Member Info for Jimmy23

Predator also focused on this market and had prepared economics at $16 mcf
High margin business.
Jimmy

It was proposed by pg to pay a one off dividend to shareholders, however dividends are taxed as income tax whereas a share buy back would be taxed as a capital gain, at a lower rate for most investors. Worth considering further.
Cairn energy adopted the policy of one off dividend and an ongoing exploration programme, with terrible results for shareholders. There is a unique opportunity in Morocco to generate early cashflow and use that to finance ongoing low risk exploration at a relatively low cost and to pay an ongoing small dividend, I think that would give a far higher and longer return to shareholders.
Appreciate that pg probably wants to retire so may want a lump sum.
Jimmy

Euro champs
It’s true that the payments for the Trinidad opportunity are phased as you describe, but if the funds are coming from an equity issue investors will want certainty that Pdr has the cash to complete the obligation and drill and complete the first wells.
Jimmy

Some interesting additional information in the very lengthy annual report.
1. Seismic at mou fan has been reprocessed and correlated to the mou 1 logged gas sands and confirms a seismic amplitude area of 30km2 which may indicate the size of the gas discovery.
2, a bid has been received for the corrib south licence in Ireland, but the bidder has not permitted disclosure till the application of new oil tax rules is established and may withdraw the bid if they are to be applied.
3. Pdr will need $3 m in cash by end of august to pay for Trinidad licence oppportunity. The economics of which look very good .
4. Intention is to sell part or all of moroccon subsidiary to provide financing and potentially a special dividend.
Jimmy

Hi GRH,
In London at the moment, not sure if I will be back again for the meeting, hopefully we can log in to attend remotely
J

GRH,
Thanks for the reply, it would have been good to have competition for the opportunity from an investor who is truly focused on the area.
Just done double comma deals myself and just an investor now.
Jimmy

My understanding from the interview is that the moroccon subsidiary is for sale.

Firstly I like the location of mou 3 , while it is structurally below mou 2 it is still within a strudtural closure of 1920 twt depth , so high chance of finding gas. I have re examined the closure to the north west and pg clarified there is closure byway of both a fault seal and stratigraphic pinchout , in addition, the tgb 4 sand structure looks interesting with a 34% chance of success which may have improved as a consequence of the mud seal encountered at mou 2. There is also an unquantified reservoir target called k above the tgb2 sand and an unnamed reservoir below tgb2 , although both of these reservoirs are not showing as laterally extensive based on the one seismic profile, so no idea of size but the do look like channels that may be laterally extensive elswhere.
Pg also confirmed that flow testing will commence shortly at mou 1 and that a lot of reservoir sands are to be tested. All good and certainly helping to derisk the project.
I liked the previous strategy of progressing to cng production asap and using cash generated to drill out the remainder of the area to develop it, which I thought was a great idea as a way to drill a licence area that has amplitude anomalies and well control , which nearby in the rharb basin has an 80%+ success rate, without shareholder dilution.
Now the strategy is to sell the moroccon subsidiary and move on to higher risk projects such as corrib south 30% chance of success, or ram head 12% chance of success or Trinidad enhanced oil recovery and co 2 storage which is yet to be proven.
So something has gone wrong and pg is selling Morocco , so I don’t know if it’s a regulatory problem with onhym who do not want cng till the field is fully proven or if there is a geological risk discovered by mou 2. Alternatively, it could be just that pg is stuck for urgent cash to pay for T and T .
So I think we will prove up gas at mou 3 and Pdr will then cash in early. I will be very surprised if he achieves $5 m per bcf and a 10% royalty . The Legals to close a deal will certainly take longer than 30 days so completion will be an issue.
Perhaps GRH could put together a consortium and buy into the opportunity for what I believe he described as going to be one of the great discoveries in decades.
Either way good upside from here.
Jimmy

I am still confused by the pg interview.
He expects to proove up 40 bcf from the testing of mou 1 and the drilling of mou 3 which will target the tgb4 sands with prospective resources of 426 bcf which were further derisked by the mud in mou 2 well. And yet still proove up the CONTINGENT RESOURCES of 393 bcf for the tgb 2 sands and he is going to sell these for the value of 40bcf and a royalty.
I think I am missing something here.
Jimmy

I was disappointed by the interview as it seemed to me to be what the Americans call bait and switch.
Firstly, I was pleased that the question I put forward regarding the structural closure of tgb2 sands to the north east was not answered fully answered, it looks he is suggesting it’s stratigraphic closure, which is always a higher risk without 3D seismic to confirm it, particularly for a basin that’s been inverted. Then again perhaps the mud will solve the problem .
With regard to the strategy, I was disappointed, as I thought that getting into cng production quickly would then provide the cashflow to fully drill out the licence without diluting shareholders. That seem to have changed and we are now looking to sell out.
Jimmy

Oilfred,
It’s not all pure speculation, there is an audited 22 meters of proven logged gas at mou 1 , and there is contingent resources of 393 bcf.
If it was pure exploration it would be prospective resources.
Jimmy

We also know that the gas reservoir was overpressurized which would be consistent with a thin wedge of high porosity and permeability reservoirs connected to a thicker reservoir , as per prognosis.
Even if the porosity permeability were 50% of that reported by nuetech you would still get one hell of a flow rate.
So for me the interesting result of the flow test will be how deep will the flow test confirm the gas down to proven level by measuring the area of investigation of the flow test.
One of the features of the geological structure is that the first potential spill point appears to me to be at about 1920 twt seismic depth which is about 3km from mou 1 .
If the flow test could establish a gas down to beyond 1920 twt depth it would effectively derisk mou 3 well in the tgb 2 sands. I just do not know if the flow test will do that, so got to proceed to flow test to do that.
Jimmy

Hi kb,
Been working on a new project so have not been posting much but still waiting like everybody else.
I am expecting a major farm out announcement that will include the drilling of five wells, three producers to include drilling the deeper O sands to increase reserves to 1.4 tcf and two other exploration wells, all paid for by farm in.
Gas sales agreement soon.
Pipeline capacity at 150 mmcf per day is likely to be reached with such a strategy.
Huge value here and it looks like the market is beginning to take notice, at last.
Jimmy

GRH,
I believe predator are planning to sell cng not lng .
The capex for cng is modest and it’s transported by truck whereas lng capex is frequently in the billions $ capex and transported by expensive specialist vessels.
Not sure supplying europe with cng is viable, but certainly the moroccon market certainly needs it .
Jimmy

Brv,
The Celtic sea is a better choice because the weather offshore west coast can get so much worse.
I do like corrib south as an exploration target though.
Jimmy

My understanding is that there is a legal obligation to remove all equipment and pipelines as part of the abandonment obligation. So to plan that properly a survey would be required , after all the pipeline has been there for circa 50 years and is likely to have acquired a lot of debris, fishing nets etc.
Then again they could be transferring ownership of the pipeline.
Jimmy

Hi GRH,
The operator has a legal obligation to remove the pipeline is one explanation, the other is that they are going to assign it to somebody else and need to survey the pipeline to give a warranty on its condition.
J

Hi Keith,
Thank you for the update on the oil potential.
My biggest concern about the oil potential has been whether the carbonate reefs have porosity and permeability, because the offshore Morocco wells failed to find good such conditions, re assuring to know there are outcrops which demonstrate good carbonate porosity and permeability.
The value for shareholders is to get the mou prospects into cashflow asap and use such revenues to drill the licence area without diluting investors.
Jimmy

GRH.
your post yesterday prompted me to look at the recent prd presentation again.
Before the recent mou 2 well results, we had the mou 1 well with proven gas in the tgb2 sands in a three way dip anticline against a faulting seal.
The recent mou 2 well structure looked like it was drilling a four way dip anticline slightly up dip in twt, from mou 1, but as one moved out of the four way dip anticline the structure between mou 1 and 2 was a three way dip anticline bound by a large fault to the east. With a large seismic gas cloud up dip from this fault it looks like the fault might not be a sealing fault.
The drilling at mou 2 has demonstrated that such an easterly fault is now likely to seal due to the presence of a widespread mud seal.
I invested in prd originally because I believed that drilling up dip from a gas discovery into a four way dip anticline was low risk, the presence of the proven mud seal has increased the probability of gas reservoirs being sealed against the eastern fault.
So then the question arises as to where did the gas cloud in the seismic east of the fault come from if the eastern fault is now sealed by the mud..?
The area has undergone a number of basin inversions as the African plate collided with the European plate. When basin inversion occurs gas will expand as it’s depressurised and will escape out of the spill points in a structure and hence give rise to the gas cloud.
Got to drill to prove it, but looking good.
There are still some uncertainties to be resolved.
1. We do not know the gas water contacts, but a seismic flat spot between mou1 and mou 2 could indicate such a location down dip.
2. The proven reservoir sands at mou 1 are only 12 meters thick, so these need to increase. The analogues sands at anchois 1 were 50 meters and anchois 2 are 150 meters. However even if they are just 12 meters it’s enough to get into production. Got to drill to find out.
3. Then we have the tgb4 sands which appear strigraphically sealed by the new mud seal.
Got to drill to prove it but looking good.
4. The mud seal has also created a new low risk prospect on the south eastern side of the major fault in an area where thick sand reservoirs are expected .
A lot to look forward to.
Jimmy

Mick
It. Seems to me that Keith calculated his £4 shares price based on p10 values instead of of the p50 volumes which are about half.
Still huge upside from current values.
A combination of flow resting at mou 2 and at mou3 may well proove such volumes, but we are not there yet.
Jimmy