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Here’s my and MIT’s thoughts on today's RNS:

Firstly, we think the overall message is positive, once you look beyond the generally dry/neutral way to which the NOMAD would only approve.

Obviously it has not set the share price alight because it raises a lot of apparent uncertainties and sounds a ‘bit negative’ in places. However, beneath the surface, we believe it offers a very positive direction and base from which to move forward with realistic hope.

First, the background. We know that the whole ‘shares issue’ raised its ugly head back in early January and this was made up of 3 separate issues to be resolved:-

1. Finding a settlement solution for the fraudulently grabbed 32m shares by EYPC (currently frozen by court injunction)

2. Replacement/buying back of the 5.25 million sold shares

3. Payment for the 2nd tranche of 64 million shares

Apparently, finding a common agreement on the best order to sort these issues out was proving a difficult conundrum for the Tamraz Group (TG) and the current Board to agree on, with the Board also being restricted by AIM and Takeover rules. As we know, this dragged on and on, giving the impression that a kind of stalemate situation had arisen (it had), and even making some people fear (including MIT !!) that the TG might even walk away from Petrel altogether, which would be devastating for the future of Petrel.

So, knowing that background perspective, today's RNS should be seen as hugely significant that both sides are now saying they have an “understanding…ON A WAY FORWARD”. The stalemate is broken!

The RNS goes on to say the 32million shares will remain protected by the injunction until all matters are resolved. Fair enough. These “matters”, we believe, mostly relate to the 32 million and 5.25 million shares issues, and will be resolved in the background.

(I personally believe that 64m, plus the whatever number of lost shares due to fraud, will be given as payment)

It is our understanding that the main sticking point surrounded the payment for the 2nd tranche of 64 million shares. It wasn’t as simple as the TG just paying for them in cash as originally proposed, because by now the other unresolved matters (points 1 and 2) were in play. It was because of these other outstanding matters (involving supposed breach of lock-in, breach of AIM rules, etc – caused by the fraudulent EYPC activities) that the NOMAD could simply not allow this tranche to be released/payed for, since it would ultimately endanger approval from the Takeover Panel further down the line (once all issues were sorted). The NOMAD is simply doing their job protecting LSE/AIM rules, as well as Petrel and its shareholders.

This again is why today’s RNS is so important because it shows that both parties look like they have now agreed a PRAGMATIC workaround by saying that, because the TG cannot now simply pay cash upfront for the 2nd tranche (because the NOMAD says the 2nd tranche cannot go ahead as originally planned), they are instead going to continue to seek multi-million pound deals/assets to bring into Petrel (as they’d always said they wanted to) but instead of such deals/assets being ‘carried for free’, Petrel will effectively contribute the equivalent cost of 64 million shares (equivalent to 2nd tranche) towards the first** deal/asset (once it is agreed).

This way, the TG group will still get their hands on 64m more shares to bring their required majority holding (as stated at the EGM) up to 51% (assuming the other issues are sorted out in the background).

** This is our assumption that Petrel shares would only be issued towards payment for the FIRST deal only. It does not make sense that either party would want to dilute the shares further on future deals/assets as that would be counter productive to everyone. Effectively paying ‘64m x agreed share price’ is a small price for Petrel to pay, to start a flow of multi £100 million deals/assets.

So, while we await the first deal/asset, DH/JT/JF will still effectively be in charge of the Petrel board, although the RNS alludes to the possibility that Michel Fayad may be re-instated. I don’t see any problem with the current board not accepting the first deal/asset when it is presented.

As mentioned earlier, the NOMAD’s ‘cautiousness’ is all over the RNS (e.g. “Should any of these proceed…”). Of course they will proceed!! There is too much money/profit at stake. In fact, our understanding is that the first asset was possibly going to be related to a very generous Iraqi contract. However, as there is currently no official Iraq government, plus travel restrictions due to coronavirus, this may now not be the first deal or may take longer than expected.

Anyway, above is our own personal opinions based on the information we know.

Good luck! I think news from now on should be of a more positive nature.

And once Michel is fully reinstated as Director and the 51% majority is restored, then given this week's progress in Ghana, our existing license there will be ratified without any problem with Tamraz on our board as well.

All still to play for it would seem.

Nice one Sampson! :)

That reflects a similar email reply from DH on the Advf board recently...

Q: David is this of any significance to PETRELS current operations in IRAQ?
HTTP://www.xinhuanet.com/english/2019-09/04/c_138365378.htm

David Horgan: Yes. Things are moving.

As an example of the potential Petrel has, and to stop people selling out too early, let’s have a play with some numbers to see what the share price might be on award of Block 6 (see my post 7592 for likelihood of that happening).

What would be the immediate effect on PET’s share price?

We know it will certainly go up, BUT, by how much? 50p, 150p, 200p???
I suppose it depends on several factors and how the market interprets these factors, including perceived ‘risk’ associated with 'unexplored' Iraqi western desert, perceived probability of reserves in reality (until drilled) being anywhere near the figures of 3-5 billion barrels that DH estimates and the value given to ’oil in the ground’.

I believe we can make ‘an educated’ (and perhaps very conservative) calculation of the price that the market should (in theory!) allow within days of the awarding of Block 6. This is based on coming up with a sensible estimate of the value of oil in the ground (no drilling done).

ASSUMPTIONS:
--------------------
Petrol would be operator of the licence; Itochu would provide (cheap) debt finance and take the oil (they are the biggest buyer of crude in the Pacific and Japan are paranoid about securing oil imports).

Assume oil price of only £40 per barrel ($50). Current oil prices $54 (WTI) to $59 (Basra Light). NOTE: Since ‘lifting cost’ per barrel in Iraq is only $2 - $3 per barrel, I’m ignoring this.

I have used a figure of 10% of reserves as a simple and VERY CONSERVATIVE method of getting to an estimate for an ‘oil in the ground’ value. As a reality check, 10% of a $50/barrel oil price is $5 or £4 which seems reasonable for an ‘in the ground’ price.

David Horgan said, in a 2007 interview, that he believed PET as operator of Block 6 would receive 25-35% of net production revenues, while the State company would take the remainder. Let’s assume lowest of 25%.

Assume that this 25% gets split between PET and ITOCHU (for barrels of oil), say 40% to PET as operator and 60% remainder to Itochu.

Let's assume 'only' 3 billion barrels in Block 6 (vs 3 to 5 billion estimated).

CALCULATION:
-------------------
3 billion barrels x 25% net interest = 750 million barrels x 40% = 300 million barrels to PET.
300 million barrels x 10% (value of oil in ground) = 30 million barrels to PET.
30 million barrels x £40 = £1.2 billion to PET (remember this is the IN GROUND value!).

Divide by 149m shares = £8 per share(4 billion barrels would be over £10/share).

HOWEVER, I am a realist and cannot see anything like this value being achieved ‘within days’ of the contract confirmation BUT what it DOES do is make it seem like a REALISTIC POSSIBILITY that something like £5 could be achievable in the very short term (of award of Block 6).

Remember, these calculations are JUST for Block 6!! ??

This is actually massive news for PET as it shows that old Saddam era blocks are now finally being agreed with the original companies!

The same Russian company Stroytransgas was originally awarded a Block 4.

I believe the more recent 4th/5th bid rounds had a completely different set of block numbers so if I'm correct, I believe 'new' Block 17 is perhaps same as exploration Block 4.

Block 4 is adjacent to Block 6!!!

Iraq inks preliminary deal with Russian oil firm to develop EXPLORATION BLOCK in WESTERN Iraq.

(BAGHDAD, Sept. 4 22:42)

The Iraqi Oil Ministry on Wednesday said that it has signed a preliminary deal with Russia's Stroytransgas company to explore and develop an oil and gas exploration block in the western province of Anbar.

Iraqi Oil Minister Thamir al-Ghadhban said at the signing ceremony that "the exploration block No. 17 is one promising site, where preliminary studies and information indicate the existence of oil reserves ranging between 2-4 billion barrels of oil equivalent, as gas accounts for 60-70 percent of the reserves," said a statement issued on the ministry's website.

Al-Ghadhban asserted the importance of this project in promoting oil and gas activity in Anbar province, which will contribute to enhancing the economy and development, providing job opportunities in the province, as well as supporting the local private sector through subcontracts, the statement said.

Asim Jihad, spokesman for the ministry, said that "this contract with the Russian company is (a service contract) including exploration, development and production operations within an area of 12,000 sq km, the statement quoted him as saying.

Jihad pointed out that the duration of the contract is 34 years, including nine years for the exploration phase, and 25 years for the development and production phases, the statement said.

Abdul Mahdi al-Amidi, director general of the petroleum contracts and licensing department, said that the contract commits the Russian company to build a housing complex and develop infrastructure and service sector in the province with an estimated value of 100 million U.S. dollars, the statement added.

In 2017, Iraq announced that its proven oil reserves increased to 153 billion barrels from previously estimated 143.1 billion barrels.

Iraq's economy heavily relies on exports of crude oil, which account for more than 90 percent of the country's revenues.

Source: Xinhua| 2019-09-04 22:42:08|
BAGHDAD, Sept. 4 (Xinhua) --

That last post should have been 1 of 4!

Been further conjecturing what areas/projects that the new ‘supercharged’ Petrel (+ billionaire investors) could potentially get involved in.

The Iraqi Oil Minister, Thamir Ghadbhan, has long said that his main priorities are as listed below (and in a recent interview, stated that gas flaring and refining were their “biggest challenges”). I think the points marked with '**' are a good match!

- Establish 3 export routes by:
- Building a new pipeline between Basra and Aqaba in Jordan **
- Rehabilitating the Iraq to Turkey pipeline **
- Extending Basra port export facilities
- Build new gas processing plants (to end gas flaring by 2022 and end gas imports) **
- Raise export capacity to 6.5 million bpd by developing southern fields
- Overhaul the refining sector **

If we look at the backgrounds of our new billionaires, Roger Tamraz and Michel Fayad, then we begin to get some strong clues what their plans might be in Iraq (and its not just to build pipelines).

Firstly though, they will make a formidable team as they know each other well and already work together at StrateVic Finance Group (a Swedish company specializing in Banking and Trading technologies) where Tamraz is Chairman and Fayad is a Director. (I don’t think this relates to Iraq at all).

So, what could they bring to the table?

Michel Fayad and Boost Inc.
------------------------------------
Boost Inc has 2 directors, Michel Fayad and Michael Chang and describes itself as ‘an integrated International Oil Company (IOC)’. Amongst other things, Boost has specific expertise in developing Methanol Complex projects and Modular Refinery Plants.

GAS PROCESSING/DEHYDRATION:
Methanol is hugely important in gas dehydration, a crucial process in gas processing plants to remove water from gas, thereby preventing gas pipelines, valves, pumps, etc from clogging up with hydrates. That type of expertise must be useful given Iraq is currently accelerating projects to process natural gas that is just being flared.
Remember that Fayad’s co-investor, Roger Tamraz built the largest methanol project in the world in the 70’s, in conjunction with ITOCHU (Petrel’s strategic partner!).

REFINERY SECTOR:
As mentioned, Iraq is overhauling its refining sector. Oil minister Thamir Ghadhban recently said: “There is a crucial and urgent need to launch new refinery projects to respond to government needs and put an end to the imports of refined products.”
What better solution to such an urgent need than a company (i.e. Boost Inc) that specializes in Modular Refinery projects – fast and flexible!

Interestingly, Ghadhban also said that “Iraq was evaluating buying stakes in oil refineries in Asia. These ventures will be an investment and a means of securing demand for Iraqi crude oil [as output increases]. The relevant companies and directorates within the Ministry of Oil are finalising thorough studies in having shares in refineries

Now that is very interesting when taken together with these facts:

• Michel Fayad’s fellow director Michael Chang is CEO of Boost Korea
• Asian refineries favor Iraqi crude
• South Korea has a massive refining capacity but little resources itself
• South Korea relies entirely on crude oil imports to supply its refineries (it’s a world top 5 importer)
• Iraq needs to secure demand for its increasing oil output (not enough new refineries to deal with this)

Could Michael Chang potentially be involved in these “thorough studies”, perhaps involving off-take agreements for ‘Asian favored Iraqi oil’ from new refineries? Everyone’s a winner.

Matthew Steckel and Petrodesigns Inc.
---------------------------------------------------
Matthew Steckel is the Chairman of Petrodesigns Inc and also the President of Netoil (Roger Tamraz is the Netoil chairman). Steckel was also founding Chairman and CEO of Tamoil in Europe;.

Petrodesigns Inc is an affiliate company of Netoil - in other words they are ‘joined at the hip’.

CHAIRMAN PRESIDENT
Netoil Inc. Roger Tamraz Matthew Steckel
Petrodesigns Inc. Matthew Steckel Unknown

Like Boost, Petrodesigns also has huge experience in Gas Dehydration in gas processing plants, but uses an alternative method involving Glycol (instead of methanol) to remove water from wet gas and prevent build up of hydrates which would clog up pipelines and working parts of a gas plant.
Petrodesigns founder was Ralph Hicks (deceased) who was considered an international expert on glycol dehydration.

SUMMARY
-------------
• Both of Petrel’s new investors give us access to expertise from 2 different companies - Petrodesigns Inc. (affiliate of Roger Tamraz' Netoil) and Boost Inc. (Michel Fayad), both having massive experience in gas processing/gas dehydration, a crucial technique used in processing natural gas (from wasted Iraqi gas flaring!)

• Boost has modular refinery expertise (flexible and quick to build, which is what Iraq needs!)

• Boost Korea and its CEO Michael Chang could be a great matchmaker for Iraq to gain guaranteed off-take of increased oil production and South Korea to gain high quality oil for their refineries. Could also be linked to studies by Iraq to invest in Asian refineries outside of Iraq (e.g. South Korea)

• Boost Inc, with its IOC label will have far more opportunities/clout (than minnow Petrel on its own ever had) to be qualified, in the eyes of the Iraqi Oil Ministry, for consideration in large scale projects (as part of a JV/consortium that includes Petrel of course!).

FINAL THOUGHTS (mine; DYOR)
-----------------------------------------
I'm conjecturing that Michel Fayad and Roger Tamraz have invested in Petrel to take advantage of its 20 years of Iraqi experience and the relationships and contacts that have been made. Petrel will open doors (and probably already has) to allow them to get straight to the IOM negotiating table for consideration in some of the many projects that Iraq is now needing. And along the way, Petrel will transform into a much larger and highly valued entity.

I believe the following are the kind of opportunities that Petrel and relevant partners are now open to.

** Exploration and Production **
Michel Fayad's Boost Inc. is considered to be an "Oil and Gas Exploration and Production" company so I could imagine that it would be an excellent fit to work with Petrel on E&P opportunities such as BLOCK 6!

The following article is very illuminating (I had not seen it before). From Irish Independent Dec 26 2018:

---- start -----
OIL AND GAS EXPLORATION INDUSTRY PROVED IN ")!* IT'S STILL A SECTOR LIKE NO OTHER.
(Ellie Donnelly, Irish Independent, 26th December 2018)

Petrel, chaired by veteran investor John Teeling, is looking at Iraq once more, seeing opportunity in a return to power of the Saairun party.
“In this year’s elections, the most successful party was the one that had previously encouraged us to come to Iraq. We are now rebuilding our Iraqi team with a view to reentering, but the formation of a government has taken a long time – it is still not complete.”

Mr Horgan added that once a contract is awarded to the group “on favourable terms”, it is ready to start work.
“We have already done very extensive work, worked up drill targets and there has been a lot of interest from international majors, particularly a large Japanese company, ITOCHU, who joint-ventured with us in Iraq before,” he said.

“If we can get confirmed title in the western desert of Iraq, we would go ahead and drill within a year. So if we confirm the contract with the government of Baghdad, I think we could get back into the tribal communities and negotiate a work programme.”

“In the past we have always used local people – if you want to defend a facility against attack you hire the people who are going to do the attacking. You go to the local chief, and it is enormously important to show basic respect and hire whoever he recommends. We never had any issue, we never lost as much as a screwdriver.”
---- end ----

** Gas Processing **
With Petrel's experience of having submitted a very detailed tender back in 2004 to develop the Khurmala Dome, including a gas processing plant to process the flared gas, combined with the IOM's recent stated desire to process/stop all flared gas by 2022, I could imagine that either Boost (Michel Fayad) and/or Petrodesigns (affiliate of Netoil) with their respective methanol/glycol Gas Dehydration expertise (to remove water from gas to prevent gas pipelines, valves, pumps from clogging up) would be ideal partners in one or more gas processing plants.

** Refineries**
Boost Inc, with their 'fast and flexible' modular refinery plant expertise would make a JV with Petrel ideal, given Petrel's experience of specifying such plants in tendering for EPC's on the Subba & Luhais (they won this $200m contract), Khurmala Dome (part of the giant Kirkuk oilfield) and Hemrin oil fields.

Libya connection? On the subject of refineries, mention has been made of a possible Libya connection. There were news reports last November saying that Libya’s state-run National Oil Corporation (NOC) had decided to relocate its Collombey refinery in Switzerland to southern Libya. The Collombey refinery is owned by the Tamoil Switzerland Oil Company. Could Petrel be involved in planning and managing that?

** Oil & Gas Pipelines **
Obviously Netoil has huge experience of financing and building pipelines like the SUMED and BTC, so they would be the 'go to' company for the IOM. Although Petrel does not have specific technical pipeline building experience, I believe they would play an important role through:

• their strategic relationship with ITOCHU
• their 'all round' experience of many of the places/regions/fields that planned pipelines may run through or near (e.g. western desert, Jordan's East Safawi, Khurmala/Kirkuk, Subba & Luhais and several other southern oilfields)
• their greatest asset is the huge number of invaluable relationships they have developed over 20 years, with the people that would need to be 'brought on board' with a huge pipeline project - IOM staff, local and foreign contractors, Iraqi people including the various groups/factions whose land a pipeline might cross
• the perceived small size of Petrel would/will be more palatable in dealings with some people who may be reticent to deal with a 'big bad' corporate entity.

vcvccvbvb

extruder, not sure what people you are referring to who you are talking as if FC is 'imminent'. I've not seen any references/posts from anyone on any boards suggesting, or thinking, that (and believe me, I read virtually every NCCL related comment/post!).
The timeline you refer to in the June 2019 A/R appears very clear to me, in that they expect FC will be 12 to 18 months from now (i.e. post JDA). That is entirely in line with the timescales on the timeline on page 32 of the Dec 2018 presentation I mentioned earlier which shows a 15 month period between JDA (end Q1) and expected FC by mid 2020. 15 months is midway between "12 and 18" if my arithmetic is correct. :)

Hi extrader. Re the post JDA time horizons, there is a very clear annotated timeline diagram on page 32 of the December 2018 presentation - worth a look. Hanno, in his recent podcast said Tariff agreement comes first, potentially up to 6 months from now, with PPA shortly after that.
No idea about your second point though.

@vonccf92. Yes, by working closely with GE and CMEC, Ncondezi were able to improve/reduce their original 2015 tariff (it helped that the Moz government scrapped VAT last year on infrastructure projects!).
The lower tariff info is detailed in NCCL's December 2018 presentation (page 27) which can be downloaded from their website. It really does make good reading! :)

I dont think it matters what link he might have between NCCL and his daytime job experience. Main point is that no-one, but no-one, invests well over £1million in a company they haven't thoroughly researched and who is probably closer to whats going on behind the scenes than lowly investors like me might be privvy to. Just follow the money! :))

vonccf92, although not a formality, I don't think the Moz government or EDM/MIREME are going to find any difficulty in agreeing the tariff, especially as the the latest/new tariff presented to them in June 2018 was 10% LOWER than the one they had PREVIOUSLY AGREED in 2015. Electricity prices have risen hugely since 2015 (140% in the last 18 months alone, from 5c to 12c/kwh) so they'll probably be very very amenable to agreeing the tariff in the next few months. It's all good.

One minute after midnight WILL be the first minute of the 23rd, so I'd say it should be tonight and not tomorrow night (as that would technically be the first minute of the 24th).

Thanks for that Zengas.

Zengas, the small print in the presentation on P7 also says "additionally risked by 50%". So, does that mean that the various implied figures quoted ($93M, $279M, $557m, etc) could in theory be twice these numbers?