The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Correction.
I had then turned to the two owners in Starbroek and submitted the proposal to each of them for one borehole and, in the event of a commercial hit, another carried borehole.
Certainly there is a geopolitical interest for ECO to have Exxon or Chevron (the owners of Stabroek) as partners. What if another player bids 2 boreholes carried, all else being equal? I had then turned to two the owners in Starbroek and submitted the proposal for a borehole and, in the event of a commercial meeting, another carried borehole.
Partners matter.
For those who want to assess risk in the individual cases, see the changed approach to the border conflict with Venezuela in this link.
Worth noting is that before the US policy shift, Venezuela chose to have an aggressive attitude 2013 where they seized boats that shot seismic. After the shift, we know Stabroek's development.
"Then US President, Barack Obama had nominated Holloway in July, 2014 to be the next American Ambassador. Following his approval by the Senate in August, 2015 , he arrived in Guyana the following month. By May, 2015 US oil giant, ExxonMobil, announced a major oil find in the offshore Stabroek Block."
( "... Perry Holloway played a major role in changing the tone of the US’ position on the border controversy. “Previously, we had simply supported the timely resolution of the Venezuela-Guyana border controversy. In large measure because of Ambassador Holloway, the US government now calls on all parties to respect the 1899 arbitration decision...")
https://demerarawaves.com/2018/11/16/united-states-shifts-position-on-guyana-venezuela-border-controversy/
Brazil, China, GB, France...maybe Venezuela have Putin , for what it is worth in this case.
Thank's, IJWT.
These are necessary prerequisites. Perhaps I related to other conditions, even Total has to, finally, complete these processes in its concessions. Cet par. :-)
My take is as good a guess as anyone else's, but a reflection may be
1. 3B/4B is "drill ready" when it comes to 3D and an interpretation of these results.
2. I don't know how developed Total Energy's block west of us is in that regard, but Gil mentioned earlier that they were planning to drill near the 3B/4B boundary. Perhaps the answer is partly in this statement, i.e. it is, perhaps, that Total sees its new concession as the starting point for exploration?
I have no additional knowledge that makes me find our CEO's 12-18 month proposal anything but reasonable. As a result, I have bought the stock and now have more than ever before. I believe in a slow rise from here with more impulsive developments when, in addition, we have another block or two to consider.
Each concession has its unique news flow until the drill is put in the ground. Now is accumulation time, next is chasing the price time. :-)
Https://worldoil.com/news/2024/3/6/totalenergies-qatarenergy-acquire-new-exploration-license-offshore-south-africa-near-successful-namibian-discoveries-in-orange-basin/
In a previous post, I wrote that we do not know how Total's management intends to prioritize drilling in its concessions. I may have to modify this after Gil's determined performance in the presentation. The reasons that can be adduced for an early entry into 3B/4B are
1. That Total Energy's investment has given 3B/4B a valuation of around 300 MUSD (using Gil's figures). It is money on the table that is a measure of their interest in the concession.
2. From a production perspective with infrastructure in mind, it is logical to start from the Venus find and systematically work south.
3. In addition, there is apparently a time aspect attached to the deal which means that Total Energy can receive a penalty payment if they do not drill within the stipulated time in the agreement.
You can see where Total Energy has its blocks in the link above.
There are several aspects to consider in this settlement.
One is that Total's willingness to quickly get to drilling depends on their relative share in the blocks in the area and the potential that Total's crew estimates exists in these respective blocks. A knowledge we do not have.
As previously noted, ECO has chosen to take cash compensation instead of being exposed with a higher share in the block. The reason for this could be risk spreading in general, or that ECO sees a quick settlement underway in Guyana.
ECO's business concept is not to produce, but to sell processed values in the ground. The company will receive bids even before an appraisal if the first drilling hits oil. Are we talking about 1 or 2 billion barrels, for ECO 60 or 120 million barrels in the ground?
We know from the Venus deal that the price to be carried through the entire production build-up - of the entire block in the future - is a further halved part. But which after 2-3 years of payback gives amounts of dollars at market price. - That is the option that ECO can sell. It's huge.
The money track ECO selected makes me think it is wrong to sell on the news. There will be more deals. And it is realistic to believe in a deterministic journey with a higher share price according to the model from previous outcomes until drilling starts.
Perhaps interesting to follow Sintana Energy's share price development from summer -22 to the start of drilling in November -23. Nothing is exactly the same, of course, but it gives an interesting angle. 200% after drillstart, slowly increasing to that date. Feel free to check news under that period of time.
You might say that a farmout in Guyana would make a difference. We will see.
Find it interesting that our CEO points out the Guyana farmout, specifically, as the next big news this year.
Milestones in the form of regulatory decisions will occur continuously during the year in 3B/4B, these are events that are now in Total's hands. For ECO, we can get the upside of this, but management may concentrate on other farmouts.
Anyone, What is the last official close date for the data room in the Guyana block? Biginning of April?
Correction:
Maximum transaction value is, including carry, of up to US$32.1m to Eco, which includes payments due to Eco from Africa Oil and Ricocure, not the 31 MUSD I wrote below.
Agreed, 6.25% in this huge block is also reflected the fact that ECO chose the money track; 31 million USD in stages.
The money trail strategy indicates that management sees a settlement in the Namibian blocks and or other strategic movement. ECO will now, once again, be an actor in the international arena for new projects.
ECO has, in practice, been a one-project company, another farmout lifts the company past its previous potential when it was, only - in practice, a company active in Guyana.
Also, now we benefit from Total bying into Tungsteen explorer.
AOI has its interests to protect. In the case of Eco Atlantic after a farmout in 3b /4B, the 20% that is the entry into the deal is no small part. It is important to note, regardless of how the deal is designed.
Aoi wants to clean up its portfolio before a larger merger with another company, this could mean buying all of Eco or selling its share in ECO to another independent or major. After a farmout, of course, our part of block 3B / 4B is of substantial value and therefore also interest.
How is news of a new major owner in ECO received? I think this situation is well prepared by the central parties involved. It is, after all, a central part of the business concept itself with the creation of our company.
The farming out of 3B / 4B in orange Basin is led by AOI. Judging by the comment from the CEO of AOI when extending the time in the data room through Q1 for new stakeholders, a settlement with Total was close, but the drilling start date unspecified. If I interpreted it correctly.
After the settlement between Aoi et al in the Venus concession, there is the same type of settlement as a possible outcome, carried up to production. In the Venus concession, this cost half of the holding plus historically sunk costs. Should ECO have such a construction with 10% left after the settlement, it stands out against what AOI and Sintana have in previous similar settlements until now.
The result of the settlement, the remaining share in block 3B/4B, will be an obvious purchase object in the market. Via Eco and / or as a separate deal where all or parts thereof are sold. Funded and ready.
Https://thebrief.com.na/2024/02/totalenergies-to-spend-n5-7bn-on-namibia-oil-exploration-in-2024/?fbclid=IwAR035h4-WXPST_K6RKys_UWbOwBaTwh0okhQw6cWATjeyn49tTZOP57p0ZQ
Total is steping up.
In the past history of ECO, Guyana has been the only card for a new drilling and multiple doubling of the share price. The other possibilities have been experienced as more peripheral.
After today's news, the focus is more on block 3B / 4B in the Orange basin. From AOI's perspective, the approval of the share in the block is a prerequisite for proceeding with the farmout process, for ECO it means the same, plus cash will be in the account.
If ECO gets new stakeholders into a farmout in Guyana, you have two active blocks at the same time, something we have not experienced so far.
So with a little more cash, we are now waiting for word from the out farming of 3B / 4B during Q1 -24.
Https://stockhouse.com/news/press-releases/2024/01/10/pel-83-exploration-campaign-update-mopane-1x-significant-light-oil-discovery
Also in Orange basin. :-)