Member Info for GreyPanther

HI BH. There's no doubt that there's considerable upside here, and I don't mean just from the WN C and D sites. The Spring Hill and Ellerby prospects each has the potential to be similar in size to WN. Unfortunately, I don't think a well on either of these prospects has been suggested by Rathlin to the Council's planning department yet, but I'd certainly like to see one of them drilled before the whole licence is sold.

It's good to see both UJO and Reabold finally saying the same thing about the Cadeby otential:
"These volumes do not include prospective resources in the Cadeby formation, from which the West Newton A-1 well recovered oil saturated core and the WNA-2 well encountered oil shows. The Cadeby is expected to have better reservoir development at the WNB-1 location"

HI there Rubey. Thank you, and well spotted. GP

HI there Rubey. Thank you, and well spotted. GP

Taken from Rathlin's website today:
"Rigging up and commissioning of the English owned and operated Drillmec HH 220 drilling rig is complete. On Sunday 4 October 2020, drilling of the main borehole commenced"

BlackHopper. I wasn't invested in RBD for the WNA-2 well, but I think the shares only really motored towards total depth and for the well results. I was in UJO, though, and their shares performed well throughout the drilling (from late April until mid June '19) and afterwards, as far as I can remember. I recall thinking at the time that UJO had performed better, and was much more volatile than RBD. Still, one hopes the fundamentals will tell this time.

Hi BlackHopper. It will be certainly be interesting to see what our SP does when the B-1 well spud is announced, presumably first thing on Monday morning. What I still can't get my head around is our SP performance relative to UJO's, particularly in the light of our much greater exposure to WN. Do you think it has anything to do with our being an OEIC, rather than a listed oil co? In theory, our SP ought only to change only when the underlying asset value changes but I assume the pressure of new investors getting in - I hope - will far outweigh considerations like that.

I'm sure David Bramhill was telling the truth when he said, and I think it was well before the recent placing, that we were fully funded for the 2020 programme . What we don't yet know is the extent of the 2021 programme. I suspect UJO themselves don't yet know all the details of next year's work programmes and budgets for each of their licences. This is because many licence operators will be submitting the 2021 budget proposals round about now. They will probably have advised their partners what to expect, but not all the cost implications. As for drilling one of the WN C or D site wells next year, I'm not so sure. We don't yet have planning consent for a well on either site, so I think they could be later than 2021. However, I wouldn't be surprised to see a sidetrack at Biscathorpe, and I'm hoping for some significant activity on other Egdon operated licences.

Thanks JD, I can't really argue with that. I suppose RBD's Deltic approach, if it had been successful (and I'm rather glad it wasn't, if I'm honest) would have been allowed under the formal OEIC rules, in that RBD would have acquired a controlling interest in Deltic via their shares, and would not have held the licences directly. It will be interesting to see what RBD and / or Rathlin do next on the corporate front. This should give us a few clues about their longer term aspirations.

Hi Rubey, JackDiamonds. Thanks for your thoughts; it’s all very interesting at the moment. Considering RBD’s 59.5% shareholding in Rathlin, I sincerely hope that Rathlin will be encouraged to acquire further UK projects, and not just limit themselves to WN. In my view no sensible oil company would want to be entirely dependent on one project, no matter how good it might turn out to be. Rathlin certainly seems to have the staff and the know-how to make further successful acquisitions. However, my concern is RBD itself. On Companies House website the business is described as “Activities of open-ended investment companies”. I may be a bit out of date, but I didn’t think that OEICs were allowed to hold non-share assets for themselves and I assumed this was why they originally invested in their UK projects via Rathlin and Corallian, and via other companies in Romania and the USA. So I looked up the definition of an OEIC and found that it’s “a type of investment fund domiciled in the United Kingdom that is structured to invest in stocks and other securities. The company's shares list on the London Stock Excchange and the price of the shares is based largely on the underlying assets of the fund. These funds can mix different types of investment strategies such as income and growth, and can constantly adjust their investment criteria and fund size”.
I had assumed this was still the case but was proved wrong when they were given permission by the OGA to acquire Humber’s 16.665% WN interest for themselves. So, perhaps Humber's WN interest mightn’t be their last UK acquisition.

Hi Jakemann. May I suggest you read some of the more recent RNSs ecause you seem to have the well numbering wrong. WN B-1 is about to spud. If it's successful they are expected to test it first, before moving back to the WN A-2 well to conduct the EWT (extended well test) there. Good luck with your investment. GP

Rubey, I've been told that Rathlin considered an IPO in mid 2018, some time before RBD made their initial investment. I understand the broker they were talking to at the time put them off, or perhaps Rathlin got cold feet, because their only asset then was a 100% interest in the WN licence. Things might be different now, following the success at WN A-2, but they still have only the single asset. They could, I suppose, still be acquired out right by RBD if the remaining Rathlin shareholders could be persuaded to take RBD's cash or shares. However, I suspect they won't be able to do it easily, as a later RBD cash deal for more of Connaught's Rathln shares seems to have fallen through some time ago. Or at least it wasn't completed. Well, I think that's how it was.

Whoops! The bulk (66.67% )of any cash from a WN sale would go to Rathlin of course, with RBD and UJO only getting the value of their 16.665% direct holdings. Would the market really value RBD's indirect Rathlin holding in the same way as its direct WN holding? I'm not so sure.

Hi Rubey. That would be nice. Of course, it assumes that RBD and UJO will do something sensible with anycash they get from a WN sale ….. like giving it to us, rather than frittering it away on indifferent projects like Corallian, Parta and California

Hi JackDiamonds. That's a very interesting way to look at it. I use another comparative: the market cap of RBD & UJO divided by their WN equity, even though this ignores all their other assets.
For RBD it's about £43 million / 56.325% = £0.76 million per 1% of WN, and
for UJO it's about £33 million / 16.665% = £1.98 million per 1% of WN, or a factor of 2.6 x RBD.
This would be much more useful if WN was both companies' only asset. I've a feeling the relative valuations are saying either the market prefers UJO's other assets to ours, or perhaps their business model is preferred to RBD's, or their managements etc, etc. Mind you, the list of possible company differentials is probably endless.

Hi Bobee. It's good to know that some of Rathlin's staff are on the case locally. Did you learn anything else of interest about what they are hoping to find in the B-1 well?

Hi Rubey. Sorry for not being more explicit. I meant that there could still be significant oil in a well developed Cadeby formation in B-1. By that I don't mean just shows. However, my feeling is that if it had previously been really promising, wouldn't they have tried to test the Cadeby too?

I've finally tracked down the source of the diagram in RBD's latest presentation (the one dated February '20 that shows B-1 as a vertical well and B-2 as a horizontal well). It's almost identical to figure 6 on page 12 in the technical section of Deloitte's June 2017 CPR. It's now very out of date as it predates the drilling of the A-2 well, although they've added a horizontal B-2 well to spice things up a bit. At the time, I they may have thought the Cadeby was still the primary WN objective, as it was before A-1 was drilled, and that it might be a "pinnacle reef". These are often seen in the Devonian of Western Canada, which is where Connaught, Rathlin's original parent company, are based. The English Zechstein / Cadeby and Kirkham Abbey Formations aren't usually developed in that way. But we might still get a pleasant surprise, one hopes.

A PS for Rubey. Did you see that i the 22 Sept RNS it said: "The WNA-1 well recovered oil saturated core and the WNA-2 well encountered oil shows in the Cadeby formation, which is expected to have better reservoir development at the WNB-1 location”
Do you think that’s a slight change of tack regarding which well had a Cadeby core?
All the best. GP

Hi Rovers66. In RBD’s 22 Sept RNS it said “drill the main borehole to a depth of approximately 2,000 metres. Completion is expected to take six to ten weeks” and I wondered why it would take so long. Perhaps a four week contingency has been included for unexpected results, I thought, or maybe for a well test. So I had another look at the latest presentation on the RBD website - which I think is dated February '20. It certainly shows B-1 as a vertical well, and B-2 as a horizontal well restricted to the Kirkham Abbey Formation. Speaking as a former geologist, I have to say that B-2 looks a bit odd for what was meant to be a further appraisal well (if drilled,and it looks more like a development well path to me. So I think this may be an old, somewhat schematic slide from Rathlin. For example, look at how the Cadeby Formation is shown; it certainly isn't drawn very accurately, well not geologically speaking. I also note that UJO no longer includes this slide in their own presentations. So, unless there is a more recent RBD presentation which shows B-2 as a vertical well, I'm inclined to take both the B-1 and B-2 well paths with a pinch of salt. Maybe I’ve got this wrong, so could someone please point me to an RNS where it says that B-1 will be drilled (more or less) vertically? Maybe it’s in a later presentation, but it still doesn't seem to be very clear from recent RNSs.