Member Info for KeithOz

@Nounours, just to add to the replies you have already received:

* I don't understand the relevance of molarity to gas volume, all geological calculations assume free gas, not gas in solution.

* Resource calculations are made assuming STP (100kPa / 1 Bar, 273.15°K / 0°C). Obviously the gas is not in that state when underground, so a GEF - gas expansion factor - is applied, based on known or assumed temperature and pressure, both of which will increase with depth. You will also see GEF referred to in equations as Bg. So 1 cf of pore space at a depth of 1000m might have a GEF of 150, meaning it will occupy 150 cf at STP, and this number will form the resource estimate. Much of the discovered gas at Guercif is overpressured - this means that it is higher than would be expected from the standard calculation. This is due to two geological reasons. Firstly, the ongoing collision of the European & African tectonic plates is squeezing the underground strata and compressing the gas more than would be expected just from the overlying weight of rock. Secondly, nearby remains of the Central Atlantic Magmatic Province - vast quantities of magma extruded when the Atlantic Ocean opened up - is still causing release of underground heat. I posted this map of geothermal gradients in Morocco on X a while ago - https://x.com/KQuick20704342/status/1720617262783008771/photo/1 - the red bit around the Guercif region indicates unusually high underground temperatures - these will help turn the carbon content of rock into oil, crack the oil to produce gas, and increase the temperature of the trapped gas, thus giving more gas per volume than would normally be expected.

* Chemical composition - as another poster has said, the more shallow gas is biogenic in origin, formed by direct action of bacteria on organic material in situ, and thus almost pure methane. Deeper thermogenic gas, derived from oil, will contain a proportion of longer chain compounds such as propane & butane. In some circumstances, there will be 'wet gas' which refers to higher content of liquid hydrocarbons, progressing to condensates, which can be either liquid or solid depending upon temperature / pressure.

Hope this helps rather than confuses 😏

MOU-2.

Re-interpretation of the MOU-2 penetrated section confirmed that MOU-2 had in fact fully penetrated the intended primary objective but was not capable of being evaluated by wireline logs. MOU-2 recovered 3 gas samples from 3 separate sands between 525.5 and 674 metres measured depth with associated gas peaks. These sands are behind well casing and therefore were not evaluated by a wireline logging programme.

The MOU-3 well drilled later in 2023 encountered some shallow over-pressured gas in the equivalent MOU-2 section which could not be logged or tested after a risk evaluation as the casing design and cement integrity at the shallow level posed a risk of uncontrolled gas flow if the over-pressured section was perforated. This interval could be perforated and tested in MOU-2. MOU-2 was safely suspended for future well re-entry and testing of the shallow gas."

Additional wells.

"The Company is foreseeing the drilling of appraisal and or development wells in late 2024 and early 2025 to potentially, if successful, add incremental gas resources to support and extend the production profiles of a CNG project and, potentially, with the MOU-5 well drilled and tested, gas resources of a sufficient size to service the gas-to-power market in Morocco. The evaluation of the potential for helium presence will also be examined. Funding and timing of this discretionary drilling programme will be dictated by the opportunity for partial monetisation of gas assets in Guercif and or an equity placing and or production revenues generated by Cory Moruga."

For the slower readers:

"The Company's planning activities for the remainder of 2024 allow for a number of possible discretionary projects over the next 12 months as follows:

Guercif Licence, onshore Morocco - MOU-5 exploration/appraisal well to test the Jurassic potential updip from existing MOU-4 well.

Onshore Trinidad - 💥Acquisition of producing fields.

New Ventures - 💥Licence application North Africa."

dependent upon cash from CNG and or C-M.

Some clarification needed here. P10 (the highest resource number) means that there is a 10% chance of meeting or exceeding this figure, P50 means a 50% chance of exceeding, and P90 (the lowest resource number) means there is a 90% chance of meeting or exceeding this figure. You do not add any of them together, as appears to have been done to get the number in this thread title.

In the 2nd bullet point of the 'post reporting period' section, it says P90, it should read P10. In the bottom line of the 'gas analysis ' section, the number is correctly given as P10.

Cards being held very close to the chest here, doubtless some will claim it is a failure of the Sandjet programme, while others will point to the multiple references to a partial divestment, probably to a local entity, at the earliest opportunity - such an entity would almost certainly require independent, comprehensive, longer-term gas flow data before handing over the cash.

The only new thing I spotted was the GIIP upside figure for MOU-5 - 14.729 TCF gross, so 11+ TCF net to PRD. Please note this is incorrectly stated to be the P90 figure, it is of course the P10.

People are getting twitchy because flow rates have not been released. The reasons for this are related to reservoir engineering. Not only is the person who is shrillest in their demands not a shareholder, but should understand the reasons better than most, since they claim to have an engineering background. As I have stressed previously, I am not an engineer, so what follows is probably a little simplistic, and quite possibly wrong.

Well pressure is pretty simple – you stick a pressure gauge on the wellhead and record the reading. But what is flow rate? Is it the volume of gas per unit of time with all the stops fully opened? There's a big clue in Methodology's Reddit magnum opus on Rharb Basin flow rates – every reading has an associated choke size. A choke is simply a valve, with its diameter given in 64ths of an inch – so a 32 choke is ½” in diameter. Why use a choke to restrict flow? The purpose is to obtain the optimum, not maximum, rate. A number of bad things can happen if you let the gas blow at maximum pressure.

* You could seriously damage the gas collection & processing equipment downstream if it is not designed to withstand that pressure.

* If the speed of the gas flow is greater than the speed of sound in that medium, you will get a sustained sonic boom – you can imagine the effect on people and equipment.

* Unrestrained pressure release may damage the reservoir formation, blasting debris into the borehole.

*The reservoir adjacent to the borehole may deplete faster than gas can flow through the reservoir, leading to 'coning' – an empty or water-filled space with its apex at the wellbore.

What you need for engineering planning and commercial projections is 'flow assurance'. This takes into account characteristics of the various reservoirs downhole, together with their individual pressures – can they all be blended and used simultaneously? Do you isolate one or more and use them sequentially? What is the sand/dust/water content? Are there any ngls/condensates? What are the characteristics of the gas collection pipework, valves, pumps, compressors, etc? This is complex stuff, with the aim of achieving a sustainable flow rate – reasonably constant and predictable over time, a known rate of reservoir depletion, and a sound basis for commercial calculations.

What if you want 50mmcfgd, but the 4 holes you have only produce 10 each? You don't over-run them at 12.5, for the reasons above, you just drill another (onshore = cheap) well. This is part of the Field Development Plan.

If PRD is at this stage, clearly there is gas. The optimisation of the gas flow from downhole reservoir to processing plant will enable finalisation of either a gas sales agreement or a sale of the whole CNG business. For MOU-5 and G2P or G2EU, with or without helium, a similar process will need to be undertaken. Possibly also in T &T.

With regard to the CNG development, imo we are approaching endgame.

A little more off topic, but still relevant to PRD.

Middle East War. I think it unlikely that Morocco will be drawn into this, even less likely that sanctions will be applied to the country or any of its companies. King Mohammed is in sole charge of foreign policy (and the armed forces, and the judiciary). Even though there have been pro-Palestinian protests across the country (including in Guercif), Morocco has strong diplomatic & business relations with Israel. Links with Israel are being carefully kept in the background at the moment, at the same time as maintaining good relations with the rest of the Arab world. Morocco also has strong ties to the EU & UK. Many Arab countries are very unhappy with Iran's leadership, and would remain neutral if a full-scale war broke out between Israel and Iran & its proxies. If production and export of oil & gas from the Middle East were to be restricted, this could potentially benefit the valuation of hydrocarbon resources in Morocco.

Government influence over PRD. A poster here suggested that ONHYM does not have the degree of control over PRD that I and several other posters have suggested. Respectfully, I disagree, and would be interested to know the reasons for this viewpoint.

There is a lengthy history of premature announcements of hydrocarbon discoveries that were claimed to make Morocco energy self-sufficient. All have crashed & burned (or not burned, actually). I have previously mentioned Talsint/Lone Star (scam), Enizgane/Europa (abandoned), Tendrara/Sound (bailed out to prevent insolvency), and now we have Anchois/Chariot (probably failure), with Gharb/SDX a dead man walking and likely to become insolvent.

All these potential saviours of the country are 25% owned by Morocco, and have been publicly championed by its leaders, who are now left in an embarrassing position. We should look at some of those involved. King Mohammed owns Al-Mada, multi-billion conglomerate who own Managem, who now own Sound Energy. Although Morocco has an elected parliament, things are done a little differently to western democracies. The King has directly appointed Aziz Akhannouch as Prime Minister - he owns Akwa Group, who own Afriquia Gaz. The King also directly appointed Leila Benali (previously with Saudi Aramco) as Energy Minister, and Nadia Fettah Alaoui as Finance Minister. The King-appointed Energy Minister from 2007-2012 was Amina Benkhadra, now head of ONHYM. All these individuals have direct involvement in approving Predator's plans, and after all the previous failures have very strong incentives for making sure that everything is done correctly from now on. CHAR was the poster-boy until a week ago, now everything has to be put behind PRD. This will be done quietly and a lot more efficiently than previously, and every single duck will need to be in a row before a new claim of energy independence is made.

Definitely not a flare. Probably a tarpaulin to keep stuff dry from the storm. Sorry.

It's not the lender who wants to renegotiate, it's the shareholders who refused to vote to approve the outrageous terms of the loan. It effectively hands the whole operation over to the lender (major shareholder Aleph Finance) on July 25th next year. The board now have just three weeks to come up with something acceptable to all parties, otherwise SDX will be taken private by Aleph and all other shareholders will have absolutely nothing.

We should all be very pleased that Predator is in the comforting position of having ZERO DEBT.

@IJWT. I wasn't involved with the Amur, project, but I spent three miserable years trying to run a JV with a Gazprom subsidiary in the face of intransigent, mendacious and incompetent Russian management. Russia will never be able to run anything technically complex without western help. It ended badly, after initiating legal action I was permanently banned from Russia. On the plus side I have some very amusing stories, and two daughters who are ¼ Russian and ¼ Ukrainian.

I confess to have been a little puzzled over the excitement about the possibility of a commercial level of helium within the MOU-5 structure. Helium is generated from the natural radioactive decay of uranium-containing minerals, most often found in granite basement rocks. It can be found as distinct pockets of trapped gas, along with nitrogen and/or carbon dioxide, or (more commonly) as a small component of natural gas accumulations. Qatar and Algeria produce helium from natural gas, with a concentration down to 0.04% being deemed commercial. The Amur plant in Russia mysteriously caught fire just before it opened - my Ukrainian friends were very upset.

The usual granitic basement rocks that generate the helium are notably absent from under Guercif, since the Hercynian orogeny did not produce any granite intrusions. (You can see the Hercynian basement rocks in the figure I put on X some time ago) - https://x.com/KQuick20704342/status/1821431180832714958/photo/1

So where has it come from?

I have just found this: https://infcis.iaea.org/udepo/Resources/Countries/Morocco.pdf

"After 1974, the BRPM [ONHYM predecessor] increased its efforts. Two areas were selected for further study. A reconnaissance programme was conducted over the Permo-Triassic of the Haute Moulouya and numerous anomalies were identified at the base of the Triassic, and these were tested by core drilling."

"In 2007, Australia’s Toro Energy Ltd signed a memorandum of understanding with Morocco’s Office

National des Hydrocarbures et des Mines (ONHYM) for the exclusive rights to evaluate the potential

of three areas known to host uranium mineralization. During 2007, these areas were evaluated and one

of them, Haute Moulouya, was considered to have potential for sediment hosted uranium. In June

2008, Toro Energy indicated that it planned to terminate the memorandum of understanding with

Morocco and focus on its activities in Australia and other areas."

So it looks like uranium-bearing sediment derived from granites elsewhere has been washed into the Guercif area in Triassic times, and is now sitting beneath the Jurassic, generating helium which will be trapped along with the methane we already knew about.

6 TCF x 0.04% = 2.4 BCF = 2,400,000 mcf @ $225 per mcf = $540M He originally in place.

After the usual reductions for recoverability, processing costs, etc., it looks to me unlikely to be a major contributor to profitability, but a useful addition, may increase the net present value by a couple of percent. Let's see what Scorpion come up with and why.

Last time I looked, uranium was 300k an ounce" In that case, I've got a whole truckload to sell you, since I can only get $79.50 per lb on the spot market 😁

Pt 2.

Morocco

Size & flow

We don't (yet) have numbers on resource size and flow rates – ONHYM are being extremely cautious after Talsint/Lone Star, Tendrara/Sound, Inezgane/Europa, Anchois/Chariot. The fact that the MOU programme is being expanded, and money is being spent on FDP & flow assurance, indicates that this is a viable project being prepared for sale or farmout.

Customer

Afriquia Gaz already have an exclusivity agreement for up to 50mmcfgd to be finalised before 27/11/24. I'm sure that both parties will be happy to extend/expand. In order to do so, it is necessary to have a very detailed appraisal. A standard gas supply agreement has clauses that protect both supplier and offtaker. The supplier does not want to gear up to produce at one rate, then be told later that the buyer only requires half the amount – so a 'take or pay' clause is included. The buyer also needs protection from a failure to supply so that they can maintain business activities – a 'supply or pay' clause. SDX went wrong when they were unable to guarantee supply to their major customer, so could not renew their existing agreement. They then needed to implement a proper flow assurance programme to get the business back on track – done by Zenith. Their current issues are related to insufficient cashflow to repay a loan provided by their main shareholder.

Infrastructure

PRD needs multiple producing wells to guarantee steady supply. They need to be connected to a central compression facility. The differing pressures have to be equalised, flow rates from the various horizons need to be intermingled in a controlled way. Reservoir depletion rates need to be calculated, and any necessary future additional wells have to be planned. This is all rolled up into the FDP and flow assurance, a complex project requiring external engineering, planning & financial analysis to ensure achievement of optimal delivery of gas from underground to the customer. This is now underway.

Finance

How much this will cost is being determined from the above process. Who provides the cash is the question. It could be:

* Akwa/Afriquia. Preferably by upfront payment for future gas sales. I would not be happy with them taking a significant stake, since they are ultimately controlled by Morocco's PM, who also controls ONHYM and their 25% stake. Too much external control for my liking.

* Us long-suffering shareholders. Possible, but I would prefer alternatives.

* Cashflow from T & T. I suspect it will take too long.

* Conventional loan / RBL – would be at a relatively high interest rate, and/or would require booked reserves.

* Venture Capital – they would love a project with pretty much guaranteed cash flow.

* A big O&G company buyout or farmin. Should get the best price, but a deal would probably need to include at least MOU-5.

I suspect Paul is currently lining up one of the last two options.

Pt 1.

Lots of issues raised yesterday while I was asleep, perhaps a quick round up would be helpful. This is my best guess following discussions yesterday with other knowledgeable investors. We do not have inside information, all the normal caveats apply.

Four things are necessary to have a viable project:

* adequate reservoir size & flow rate,

* a customer to buy a sufficient volume at a reasonable price,

* infrastructure to get the gas out of the ground and to the customer,

* finance to pay for the necessary upfront costs.

Trinidad

Size & flow

The ITR is running with a conservative 8.3mmbbl recoverable for Cory Moruga. Similar sized Moruga West has produced 12.2mmbbl to date, Innis Trinity 22.9mmbbl. So plenty of oil in well-understood reservoirs – C-M is continuous in part with Moruga West, and Jacobin-1 has been selected for first evaluation since it taps into these same reservoir sands. Yesterday's RNS gave us the +ve news that it is at virgin pressure, but -ve news that it has a waxing issue. This is quite common – oil underground is at high temperature & pressure so low viscosity. As it is extracted, temperature & pressure fall, and the paraffin content of the oil can start to crystallise, causing an increase in viscosity and potential for clogging the well bore and above ground piping, which will reduce oil flow. There are various tried & tested methods for reversing this process, I am not familiar with this particular one being used, but it is easy to imagine that heat & nitrogen will liquify the paraffin wax and restore fluidity. So we will have adequate reservoir and flow rate.

Customer

The oil industry is very well developed in T&T. There are refineries that buy oil by the truckload, and plenty of tanker operators who buy at the wellhead and transport it to the refineries, so no problems with customers.

Infrastructure

Simple & easy – a pump and a storage tank beside the well head.

Finance

Low, not much infrastructure required, suitable equipment and skilled personnel are readily available, and wages are low. We are assured that we are fully funded.

@OldSlow. The scale at the top is metres, so basically 25km wide. The vertical axis is milliseconds TWT (two-way seismic time), so around 4km top to bottom. All those fault lines act as conduits for gas from lower strata upwards, but are fortuitously sealed before they reach the surface, resulting in lots of stacked gas-filled reservoirs. That's my interpretation, doubtless some on here will have alternative opinions.

I wasn't going to go down the Helium wormhole, but just a quick clarification on prices. The vast majority of Helium is sold on contract to the big specialist gas distributors such as Zephyr (the biggest), Air Liquide, Linde & BOC. Current contract prices are in the range $225 - 250 per mcf. You will also see much higher spot prices quoted, especially by small Helium producers trying to ramp up their prospects. In reality, almost no Helium is sold at spot, and then only in the US.

In summary, assume 20 - 25 x the price of natural gas. I have no idea about separation costs, I am not an engineer.

"The Company is fully funded to undertake all additional operations that may be considered necessary to support RESRVOIR FLOW ASSURANCE for the purposes of PLANNING A POTENTIAL DEVELOPMENT OPTION." My caps, to emphasize what Zenith are employed to do, based on an initial appraisal of MOU-3 results.

I didn't say they were hired to drill additional wells, although that may be part of their recommendation. I suggest if you don't know what Field Development Plan and Reservoir Flow Assurance mean, that you familiarise yourself with these terms before you embarrass yourself further.

Matt - that's what Zenith do for a living.

...simply have no idea. Zenith have been employed to draw up a field development plan. You can't do an FDP unless you have proven gas. I expect that the expansion of the MOU-3 testing programme is to include the many horizons above & below the Middle Sands (the only horizons in the original programme). See the many different potential reservoirs here - https://x.com/KQuick20704342/status/1835948790110691562/photo/1

This additional data will be necessary to compare the same horizons in the other wells, and decide what infill wells will provide optimum flow. The FDP would also include the connections required between the various wells, both current and new, and the central CNG plant.

This scale of work at this stage would imply that there is a lot of gas, very probably more than Moroccan industry can utilise in the next couple of years. Afriquia will be intimately involved, it is very much in their interest.

I also see that Lonny has removed his connection to PRD on his X account, although the related posts remain.