Member Info for KeithOz

Should gave added that the CPR porosity & permeability figures were assumptions based on the logs from GRF-1 (I think). The RNS numbers are based on analysis of the actual rock brought to surface from the MOU-1 borehole, so are directly relevant.

Matt - that's not a daft question at all - I looked at the porosity & permeability numbers and thought 'Jeez, that can't be right', but if you read further on in the RNS it says: " Lack of compaction and consolidation suggests that poroperm conditions would not have been significantly impacted through burial and therefore good reservoir quality would potentially be retained, as supported by the post-well NuTech log analysis."

CHAR are also guestimating: Lixus 4.6 TCF & Rissana 7 TCF

MOU-2 is twice the size of Chariot's Anchois. CHAR RNS today:

* 82% increase in 1C contingent resources from 201 Bcf to 365 Bcf

* 76% increase in 2C contingent resources from 361 Bcf to 637 Bcf

* 49% increase in 2U prospective resources to 754 Bcf in three undrilled targets with an improvement in the probability of geological success, now ranging from 49 to 61 %

* Total remaining recoverable resource at Anchois (2C plus 2U) now stands at 1.4 Tcf

Sorry to monopolize the board, but with the help of my younger daughter, we have come up with an interesting analogy. Your bath tub is the Guercif graben - the length, width & depth are near enough in proportion. It is filled with a jumble of containers ranging in size from egg cups to open plastic storage boxes. These have their open sides facing in random directions, if facing downwards they will trap gas bubbling up through the plug hole (not from impolite locations, thank you). The MOU-fan is about the size of an inverted tea cup.

Part 2.
Porosity: CPR 25%, RNS 45%
Permeability: CPR 1D, RNS 2-5D
Net pay: CPR 65ft(20m), RNS up to 110m since there doesn't appear to be compartmentalisation (NH - please note!)
Gas Expansion Factor or Bg: CPR 140, RNS not stated, but my amateurish calculations for this drilling depth plus 500psi overpressure suggest nearer 300, i.e twice as much gas per m³ than used in the CPR.
Upside: The 295BCF quoted is for Upper Tortonion (TGB-2/-3/-4) only. Data in the September 2021 presentations suggest the whole MOU-fan has up to 1.8TCF including the Mid Tortonian (Lower Hoot). That's using the old porosity & permeability numbers, of course we don't know if those factors are as good for the other formations.
NPV: Couldn't work out how they arrived at the stated value, since not all the assumptions were given, but they didn't include any of the increased possibilities above. Nor did they reduce the capex required as a result of using leased production gear, which would increase the NPV significantly. The £1.465p share price was still based on the February 2022 CPR numbers, which have been called in to question by a number of posters here for being at the conservative end of the scale. NB - I am using polite understatement here, don't want to upset the King.
Gas price: CPR $9/MCF, 2021 average price achieved by SDX was $11.4/MCF. God knows what it will be going forward, but my rough calculation suggests that for each $1/MCF increase above $9, the (old, incorrect) NPV goes up $30M.

So in summary, and please note only in my opinion, every single factor in the RNS is an improvement over the February 2022 CPR, and this will obviously be reflected in a new NPV derived from the next, post-flow test, CPR (Feb 2023?). That's why I'm not at all concerned about the worst case financing scenario of having a $2M placing.

7.00am RNS timing is inconvenient for me, since it is my late afternoon when I have other family-related things to do. This morning (my time) I've had a couple of espressos, and have some time to check back on a couple details I wanted to review.

* This was specifically titled an Operations & Drilling Update. Not a Financial Update. Including all the bits & pieces en route to Morocco, drill costs for one hole will be around $3M, with 2 flow tests of around $1M each. After the last placing, PRD have around $3m, so a bit (but only a bit) more is needed. I agree with other posters that this RNS is designed to prod potential providers of finance. I don't care if we don't secure a JV, a placing of $2M is neither here nor there in the overall picture.

*What we are now to call MOU-2 is very close to the old MOU-4, and is targeting exactly the same structure. This is a 4-way dip around 11km², with the enclosure about 75m deep. The anticipated reservoir of TGB-2/-3/-4 sands is about 110m thick, which could mean that not all the reservoir is filled with gas. There is a possible gas cloud/chimney at the Eastern end of the closure - why is that important? - it suggests the trap is filled to spill. The top of the reservoir is expected to be between 1130-1200m, so the bottom will be 1310m max. PRD are drilling a further 190m to 1500TD. Why? Because there is a good chance that not only that the MOU-2 trap is filled with gas but to quote the RNS "Gas deeper than structural closure will help establish the validity of a single stratigraphic trap covering up to 30km² defined by the seismic amplitude signature tested in MOU-1." That's a lot of gas.

* There are some interesting numbers in the RNS that do not match the latest CPR. CPR no. first, then RNS:

*

Finance not needed. Enough cash to drill one well & complete 2. CNG equipment will be leased. PRD retain 75% of the licence. Monetisation in 6 months. As my previous post indicated, the fan geology is beyond anything I have ever seen. Where's Nigel when we need him?

Some very interesting things Flagstaff did not mention:

* Porosity of 35 - 40% - what???
* Permeability of 2 - 5 Darcies - what??????
* Leasing of CNG unit to elimanat upfront capital cost
* Unrisked value of £1.465p per share

If you are a small company with an asset that you want to develop, whether it is a resource or intellectual property (IT or new medical treatment, etc), there are some good rules to follow in order to maximise your returns.

1. Develop it as far as you can using your own money & people.
2. When you do need to bring someone in, make sure they have both money and expertise to give the opportunity maximum leverage in the marketplace.
3. Make sure there is an actionable "Best Efforts" clause in the contract.
4. Retain as big a share of the equity of the project as possible, and some managerial/development control.
5. Get a front-end payment to ensure that the partner will be incentivised to get a return on their investment.
6. Have staged milestone payments for specific achievements, with time objectives / limits.
7. As well as a getting a %age of earnings (royalty. net smelter return, etc) always retain at least a stub equity that can be sold on again if necessary or desirable, so you are exposed to any unexpected upside.
7. Include a procedure for getting your project back if things don't work out with the partner.

I am very confident that our new NEDs know all this, and of course it is the principal business of Peterhouse, an outfit that I rate highly. Just fyi, I don't mean this as a boast, after quitting exploration (no available women out in the desert, I've never been attracted to camels), I worked for a couple of decades in business development for several international corporations, mostly outside of resources. This involved acquisitions, divestments and in- & out-licensing. I know there are others on here with more expertise in this area, please add any more points that you think I have missed.

OK, Aleph own Swedish company Intertank, who have storage and distribution centres at several European ports. So they want to get hold of SDX gas, wriggle out of the existing Morocco supply agreements, and sell the SDX gas for a higher price in Europe. Would be sensible, but I suspect the Moroccan authorities will have something to say about that...

Oh, 3 of us posted same thing at same time - sorry!

RNS this morning from SDX saying that Aleph Commodities (never heard of them) and concert party hold 26.5% of SDX shares, and intend to vote against the merger with Tenaz. The interesting bit is that Aleph say "Aleph welcomes the opportunity to engage with management and the Board of Directors to explore opportunities to provide financial, commercial and technical support to SDX to ensure the growth of the Company and its production base, with minimal dilution."

Someone apparently has plenty of cash to invest in Morocco (& Egypt) gas.

Just to whet your appetites, I notice on p.9 of the Sound Energy 2021 Annual Report that "internal exploration potential estimates" of GIIP for their whole licence area (Greater Tendrara + Sidi Mokhtar + Anoual = 28.1K km²) is 28.35 TCF gross. Sound's Contingent Resource (Tendrara) is only 283 BCF net on a 2C basis. The equivalent for just the MOU fan is 295 BCF.

Sound's estimate is entirely in the TAGI (Triassic Argilo-Gréseux Inferieur). Sound do not have the younger Tertiary near-surface reservoirs that PRD have - PRD is going initially for the shallow, cheap-to-access gas. I see no reason why most of the Guercif licence should not be underlain by TAGI sands, something to be evaluated once there is cashflow from the Tertiary. ONHYM had previously identified nine potential TAGI traps, but this is from very limited seismic over a small area of the Guercif licence. PRD are currently quite literally just scratching the surface in the Guercif licence. To give an idea of what could be deeper down, I recommend reading this ONHYM summary if you have not already done so:

http://www.onhym.com/en/prospectivity-of-basins/regional-exploration/onshore/39-en/petroleum/195-guercif-basin.html

Latorre - the missing word has to be "f@rt". Do I win the prize?

After the appointment of Peterhouse and the two NEDs who have been praised on Twitter by Lonny & heavily optioned, I suspect the Morocco RNS when it comes will be a little different. Something around a financing arrangement whereby PRD retains all its field equity, and progressively rolls out a drilling campaign self-financed from CNG production.

Like a Facebook profile, "it's complicated" :-) The $12.8M (USD not GBP) is based on calculated losses that would have occurred should the contract have proceeded as agreed during the period in question. The $102M (USD not GBP) is a projection of losses into the future based on all of the field for the agreed life of the contract.

My opinion (based on litigation under UK law regarding disputes over non-utilisation of licenced intellectual property that I have been involved with) is that actual losses (£ 500K) are easy to prove in court. Consequential losses ($12.8M) are quite difficult to prove, potential consequential losses ($102M) would be very difficult. I would be surprised if T & T law is much different, given the colonial history. Here is the verbatim for the PRD 7th June RNS, explaining the categories:

"* Based on operating and capital investment costs established by the Company for the CO2 EOR operations at Inniss-Trinity, the utilisation of unused tax losses, and an average WTI spot price of US$100, the Company is attributing an undiscounted value to these potential resources of US$30/barrel after deduction of all taxes, royalties and operating costs, inclusive of CO2 supply. The Company therefore determines that the potential claim for estimated consequential losses against Challenger, based on 50% of net profits under the WPA, could be up to US$12,800,000 but may be revised upwards depending on forward oil price projections.
* Phase 4 of the approved Inniss-Trinity CO2 EOR Project Proposal PRD25092019 allows for the application of the CO2 EOR Pilot learnings to be applied within new areas of the Inniss-Trinity field for upscaling CO2 EOR. The SLR Consulting Ireland Ltd independent Competent Persons Report for the Inniss-Trinity field published 19 February 2020 gives Best Estimate recoverable CO2 EOR resources for the entire Inniss-Trinity field of 6.8 million barrels.
* Based on 50% of net profits under the WPA this would amount potentially to estimated undiscounted consequential losses of up to US$102 million but may be revised upwards depending on forward oil price projections.

My overall take is that it is PRD's intention to apply the frighteners. This seems to have worked, I suspect the CEG Board are in disarray as to how to explain all this in their Annual Report, particularly now the CFO has given them the finger. The company must be dead in the water, I don't think PRD need to do anything in a hurry, interesting bits will float off the wreckage, and because of PRD's expertise in CO2 injection, I would expect Heritage to allocate the salvage to PRD.

Legal disclaimer - I must stress that all the above is merely fantasy & conjecture, I am 100% certain that the CEG board are all honest & competent business folk who clearly have the best interests of their shareholders positioned well above their own. You only have to look at the share price chart over the last 12 months to see that this is absolutely o

TTT/Porters. This matter is indeed related to PRD. PRD filed a claim against FRAM for non-repayment of a loan for £591,065 a long time ago. CEG have continued to dispute this matter, so this June PRD raised the stakes by additionally suing for up to $102 million damages for breach of contract in relation to the unilateral early termination of the Innis-Trinity Participation Agreement.

From PRD RNS 7th June 2022:

"The FRAM Loan outstanding to the Company is £591,065 as of 31 December 2021.
The FRAM Loan is reported as a receivable in the Company's audited Financial Statements for 2020 and identified as a contingent liability in Challenger's 2020 Financial Statements. "

Thanks for the full details PT - to me the important bit is where they put their head into the noose by stating "The Croup has filed a counterclaim which. if successful, will REDUCE the Croup's liability WITHOUT FULLY EXTINGUISHING IT".
How on earth can they reconcile that with the statement made in the June 8th RNS "FRAM denies that any amount is owing to Predator pursuant to the WPA, and considers the various assertions made by Predator in yesterday's announcement to be devoid of any technical justification or legal basis"

A genuine question, so I'll try & give a genuine answer! KAV have some projects which are potentially of huge commercial value. They have been investigating these for three years, but have not yet drilled economic mineralisation. There are three types of investors in mining stocks.
1. Institutional Investors, who will not (or are not allowed to) invest in companies that do not yet have a defined resource. They do not hold KAV stock
2. Average private investors who are looking for a quick high return, the mythical ten-bagger, whose investment decisions are driven largely by 'tips'. They have tried investing in KAV, but have lost patience when they do not see instant returns - see for example the behaviour after the drill narrowly missed the B1 target earlier this year.
3. Serious / semi-professional private investors who specialise in resources companies. They understand that ten-baggers normally take a few years, carefully research companies, looking for those with potential world-class projects, stable jurisdictions & good management, then simply hold for 2-5 years.

KAV is unusual among exploration microcaps in that it releases very detailed (and often very technical) information. This will encourage Group 3 and discourage Group 2 investors. The company appears to have an unusually high proportion of shares in very sticky hands, be they directors, insiders, associated companies or group 3 investors.

The problem is that these sticky-handed folk already hold a lot of shares, and are not in line to buy many more since that is likely to over-risk their portfolios. At the same time, we are in one of the worst risk-off investment environments for many years. On the other hand, this is an opportunity, in that if/when a potentially economic or hopefully transformational discovery is made, there will be a mad scramble for the very small number of shares freely available.

I would be interested to hear other folks' opinions on this issue.