Member Info for GKahn

HAMM: A DCF valuation of Heron is likely 35p plus. I think shareholders would gladly accept 20p given the current circumstances. That would leave the buyer with plenty of upside. The question is “what would be acceptable to Petrovis”,

“Nero fiddles while Rome burns”

A better scenario than Buck’s departure would be a takeover. The board should consider the interests of shareholders and put the company up for sale.

“The government will be into election mode late this year. Let’s say PM produce before year end. This will give the DP and others political ammo to use as Mongolian crude will be going over the border, when the country is shipping nearly all of its fuel from Russia. A huge political own goal. “

If as and when Heron is producing oil the Mongolian Government will be entitled to 5% royalty oil and an initial 40% production share, i.e. 45%. While PM 55% would have to go via PetroChina to a refinery in NE China, for the next three years until the Mongolian refinery comes on-stream, it is very questionable whether it would be politically acceptable for the Government to export its oil. The alternative would be for MRPAM to enter into a storage arrangement with PetroChina.

On the other hand, If Heron production is stalled for an extended period, PM wouldn’t have the income and cash flow to pay for additional block XX exploration and development, unless the deal with DQE is extraordinary favourable. Further success in Block XX is key to domestic supply for the refinery. Otherwise, Mongolia might have to import Russian crude oil for the refinery to be operationally viable.

Many thanks Ojay

Yes: there are a few potential scenarios that could work out well for PM shareholders, including a possible takeover of PM, however unlikely that may seem at this point. PM is not in control of its destiny and the economics of export to China may not be attractive in the short term ; moreover, MG has a problem with its refinery scheduled to come on stream in about three years with insufficient domestic crude oil supply. This situation lends itself to an opportunistic takeover of PM.

There is another relevant factor which should be considered, namely MG’s 40% initial production share and 5% royalty, under the PSC terms. Given the political sensitivities would MG want to see its share of crude oil produced exported to a refinery in NW China for the next three years until its refinery comes onstream?

Absolutely Master and Rookie. The local authorities will be in no hurry to cooperate with the registration of the area and sign the required contracts for management of the special purpose land. While described by PM as follow-up formalities, this could drag on and on unfortunately.

WOS, that makes sense if the IOM discussions related to new block applications, thanks

Thank you Vikinglass, I must have missed this, can you let me know the date of the RNS

"PM have apparently signed and agreed revised PSC's with the MG in the IOM" Where did this come from? If the PSC was amended it would have been an annouunceable event by RNS

Nathan91 filtered

Hamm

To calculate the P&L impact of H1 production and export to a refinery in NW China, we need to know the price of Russian crude delivered to NW China with which h Heron crude will have to be competitive, then deduct the trucking cost and a facilitation fee to PetroChina, then the impact of the PSC terms, specifically the 5% royalty and the Governments initial 40% production share.

ART: PC's blocks have many producing wells

Hamm filtered

"Gkahn, get lost. The Idiot is you. You were the one crying like a baby and wanted to take legal action against MB. Surely Doc/BP are much better than you sneaky bassttd."

Incredible, I never suggested legal action against MB, provide evidence please

Badprophet, Hamm, and Doc83 stop acting like childish idiots

Very good points Thornogson. This raises a couple of important questions: Firstly, what are the economics of trucking crude oil to a refinery in China until such time as the Mongolian re=finery comes onstream; and secondly a related point, applying cash from the early Heron wells, how many wells can be drilled and producing ahead of refinery completion?

Horsers: a question for you. If V1 & V2 are successful and the land-use licence for block XX gets issued in the near future, how much crude oil production do you think can be brought onstream from blocks XX and V in time for the planned refinery start -up?

Absolutely badprophet, It is almost inconceivable now that Mongolia’s domestic oil production will be sufficient for the viability of the refinery when it comes on stream. IMO, the MG may have to defer refinery start-up or else import cheap Russian crude.

Hamm

What certificate and what relevance?