Member Info for InJamesweTrust

Noix
One interview is before the Tullow update and the next is after. Circumstances change and as Keynes isnpurported to have said, "When the facts change, I change my mind - what do you do Sir?"
Essentially, the operator can change their mind at any point. Depending on Carapa outcome, I'd suggest Total will be keen to accelerate things. I should think Tullow will be keen to do this also and explore how to demonstrate sizeable finds in key areas of the field.
Can see Jethro and its channel as the first drill followed by one or two of the 600m barrel plus cretaceous prospects. If these have similarly impressive porosity and pay zones as Jethro and Joe with lighter oil and Jethro oil is commercial then that is a 3 FPSO field that can do 600k bopd plus in 3yrs with the right investment.
For Eco share that is $1bn plus a year and only half the field size if that.

There was probably the likelihood of a 3td well by backup in the Tertiary but that may be less so for now. Other 2 probably being by rug/drillship.

Karoon offshore have negotiated to take the stena Forth for a drill in early Q1, the ship being assigned to Karoon by Tullow. So if they have it under contract why not use it
The assignment is for one drill so she should be available late April/early May....

I wonder if Azvalor is the start of institutions coming in to push for change of management. McDade has looked/sounded like a rabbit in the headlights for a little while now and seems in thrall to City view on debt instead of pushing exploration harder.

Phoebus
I think he is naturally optimistic but equally has an idea when things can be done which may sometimes have spanner thrown in the works by say Tullow.
Carapa has been delayed starting, originally due in early sept so the results of that are needed for the CPR thus delaying it.
I talked to him on Tuesday and he said that plugging in drilling results is simpler than analysing the seismic results. The seismic is already interpreted to a range of variables so it is about adjusting the ranges based on drilling experience.

Hi Extrader,

Interesting to note.
Hence why I think the selling is somewhat overdone.
However, the market is the market!

Mentioned twice yesterday, the fields should be big enough to be commercial due to economies of scale.

With that in mind and more to drill for the heavy oil news is really only worth a 30% or so hit to the investment case. There is every chance Orinduik can be a major production hub producing light and sweet crude and a likelihood of there being refining/cracker capacity locally soon (although GoM is not far) which resolves many of the concerns.

Will
Think Exxon/Hess were educated all along about what lay in store in the Tertiary but Tullow in their wisdom wanted 2 slam dunks to kick off their campaign - strategy wise one would really need to ask questions of them.
John Hess' comments are kinda bull**** too - their closest to the shore is Hammerhead which is heavier and in the tertiary not sure they have drilled Cretaceous much closer in but why not sink the knife anyway.
Agree we have 2 drills and frkm those potentially 2 areas where there is 600m barrels and 750m barrels of oil. That is economy of scale for a major Capex budget and all sorts of bells and whistles.
The selling seems heavily overdone but that appears to be the way of the world until a big order lands.

The reaction is brutal.
Drilling Jethro and its channel will cost Tullow c.$18m, proving the flow works and volume of oil is 500m barrels plus will be worth significantly more.
Joe and Jimmy are right above Rappu in the Cretaceous so an accumulation of c.750m barrels, that also can be made commercial I'd imagine.
There are at least 3 other 'clusters' on the licence on top of above that could if oil bearing provide significant economies of scale for production regardless of slightly higher CapEx and Opex and slightly lower price per barrel.
How much will it cost to find oil of any sort elsewhere for majors? $8/10/12 a barrel.
Eco has 70m barrels plus another 650m to play for

2 drills to be announced in January at least 1 Cretaceous. CpR in 3 or 4 weeks with upside on CoS and new prospects
3bn of Cretaceous with lighter oil in prospect
Oil flowed to surface and indicates it can be produced.
The heavy oil itself is not a problem it is flown and temperature and porosity are positive aspects of this.

Hi Cebo
HuR were aggressive in their downtime assumptions and hence using higher downtime (20% than HUR) dont see it as a negative they are doing well and over delivering on the EPS. Merely mention to say where figures are derived from so as not to be pie in the sky.

Hi all,

Using a figure of £2.5bn for set up of an FPSO solution, $55 a barrel if oil (escalating at 0.5%) and $25 OpEx (20% higher than Huuricane energy in harsh weather with pigging and other downtime concerna) and 80% upside on a 150k bopd production and a 6% debt interest rate returns gross cashflow of £1.4bn and net £434m. There is capacity for 4 to 5 of these on the licence....andndiscount factor for majors is lower.
Flexing to 90% availability and $62 oil makes £980m NPV cash for Ecos share with potential for 5x these on licence.

Noix
I dont think they have sat in it for 3 months. My action would be towards Tullow who with poor choice of words have inflamed what is a setback but not a hammer blow as has been priced in.

Spike
You're missing the point, Tullow arent intending to produce but post analysis need to demonstrate the Tertiary commerciality and flow as well as Cretaceous . Post the next drills 2x Cretaceous and 1x Tertiary I think they will look to farm down by Q3 end next year.

Spike
Tullow need to accelerate drilling and are likely even more keen to also appraise Jethro which is a large accumulation has every potential to be commercial for the right operator. They are clear they need to farm down so now need to prove up quickly to achieve fair value.
Exxon and Total can easily process this oil and upgrade as necessary and know the licence and as they say surrounding real estate.

Proselenses
You move to another tack to undermine the share but there is weakness to your argument here too. Tullow is less able to fund development than Eco given their cash constraint and debt management strategy.
The initial cash call relates to long lead items and sub sea work would not commence immediately and there would be an FPSO charter not purchase. Hence, upfront costs would be manageable. Big boys may want to crush but enough PE players are interested in oil plays for the IRR and have cash.
Ultimately, yesterday's news has an impact on field value but we have
JETHRO AND JETHRO CHANNEL - jointly an accumulation of c.5-600m barrels where extra CapEx (which reports show will be minimal) can be spread across alot of barrels. Minimising the per barrel impact.
Joe and Jimmy - likely a 200m barrel plus accumulation with Rappu (535m barrels beneath in the Cretaceous) again all close enough to have well pads linked to a single vessel and lots of barrels to spread CapEx over.
The BoD indicate the oil is in porous sand with over pressure and high reservoir temperature making it highly mobile.
There are plentiful cracker facilities and the ability to upgrade the oil to sell to market.
The viability remains, the commerciality has changed indeed in the NPV is lower but the Market Cap is £100m for a share of 700m barrels or 20c a barrel with potentially 900m barrels already discovered across Hammerhead, Jethro, Jethro channel, Joe and Jimmy.

Again, Carapa is feeder channel for Liza and not linked to what partners are drilling on Orinduik although dont doubt the market will make a linkage.
What John Hess is saying doesn't really tie with maps as Jethro looks inline with Hammerhead in the same age source rock.
Around Hammerhead are additional prospects Peregrin, Kumakka, Amaila, Aurituk and Iatuk across the Tertiary and Cretaceous borders.

Hi Jay
I'm not sure how much store I put in the hearsay of platts. However, time will tell and even with that news out there Canada closed reasonably all things considered that is!!
All the best.

JayKay
I think I know what you're alluding to, yes they will need to be clear. However, they are not the operator and as the operator says they are still appraising so I'm not sure it is in their gift.
I dont think the heavy oil is the end of the world but it has made the market a bit more concerned. I'm not sure Tullow word their releases brilliantly.

Extrader
Additionally, Carapa is not deemed to be linked to our prospects more to feed the Liza channel if I'm not mistaken.
This is now back to the price it was prior to the Jethro drill despite discovery of 350m barrels plus and likely further 400m barrels across Jethro channel, Jimmy and Hammerhead which essentially are very high CoS.
The porosity has been good and there are likely more than 2bn barrels of Cretaceous also to play for with a couple of very chunky prospects which would take us above 1.2bn barrels from only 2 drills or 2bn in 3 drills.
Ecos company presentation indicates 9.5bn barrels across Stabroek which is mainly medium light crude in the Cretaceous.