Member Info for InJamesweTrust

Market always waits before assigning capital until it gets nearer the time. Tullow confirmed 2 Orinduik drills which Gil has only been able to hint at previously.
With a mid May spud for Jethro and a Q3 start for the Kanuku drill it is hopefully indicative of 2 consecutive drills on Orinduik - makes sense in terms of drillships location and from a CoS/prospectivity perspective also I dare say.
First drill can open up the bigger play so may target 2 zones. With another drill that confirms potential to unlock 3 zones and Hammerhead to be appraised.
Based on 4-D resonance imaging (or whatever it is) dare say Exxon cam get a pretty clear idea.
Lots to play for.

Money isn't required and almost silly to raise until Hammerhead confirms oil on our side. Process can be time consuming though so possibly looking ahead. Better to have and not need, than need and not have.

No announcement of holding above 3% threshold as yet so fears over stake building aren't yet something to be concerned about. This will be in the radar of Siccar point and other PE houses as well as many mid-tier/major oil firms as the ability to monetise major fields through an FPSO strategy (17 wells for instance in Liza 1 versus the 72 wells BP has drilled and equipped for Quad 204) just add to the efficiency and attraction.

A fairly thin update from Tullow but confirmation of 2 drills on Orinduik in Q2 along with Exxon appraisal of Hammerhead makes for an extremely busy quarter for ECO.

Who couldn't find two (billion) farthings

Maverick7
At cap mkts day, They said 3 yrs from drill to.production for Guyana. If Exxon makes Hammerhead it's 3rd FPSO (as mentioned) it Is 2023 timing wise.

Maverick
I think they were but Ian Cloke their EVP of exploration was demonstrably excited by the prospect I thought.
If all goes as we think hard to see better value potential anywhere else.

Had a look at last year's Tullow update - tough to tell how much info it will or won't include on Guyana. As an operational update much of it was on successes achieved with less of a look forward element. However, as analyst questions at Cap Mkts day had a strong focus on Guyana they will perhaps bow to sentiment and provide some further info on plans for the year in addition to what has already been divulged.

Malbrad
On conservative estimates, 250m barrels of Hammerhead is on our block. From what I can infer from geology (pics are hard to come by) in CPR if Exxon state it is their biggest discovery to date then 250m barrels for Orinduik is pitching low probably.
However, that alone is a decent discovery and according to Gil worth 37.5m barrels x $8-10 or $300-375M or about £1.80 per share. How much one would argue that is unrisked already and we are in fact underpriced is a matter of personal perception/preference.
If that is indicative of the price for 37.5m barrels and ECO share is 15% of the potential (which with Tertiary is likely 4-5bn barrels then even heavily discounted) 50p doesn't look too bad to me.
JIMO - as I say a matter of personal perception.
As for fund raising, we are fully funded for 3-4 drills which if successful is likely to result in reserves in excess of 200m barrels booked for ECO. With PE interest in good fields, that can monetise quickly and the level such drills should push SP to - I don't think raising funds will be difficult and the SP should be valued at many multiples of today so not highly dilutive.

Be interested to see what the size on our block is given the size estimated by Exxon on their side.

Not sure if it's been mentioned already but looks like Lincoln drill is 1st February for up to 80 days.

They're only selling 5% of Aramco and aiming for a trillion dollar valuation. That is probably only 9x profit. If they get $50bn then I dare say it allows the family nests to be taken care of before the golden eggs starts looking more like silver.

Not sure the situation for an £80m MCAP sitting on such a find is in any way normal. Hence, a normalised share price is a difficult concept. What point does the market recognise what we (and Gil) think we see.
The risked is simple potential value per barrel against the CoS in the CPR - this does not take account of Hammerhead find and by most estimations is very conservative.
Unitisation - the Berenberg note states Exxon.will appraise Hammerhead in Q2. They drilled it using Eco/Tullow geo data so.imagine they are happy with it. For me, the unitisation discussions will come down to where to drill, who bears what cost of the next drill then (if it is.on Orinduik part of.licence) what plans are.
Exxon stated it is.so big it may be accelerated in their plans ahead I presume of Payara. Costs would then be split across the 6 partners depending on.projected share of field with some sort of equalization if further drilling changes the mix across licences.
Given the Q2 drill, I'd be surprised if.unitisatuon discussions were not already underway.

Biffa,
In a $35 oil environment drilling will be even cheaper than today. HUR would generate c.$80m in cashflow from that this year allied to contingency of probably $50m plus. So long as they waited until 3 months of flow from EPS 3 drills would cost only $100m in 2019 with $90m cash in 2020. Every extra dollar on oil price equates to another $5m in the coffers.
With this they would retain a buffer similar to that they have now. What else are they doing with cash - not drilling GLA?!?!?!

Biffa
One of the analyst notes estimate there is c.$50m contingency in the EPS funding. All costs will be fully funded to end H1 so as soon as cash starts coming in costs for vessels etc are self funded thus releasing cash contingency also. This is where the Spirit deal made little sense as even at $35 oil they could pay for two or three drills this year if EPS flows.as expected.

Possible it is anticipation of news on drill timing and Hammerhead extending in from Tullow next week so may drop back if no news. Would say all parties will be keen to understand Hammerhead and negotiating feverishly for detail of who pays what to do so.
Ideally - Tullow contract for 2 drills on Orinduik and Orinduik use Exxon vessel to drill Hammerhead on Orinduik licence.
Complicated by multiple targets in Tertiary and Cretaceous on the Orinduik licence.

RNS may explain lack of quotes.....

Not sure shorting is really the play here with potential news on unitisation at any time - Tullow/Exxon/Hess could all do so in Jan and Tullow again in Feb.

Think they are a German bank predominantly. Someone I used to deal with went to work for them - bigger in Shipping and through that alot of dealing with German professionals (KG Strictures) HNW clients.

Biffa
Risks remain, statements like "you won't be disappointed" and "either way you're going to make money" are a but presumptive. Nature can still surprise and it is worth bearing in mind.