Member Info for InJamesweTrust

Hi Extrader,

Tullow were aware of it and noted they could open a new line item for appraisal over exploration. However, how extensive the line item could be would remain constrained by their balance sheet capacity.
Reading the Tullow messages, alas I think we are looking at Q1 for another drill.
Given the potential sums involved Tullow are cheap as regards the value of their Guyana stake now (IMO) let alone the rest of their business.
Noix - thanks for your inputs earlier, as keen if anything seemingly erroneous is corrected to ensure the BB gives the best info to all.

Noix
Not a matter of racing ahead, just a matter of saying what I'd hope they will/should do in my opinion while caveating all noises emanating from business say they won't.

If this is the case, I'd be keen to see them contract another vessel/rig in short course to get work started and would be disappointed if no more drilling until Q2. This may be where Total will be frustrated by the Tullow P&L. Not withstanding the benefit of reprocessing seismic, the existing data has been in their hands for more than a year so I dare say further prospects are reasonably well understood.
Tullow seem very conservative but have been extremely harshly judged on debt historically which seems to inhibit their 'risk' appetite.

Noix
I was careful to say, I dont think the price of the Anadarko is anything like what we will see overall. However, it serves to indicate the appetite for reserves where production is either active or can be quickly moved to production.
Reduces the risk of orphaned capital over a major fixed platform install significantly when you can sanction a 3yr FPSO solution.
We are very early stage and I would like to see ECO and partners get the opportunity to drill 2 or 3 more wells at least after Joe and in success case I think we'd be in an interesting position.
I'd be very keen post Joe for Gil to give some indication on reiterating CPR, estimated volumes, change in risk across Tertiary zones etc and clear timeline for H1'20 activity.
For an end Sept result on Joe, another 50 day drill into a deeper zone takes the rig to end November and allows a quick start to 2020.programme instead of time wasted demon and remob- while.noises are firm it is jot on the cards I'd be astonished if it is an opportuntiy not grasped.
Relaxed here now as the 100m barrels quoted by Tullow is let's say a little conservative now, hence fair to say SP is.more than backed by Jethro results.
Jimo

Interesting at that level of production, Anadarko only has reserves to support 7 years production.
They run more than 4,000 wells across the 2 basins which will need to be drilled again.
The salient figure therefore is probably the value attributable to reserves which is around $10 a barrel.
That still equates to chunky numbers for ECO and Tullow as they prove up (hopefully) this field.

So Anadarko is 660k bold not 150k bopd.
As an NPV that is more complicated as theyll need to keep sinking CapEx to maintain production. So the CapEx probably is self eliminating except for advantage of area being more advanced infrastructure wise.
I'd say an NPV of 4yrs production at 660k bopd using $60 oil without CapEx is about $20bn. That makes an $18bn figure.
The higher reserves coming out of Guyana make a difference but are difficult to quantify

Noix
My understanding is the final price was $38bn having outbid Chevron at $36bn. Their producing assets were c.150k bopd and reserves of 1.5bn barrels.

As a corollary, Tullow produce c.100k bopd with all systems working although their b/e is higher than shale I'd imagine. Based on the potential of Guyana Tullow and Eco have potential reserves of 1.8bn from Orinduik.

I think the 1.8bn is conservative and the potential is for this to be much higher. By my reckoning take CapEx for production of $6bn away and an NPV for 4yrs at 150k bopd (time to get Guyana to this) will be another $6bn that leaves a price of $26bn.
Say there is a 70% uplift in reserves, that is still $10 a barrel and Guyana break even beats the Permian according to HESS.
I'm not for a minute saying Chevrom will pay anything like that but at the moment it would only cost them around $4bn.
By Easter drilling may have discovered around 1.5-2.0bn of the 4bn to play for.
So there is a reasonable comparable.

Qatar petroleum in on the P&D too and the Tullow board who successfully head a producing 9pk bopd company now innthe business of producing dodgy RNS'.

Have drawn parallels to the price paid for Anadarko as a producer. With Tullows production and their joint reserves with ECO in Guyana they are really not that different......
May look into Anadarko a bit more but Chevron cant have escaped noticing.

The size of the enormous blob South of Jethro which borders Kanukku- possibly Kumakka is enormous.
The potential is there to see and the fact this mapndoeant include all the leads and nor does the CPR I'd love to hear the actual updated expectations of the licence are.
The opportunity to get in and control this field is a massive one for majors.

Bright spot
The fly in the ointment of that statement is what happens to the value if Carapa confirms the existence of petroleum systems in the Cretaceous?
Gil has been clear in prior interviews the oil is on the slopes where they are.
Using the $8 a barrel oft quoted am not sure £4 covers Joe and Jethro let alone the rest that is to play for.
Gil must have been pretty hammer(head)ed last week to be passing on his sale wishes to the good folk of the Aces. I'm all for corporate transparency dont get me wrong but....

Wallact
What boggles my mind is then applying $8-12 for drilled. $6 for channel and $2-3 the rest plus $1.50 for the cretaceous. It gets a bit mad again and the market just hasn't clocked on to it yet it seems.
Needa more from Eco/Tullow to advise.
Timeline wise we have Joe end Sept, Carapa in Oct and Tullow results early Nov followed by CMD end Nov (if times similarly to last year).

Quite interesting to listen to Gil interview and consider Jethro is 20 square.km or more versus a P90 of 18 in the CPR.
So, taking the P50 area and reserve estimate and moving this to P90 and increasing the porosity brings out some pretty funny numbers. Gil stated they see over 2bn barrels in the Tertiary way more than the 770m I see in CPR.
However, do the above and his 2bn barrels of Tertiary doesn't seem quite so mad....

By all accounts Hammerhead is a monster- looking the blobs, while depths of the various areas arent clear I'd estimate 10-15% of this is on our block. Think most here expect Hammerhead to be 1bn plus barrels.

Jethro is looking like 350m plus based on some of the calls presented around recovery factor. The channel looks a slightly bigger size wise but little info on depth and Joe has the potential to surprise on upside as it seems CPR may have pitched conservatively.

Taken in the round this looks like there is a billion barrels significantly derisked on Orinduik and at least one more drill to come to confirm this.

I think if Joe exceeds expectations we are sitting in a billion barrels between Jethro, Jethro channel and Joe.
That is 150m barrels net to ECO.
That is alot more than $500m and I think should be clear by the time of Tullow CMD.

Maverick
There isnt a dilemma so far as I can see.
Appraise Jethro, drill Joe then drill 2 Cretaceous. That should find (if successful) oil in fields equivalent to 1.0 - 1.5bn barrels and prove the oil has migrated across various areas in the licence.
At this point Tullow can complete discussion but frankly I'd be surprised if they are not.opening a data room now or soon to share the info needed by majors to assess the prospectiviry of the field for themselves.
I've not doubt they've been invited to discuss selling a stake before.
It is not in their interests for QP/Total to have a closed run at it, they want a competitive bidding scene to maximise return.
This plays into the hands of ECO as a sell down from Tullow and sale of Guyana by Eco can give a major access to one of the hottest licences (potential wise) in years for a very reasonable upfront dollar per prospective/contingent barrel cost.
Mentioned below the figures put together for Faroe.petroleum plc by Gaffney Cline/Rothschild and would suggest Anadarko indicates a price of $12 plus per barrel of discovered reserves (I'd say one third/one quarter for derisked contingent).

Just means it's one theyll begging back to not plugged and abandoned. So they haven't filled it with cement.

Acuere on ADVFN and any others

I'd used 600m barrels having seen it earlier. Reading the runes I think JL is 3-400m barrels and Jetheo channel same again. So am using 600m barrels. However, if you prefer consider it Jetheo, Jetheo channel and Joe which the drill is supposed to have substantially derisked.
I think the CPR will be updated to increase resources but that can take a long time.

Maverick
If Tullow haven't got the money to drill exploration I dont see how they can move the well to be a producer efficiently. To make good use of an FPSO they probably need another 5-10 wells minimum and then to complete the subsea works. Once these are complete how do they fit with available FPSO's or do they need to order one which even if chartering will need significant contingent commitment on Tullow balance sheet for the vessel charterer to complete a speculative build to Tullow spec for Orinduik.
Personally (although I'm not an expert) I cant see any of the above coming in below a billion.five.
Instead, as mentioned at CMD last November I think they will.open a new line item for appraisal and drill using debt funds. Their revenues are better this coming year due to increased production and no likely court judgements.
They need in this case 3 or 4 more drills to show the field value and complete a farm down - which I think could clear their debt and give them a free carry on 2 field development plans based on recent industry M&A activity.

Faroe petroleum working with Gaffney Cline and NM Rothschild valued their 102m 2P and 98m 2C at up to $1.1bn in Sept 2018.
DNO paid around $640m - these being harsher environment, hence higher cost North Sea assets.
In their defence Faroe cited the average price paid for 2P of $12.14 and blended price of $9.54 per barrel in previous North sea corporate events.
DnO paid $6.80 for 2P and $3.20 for 2C or thereabouts.
Just consider those numbers relative to our own lower cost, higher economy of scale potential asset base......
Then think.of the current SP.
If Jethro is 600m barrels we have 90m proven and 510m (plus any CPR uplift) still to play for and 7 drills to do it with.....

There may be a pause but the Tullow CMD is end November and Analysts will want to know what their plans are by that date in terms of 2020 drilling, farm out, value expectations and many other aspects.
Just consider that Hess has risen c.$9bn in MCAP on the back of Guyana per the WSJ article and they have 30% of Stabroek.
If Jethro has blown the doors off is 4bn still the working assumption for this stock.
Post next drill, Gil needs to come out and say what the next steps and plans are clearly.

Hit alot more than $2.21 in the end, wonder if it will reflect the TSX close on the London price... .
The rise in MCAP for HESS which was a $16bn company beforehand shows the value attributable to these fields once the exploration bit is done.
Still think proving the Tertiary (Upper and Lower) and Cretaceous is Tullows best way to maximise a farm out and accelerate the exploration, appraisal and production of the fields.
The potential to garner 30-35-40-45% of these fields (from Tullow and Eco) must now be on every majors radar.
What price a significantly derisked 1.8-2.7bn barrels of reserves with low production costs, flowing inside 3yrs and outlay (acquisition and capex) repaid within 4-5yrs of production due to coat base and financial terms.
Not available in many other provinces.