RE: Potential value30 Jan 2022 08:58
Thanks for an excellent analysis Jasper on what the Cambay field cpuld be worth if all goes well. By " all goes well", I of course mean that the refrac of 77h produces the hoped for increase in production rates of 3 to 5 times. I think 5 times would actually give more yield than the figures you quote.
You touch on a really major issue at the enx of your post when you say
" Now these are crude numbers and don’t allow for 1. Further capital raising (more shares issued) 2. possible debt funding 3. Farm out of a % of the licence". Basically, where do Oilex get the money to fund a project which will cost many times the current value of the company? Of course that value should increase several fold if the refrac is successful. However the cost of each well will be around 5 to 10 million usd so we are talking big numbers here. Given what they have said about only one well this year and the second next year they may be thinking of a staged approach. The increase in company value after refrac would enable them to raise or farm out a % and give them enough to finance the next well(s). That in turn might give then enough to repeat the process and gradually increase the number of wells. It could however be a long drawn out process. Probably too long for someone for someone of my vintage. Lol.
In light of the above, my gut feeling is that once successful fracking is demonstrated we may see a big farm out with Oilex perhaps retaining only a nominal interest thus providing the cash to move into to CCS which seems to be Roland's vision if the way forward. They could perhaps reduce there interest in stages while the next couple of wells further demonstrate success.
Two things seem to me to add weight to the idea, that the above is what they are thinking. The first is how drawn out the program is. First new well in h2 this year, 2nd now pushed into next year. Maybe, they only expect a small involvement by then.
Thr second is that they are subbing out the work on the ground. Presumably this will help facilitate any transfer of interest smoothly.
Like you, I am only musing and may be wide of the mark. Ever since Roland came in, I have got the impression that, at this late stage in his career, CCS is what floats his boat.
If the above scenario does come about we should see a very good boost to the sp. Impossible to say what, but, as you say, interesting times ahead.
Atb. Gla.
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