Member Info for KeithOz

I first mentioned in mid-2023 industry talk that ADNOC (Abu Dhabi National Oil Corporation) was interested in Guercif, both here and on what was then Twitter. I still think they are in the frame; they have invested heavily in Morocco over the last couple of years. These investments include in Nador Freeport, currently being connected to Guercif by a new motorway; renewable energy projects; desalination plants; and a major fertiliser joint venture with OCP.

Today's announcement that the UAE is leaving OPEC is particularly interesting. The UAE quota under OPEC was 3.5M Bbl/day, compared to their actual producing ability of 5M Bbl/day. Abu Dhabi is the UAE overwhelming majority producer, with around 95% of total Emirates oil. ADNOC will now be exporting an additional 1.5M Bbl/day of Murban crude, including overland to the ADNOC-owned port of Fujairah, via the ADNOC-owned Habshan-Fujairah pipeline, thus bypassing the Strait of Hormuz. Clever move.

This will provide a huge increase in cashflow to XRG, the ADNOC-owned fund with a capitalisation of $150Bn, of which currently $80Bn is as cash available for investment in energy projects worldwide. I am sure they could find some spare dirhams down the back of the sofa if Paul Griffiths were to ask nicely.

https://xrg.com/en/platforms#Gas

Any hole in the ground will likely produce helium at above air background levels, which is 5.2ppm, but that is a meaningless statement. The 1557 ppm from MOU-5 is borderline commercial, depending upon volume of carrier gas. I would think that the number of gas boreholes worldwide with or exceeding this concentration of helium is a fraction of 1%. To suggest that 90% of boreholes contain this level of helium is either delusional or deliberate misinformation.

Comparison with HeliumOne's resource in Tanzania is also meaningless. The Helium they have is 'fizz gas' composed of perhaps 5% He in 95% Nitrogen, the two gases being dissolved in ground water, not present as free gas under pressure. The water is sloshing around in faults, not captured in a sealed reservoir, so this means that the water needs to be pumped to the surface, the bubbles captured, then the helium separated - not very likely to be commercial. I suspect that HE1 seriously misled their shareholders - they conducted electromagnetic surveys which would have identified the situation, but did not release the results. Hardly surprising the share price collapsed when the real situation became known, which was just after the Chairman & then CEO had left the company and sold all their shareholdings. Caveat Emptor.

I note that yesterday the Taipei stock market overtook London in market capitalisation.

If you're really interested (ie nerd), I've put up a phase diagram on X.

https://x.com/KQuick20704342/status/2048654961555513525

@Sandy. That's the problem with AI, it often doesn't understand the question. The original post that inspired you to ask this question has a multitude of caveats. If you start with 1 Bn barrels of oil, and have ideal cracking conditions (temperature & pressure) for long enough, that oil could be converted into 1-2 TCF of gas, leaving behind a tarry residue that is little use to anyone. Under less-than-ideal conditions within the 'gas window', less gas will be produced and more (and better quality) oil will remain. The only way you can state how much oil is still present, based on volume of gas present, is if you know the subterranean conditions that have cracked the oil - temperature, pressure, and duration - and are very good at maths.

Conditions at Guercif are unusual, with a very high geothermal gradient (it gets hotter faster than normal as you go down). A normal GG would be around 25°C per km. Beneath Guercif it is over 40°C per km. This would suggest that there is a higher chance that more oil will have cracked to produce gas, but also a higher chance that any remaining oil would be degraded.

In short, it is almost impossible to predict the quantity and quality of oil based solely on the volume of gas present. An additional factor to bear in mind is that all this relates only to the deeper thermogenic gas, not the shallow biogenic gas that was formed in situ at low temperature by bacteria chomping on the organic matter within the sediments.

There is oil - it was flowed to surface in the 1920's, there are abundant oil seeps in the NW quadrant of the licence, and both surface sampling and remote sensing (satellite) surveys have shown oil to be present. How much is an open question, and I suggest that investors should not rely on some of the figures that have appeared on this board recently.

@CCC - Thank you for the clarification, I was not invested in GKP at the time (17 years ago), hence received the information second-hand. I understand the subsequent collapse in the share price was due to the company taking on a large amount of debt. They were then unable to service the interest payments since the political situation meant that they were unable to sell the oil, and the creditors took control.

There are three lessons here -

1. R-SDDH data was able to predict correctly the presence of oil and optimal drill placement.

2. Drilling success can result in significant multiplication of the share price.

3. Debt can end up as the albatross around the neck.

We should be pleased that the data for Guercif is positive, and that PRD has no debt.

This one made me smile..."WTF are all these references to Michael Caine about?"

Oh Boy. Way back on 18th March 2021 PRD issued an RNS outlining the profitability of a CNG operation based on modest flows of gas from Guercif. One of the board's most prominent members, GRH, posted an analysis of this demonstrating that the anticipated cash flows were far greater than anyone had realised. He titled the post "Michael Caine" in reference to the famous line in the Italian Job - "You only had to blow the bloody doors off."

GRH is a retired highly successful businessman, with a remarkable record of investing in oil & gas. This hydrocarbon success is partly due to his association with Scotforth, an oil & gas services company who have developed satellite-based sensing technology. @Sygmaa posted a link to their website yesterday:

https://www.scotforth.com/index.php/exploration-methodology

Scotforth (& GRH) have this remote sensing data for Guercif. It is commercially confidential, so I have not seen it, but the late Adnan Samarrai has, and he was very impressed by the apparent prospectivity. Adnan was one of the most prolific discoverers of hydrocarbons of all time, and geologist advising GKP at the time of the discovery of the Shaikan oilfield. Using Scotforth data, GRH correctly forecast the correct positioning of the main discovery drill.

GKP shares went from 12p in July 2009 to over £1.08p in October, then over the next couple of years, as the full scale of the discovery unfolded, up to a high of £4.60p.

I find it curious that someone who has posted here over 1000 negative opinions on the company, has so little genuine interest in PRD that they have not signed up for updates. Maybe they are concerned at revealing their name and email address? No need for concern, your IP address is far more important for obtaining incriminating information correlating attempts at market manipulation with trading, and they already have that. Don't worry, you'll look cute in an orange jumpsuit.

@MaB - If overpressured.

I perhaps should have made clear that these were two separate questions, and the answers do not overlap much. The MOU-1 / MOU-3 project is focused on biogenic gas, created in situ. This will not contain Helium. There are substantial geological seals between the shallow biogenic gas and the deeper thermogenic gas. The Jurassic / Triassic opportunity is thermogenic gas that has migrated from below, and will contain Helium given off from the underlying granite.

This means that conventional biogenic gas will have a lower value per BCF than conventional thermogenic gas that contains a commercial concentration of Helium. Unconventional (shale) gas will have a lower value, since multiple fracked horizontal wells will be more costly, and a lower proportion of the gas initially in place is likely to be extractable.

P.S. I wasn't going to mention this in case it is getting a bit confusing - but - if you look at the table on the right of slide 33 of the October 25 presentation, you will see that there are two pink stars suggesting two distinct Helium sources, not one. It looks as if PG believes the source of He in MOU-5 is indeed from the granite, while that found at 1350m in MOU-3 is from the volcaniclastic sediments (washed-in remains of a nearby volcano) that the drill intersected at that level.

PRD is unique in that it makes public an incredible level of detailed findings (such as the entire MOU-2 striplog). You have to ask why, since very few private investors are going to be able to make much of this, and the company does not give an interpretation of these findings - as an example, look at the appendices to the October presentation. So why the hell would they do this?

imho it can only be as appetisers to industry insiders looking for a new acquisition.

NuTech log / conventional log comparison:

https://x.com/KQuick20704342/status/2002519690086920579

What is NuTech and what does it make a difference for PRD?

NuTech is a technical services company best known for their biggest discoveries, such as Eagle Ford (US) and Vaca Muerta (Peru) which came not from drilling new wells, but from looking harder at data that already existed. NuTech has a worldwide database from over 50,000 wells, which correlates the logged results with actual production. By comparing the PRD readout with other similar wells in their database, they can predict the likely hydrocarbon content with considerable accuracy.

All quotes from:

https://www.nutechenergy.com/integrated-solutions/petrophysical-analysis/

“NULOOK is an enhanced petrophysical analysis which utilizes conventional open hole well logs. An accurate determination of effective porosity is derived using a proprietary system which integrates a multi-source clay volume logic and a series of algorithms which yield a pore size distribution”.

Put simply, this gives an understanding of the texture of the reservoir rock beyond the immediate bore surface – so beyond formation damage - and the likely content of bound and free hydrocarbons.

I assume that this technology is being applied on two fronts for PRD:

Firstly, Nulook Thin Bed Analysis will be of particular value for much of the extensive laminated turbidite fan reservoir beds in MOU-3/MOU-4. Conventional logging lacks the vertical resolution to evaluate properly low contrast and/or thinly laminated intervals – typically it is unable to record reservoir beds of less than half a metre thickness, a frequent occurrence in, and major component of, the thick turbidite systems under Guercif. Using NuTech will enable identification of pay zones that are invisible at conventional log resolution.

Secondly, Nulook Shale Analysis of the large potential shale gas resource around MOU-1. This “yields the Total Organic Carbon content of the shale and provides a kerogen correction on the log data to determine the effective porosity and permeability of an organic shale”. This means it shows any gas in what appears as barren rock on a conventional log.

We are waiting for release of the latest ITR to see how the Nutech evaluation has changed the total resource around MOU-1 and MOU-3. Much of the current resource is taken from the 2022 TRACS report, the remainder from the 2024 Scorpion ITR. I have combed through these in detail, and compared the published original well logs with the revised NuTech analysis, where available – I put some of this on X a while ago. My guess, and I emphasise it is no more than a guess, is that in the MOU-1 to MOU-3 shallow Miocene structures we have 1-2 TCF conventional resource, and an additional 1-2 TCF shale gas.

Helium contd.

I have previously posted a couple of maps/diagrams on X: https://x.com/KQuick20704342/status/1899250088582738385 https://x.com/KQuick20704342/status/2019353591761522951

Helium. Is it just a pipe dream?

The geological setting is favourable for Helium. It has recently been discovered that there are massive ancient granitic plutons beneath the region, that only show as tiny outcrops at the surface. The U & Th within the granite minerals has been undergoing radioactive decay for around 150M years, so has had plenty of time to produce lots of He.

The overlying rock strata include thick layers of salt and impervious marls, perfect for sealing gas within suitable structures. There are extensive fault systems that would enable transfer of He from the granites up to the trapping structures, which also contain methane. PRD has detected He in a fault system intersected by MOU-5 at 1557 ppm (about 500x expected background), and also in the deepest sample taken in MOU-3, at 1395M. I have asked what the other 998443 ppm were in MOU-5, since there wasn't any methane, but didn't get an answer. I also asked what the concentration of He was in MOU-3, again no answer. I have further asked about the status of the licence-wide satellite survey for He that should have been completed some months ago - again, no answer.

Now, the difficult question - is it commercial? That depends upon the concentration of He within the methane carrier gas, and the volume of methane. Where you have vast quantities of gas, such as the North Field in Qatar or the Hassi R'Mel field in Algeria, then a very low concentration of He becomes commercially viable. Helium is expensive to separate from the methane, and the price obtained can vary enormously dependent upon purity, but if everything was just right, it could double the value of the methane.

With Qatari production currently out of action due to Iranian war damage, He is once again in short supply. A new viable source, outside a politically sensitive area, would be of great interest. However, at this stage, PRD are keeping very quiet about both the volume of methane and the concentration of He.

This could mean two things - either there isn't very much He, or there is lots of it.

@MMR - Very useful, saves having to recalculate every time. One question - this model seems to apply the royalty by removing it from the overall value. I have done my sums a little differently - while having a royalty in place would reduce the initial payment, it should increase the stub value. The value of a royalty would be the discounted cash flows going forward. This is a rather complicated calculation, since you have to assume the sales by year going forward, apply the royalty percentage to those sales, then work out the NPV.

I'm not clever enough to add that to your model, but I have done that with a standard IRR/NPV spreadsheet, and using some quite reasonable assumptions, the value of the royalty will be greater than the initial payment. This is particularly the case if you assume upfront payment is made as a discounted value on a proven resource - say 2-3 TCF - but the royalty ends up on being on several hundred BCF per year, not an impossibility. I personally think that this will be the case, with a modest front-end payment, and the real value in the ongoing income. I know this will deflate some of the more optimistic/unrealistic expectations here, but people must accept that much of the opportunity with the Guercif licences is still at an early stage of realisation.

This is the main reason, imho, to retain either a stub equity or royalty.

It is incorrect now. It was correct when I posted.

It would appear that lse's link to the real LSE is broken this morning. So far 11 trades have been reported, with 824,770 buys, 4911 sells. 3.225p/3.4p.

@Donal. I think there may be some confusion as to what "Full Exit" of Guercif means. To some, it implies that PRD takes a cash sum and hands over all 75% of the licence, and rides off into the sunset. That is not what I would like to see, since we are left with no exposure to what should be a very substantial upside. This is not the scenario that Paul Griffiths has hinted at, nor does it seem to be the preferred route of the author of this note. They say in Section 9:

" PRD has been unusually transparent about the intended deal structure. The October 2025 IMC investor presentation is explicit: the mechanism is an initial cash payment combined with a royalty or milestone payment tied to production. In PG's own words from the presentation slides: 'Initial cash payment to strengthen further discretionary funds & dividend potential, royalty tied to reaching production milestones.'

This is a classic two-part consideration structure used in resource asset transactions where the buyer wants to manage development risk and the seller wants upside participation without staying as operator. It is also the structure most likely to maximise headline consideration — the initial cash underpins shareholder value and enables capital return, while the royalty tail preserves exposure to the basin's full potential without PRD needing to fund further drilling."

@F & M. You did say rhetorical questions, but in case an undefined entity is scanning this board to see what would be acceptable to shareholders, I will provide some rather loose answers.

As with all actual or potential investments, I try to come up with a range of possible values based on reasonable, factually based assumptions; then compare these with the market price in order to determine real value. Accordingly, I have an extensive spreadsheet for PRD into which I can drop appropriate variables.

Key to this for Guercif are: 1). Value per TCF of gas. 2). Volumes of gas present. 3). What discount would a buyer expect?

My mid-points are: 1). $2Bn NPV10 per TCF. 2). In the MOU-1/MOU-3 structure alone - 1-2TCF conventional gas, 1-2 TCF shale gas. 3). 25% of NPV10 for 2C resources is current going rate.

Clearly, on this basis, just for this one structure in Morocco, PRD is massively undervalued, which is why I am here. My upsides, based on what I consider to be reasonable assumptions, would cause certain people here to spontaneously combust. It is obvious that PRD, with its current funding and staffing levels, is totally unable to realise these upsides, even if PG were to outlive Methuselah. Hence the attempt to bring in a suitable partner.

Their valuation is going to be based primarily upon known resource. I do not know what resource estimate they will come up with. It may be the same as the ITR which we have not yet seen, it may be more - whichever, it will be based on their own examination of the raw data by their in-house expert team. That's why I found the recent attempts to discredit Scorpion rather silly - the purpose of an ITR is to give PRD management an independent opinion, an acquiror will form their own view.

So that's a fairly easy answer for Contingent Resource - but what about the potentially huge upside of Prospective Resource gas, within which I include the Jurassic Carbonate(s), Triassic, and those 19 other prospects that feature in all the recent ITRs/CPRs? Of course, these are higher risk and further down the line, so no one is going to pay top dollar. I do not have adequate data to evaluate potential commercial oil or helium, so currently assign no value to these, but that could change massively in the near future. This is why I would much prefer PRD to retain significant exposure to this upside, either through equity or at the very least a royalty over Guercif. This is an asset that should multiply in volume of resources produced, which are likely to sell at inflation-proofed prices. That's the sort of income stream everyone should be looking for to lock away in their tax-exempt pension pot, especially if they intend to outstrip Methuselah.

This is a well thought through analysis, it shouldn't be long before we know the actual outcome. May I suggest a couple of amendments to this document?

* Part 1. My reading of the last RNS concerning the potential deepening of MOU-6 is that this would be to access the deeper thermogenic gas already identified my MOU-3: TGB-4, TGB-2, Upper & Lower Moulouya Fan. There may be Triassic below, but it will be a lot deeper than at MOU-5, and MOU-3/6 would not be drilling at an optimal location.

* Part 3. I am not as confident as some here that MOU-3 will have cleaned up and gas pressure has increased in the bore. Normally such a clean-up would manifest within the first few weeks, not after a year.

* Part 3. My quoted use of "E.C." referred to Exploitation Concession, not European Commission.

* Part 3. It is my understanding from the most recent RNSs that the ITR currently with ONHYM relates only to the Miocene gas around MOU-1 & MOU-3, and does not include an update to the Jurassic & Triassic. It would be nice if it is more comprehensive, but don't hold your breath.

We are due the Annual Results in the next few days, maybe some more detail in the 'Post Reporting Date' section.