placing
A Placing may be the simplest form of borrowing but the sacrifice of share value is sometimes too great, especially to a company in this position. Now, having reached commercial success with a successful strike in hand they are likely to be seen as a lesser risk by banks and financial institutions. As such, a draw down facility would be imv be a preferred option. That way the company is only devalued when the draw down is used. There intention would be to place six wells within 50 to 100 metres around Heron-1 in order to create the potential to produce 4,900 bpd. They can then run at that rate or choke back to 1,200 bpd to increase the total resource recovery, which in turn would lengthen the lifespan of the well and increase the total overall recoverable resource from 25mb (15%) to 41.25mb (25%), this in turn again increases the share price to 26.4p. Choking back increase the market capitalisation, not as otherwise stated. At £2m per well (Mike Bucks re-conning) they would need £12m to manifest the full recoverable value of six wells. A draw down is usually charged at around 7/9% interest and easily paid back within the first six months. If the wells are artificially pumped, these figures could be significantly enhanced.
Fact three - commercial sell-ability
Petrovis is by far the largest petro-chemical transporter and supplier in Mongolia and the CEO of Petrovis is Enkhmaa Davaanyam who is also Chairman of MATD and incidentally head of operations in Mongolia for Macquarie Capital financial advisers (very useful for a Draw Down). So we not only have direct and first hand communication with Mongolias largest transportation infrastructure, we also have first hand inroads to financial solutions. In terms of leverage, this must to some degree give Mike Buck an extreme negotiating advantage and to that extent successful negotiations with Petro China are merely a formality imv with a very nice surprise in the coming months.
I know I'm gonna get verbally killed for saying this but I've read somewhere Davaanyam is or was also connected to Petro China but can't find the link
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