Member Info for Helpful

They look like a proper team now instead of standing around looking each other and asking what should they do next. Fingers crossed.

Ezhik, Ageos not drilling in that video but going back down to depth to drill. Looks to me like they have been busy: the overalls are not so clean now.

https://twitter.com/zenithenergyltd/status/1166730597471010817?s=19

That is for an operatorship: we are not the operator on the new wells.

I have said the same to them.

If nothing else, TB should do a podcast about who he is, his background, why he set up Attis, why he did the deal with Mayan, what is their USP on the reporting and compliance contracts, how far does he see it going and so on. TB is an unknown quantity to the market and that should be addressed. It needs to be clear that this is a team effort and that the team runs the business so that when the trolls start about how much they hate CW it reduces the effect on the company.

From the Attis acquisition announcement in April

· Acquisition to transform combined group's revenue / cash flow profile and provides Mayan with an in-house, experienced, operating team
· Attis has a 50% interest in 98 wells across 5,100 acres in the Fort Worth Field, Texas which currently produces 41 boepd net to Attis
· As operator of the Fort Worth Field asset, Attis generates approximately US$34,000 per calendar month in additional operating revenue
· Attis' oilfield services division, which also provides third parties with oilfield services, opens up an additional business line with growth potential
· Acquisition increases Mayan's acreage and net production to 8,841 acres and 98 boepd respectively, based on Mayan current net production of 57 boepd and transforms Mayan into a cash flow positive operator:
o Pro forma group turnover of approximately US$190,000 per month (based on current combined production and Attis operator revenues)
o Economies of scale savings generated across the new entities with initial combined company cost savings of c. US$20,000 per month due to elimination of third party operator charges for Mayan's Zink Ranch and Austin fields

So Attis generates about $34k pm from the FW field as the operator. We now do the reporting on another 1,812 wells. So if the revenue is the same per well we get 1,812 x $340 = $616,080 pm. Lets be conservative and say that it is half that figure, we are about $313k pm with more contracts to follow. 20% margin gives us profits of about $62k pm.

From the April announcement... Paolo Amoruso, Chairman of Mayan, said, "The rationale for this merger is one of operational efficiency, economies of scale, increased acreage and production, exposure to a service provider and the creation of a cash flow positive platform from which to grow the enlarged group further.

I suspect that we are now seriously cash flow positive once the revenue from these contracts kick in.

A nice little mini update mid September with the reserves report to follow end of September along with the forward plan and we should look pretty good here.

DYOR

https://twitter.com/zenithenergyltd/status/1166625057168396288?s=19

Looks like some drilling waste in the pit.

The Company forecasts that the Contracts will generate positive cashflow from September 2019 and represent the first step in building out a robust oilfield service offering across the region. The US management team continues to develop the service division and further contracts are anticipated to be agreed, providing a stable revenue base. The service division revenues complement the Company's established strategy to insulate production revenue pressure brought about by the volatility in commodity prices.

So plural, further contracts: so they are already in negotiations for more deals

DYOR

Paolo wants this to be a proper business. The services revenues de-risks the oil & gas side.

Excellent! I wonder how far they can push this? 5,000 wells? 10,000 wells? It would be good to get to a position where the company's overhead is covered by services revenue. I wonder if they have more in the pipeline?

https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/scalping_report/2019/08/27/Gold-Price-Targets-XAU-USD-Breakout-Losing-Steam-GLD-Technical-Trade-Outlook-MBCS8.html

It is down to what they decide to do next and how the market responds. They can increase the income on the existing assets but not by much unless they commit to doing something fairly aggressive. Read the Moyes report on the Mathis asset: that says there is at least two new drill targets with total 400k EUR. With modern technology compared to 2014, I would expect that EUR figure to be greater if the report is undated.

Separately, them picking up contracts as operator or reporting agent makes a difference. I expect they will pick up more but they have a fairly long lead time.
DYOR

https://twitter.com/kirillklip/status/1165231704681918465?s=19

Shouldn't you be over on RGM crying about how everything is against you?

Gold $1,526

https://goldprice.org/

Mesquite vs Mathis

I can't help myself. I just had a relook at Mesquite. So what NTOG is looking to do is drill a 5,000 ft lateral that will give an EUR of 300,000 barrels and a PV10 of $3.3mil. I can't see the cost per well but lets say $2mil. From 2014 AOGL has a Moyes report that identified two new drill locations at Mathis with an EUR of 200k each, 500 ft lateral and a cost of $500k per well. It looks to me that the Mathis asset has better economics than the Mesquite asset.

DYOR

I have both. I have compared them in the past. I think NTOG is a good comparator for AOGL.
In my view what NTOG was trying to do at Pine Mills and the PUD assets it has is very similar to what AOGL is doing and has been attempting to do for some time.
Take some old assets, work them over, minimise the cost and maximise the revenue. In my view NTOG has done a decent job at Pine Mills and AOGL has done a decent job on it assets. NTOG may have gone as far as it can on squeezing its old assets but AOGL is just getting started.

NTOG changed direction with the new drills it did in the Permian. In my view, they were a poor choice, the results weren't particularly great and they would have done better to pursue their existing model. An EUR of 35k, bopd of 50 and a NRI of 57% for a cost of circa $300k/$400k with no guarantee of success (as we have seen) is not good value in my mind.

The new play in the Mesquite might be quite interesting and I bought back in 3 weeks ago.

The issue both companies have is that working over old wells is messy, fiddley, irritating work. Companies want shiny new wells that can be put online at 50bopd and no hassle for a few years (in theory). AOGL are now at the stage NTOG were a while back: do we keep fiddling around or do we take some bold steps? My view is that AOGL should continue to maximise its workover and BHP potential whilst identifying new drill opportunities and funding them via the US Private Investor market. I would have preferred that NTOG got it net production to circa 200 bopd before doing exciting stuff.

I could go on but you can do your own analysis.

DYOR

https://www.rrc.state.tx.us/oil-gas/major-oil-and-gas-formations/eagle-ford-shale-information/

https://geology.com/county-map/texas.shtml

1,187 ozs to July. The rate of production is increasing so let's say 2,500 Oz for the current year.
2,500 x $1,450 = $3,625,000
3% of $3,625,000 is $108,750
$3,000,000/$108,750 is 27 years.
IMHO the royalty for the current year will be closer to $200,000 and probably double for next year.

See how the maths thing works Tragic?

https://twitter.com/zenithenergyltd/status/1164789103365197824?s=19

https://www.lse.co.uk/rns/POW/power-metal-katoro-gold-update--3mes12lwcg1w8vg.html