Member Info for KeithOz

- a possible reason why testing may not yet have begun.

Some comments (many from the usual suspects), suggesting that PGVM buyout talk is a fantasy, despite clear pointers from the last 18 months being spelled out in some detail. Neither I, GRH, Cube, nor anyone I have been in contact with, has inside information, otherwise we would not be making the comments that we have. So in this sense, it is speculation.

However, between us and the many other people making similar observations, there is a certain familiarity with the O&G industry, and experience of structuring deals. GRH heads his Twitter account with “closed on $22 billion”. I can't claim that amount, but have worked for two Fortune-500 companies as Business Development Director for EMEA, and for three years structured and ran a JV with a subsidiary of Gazprom. Cube is still active in the industry and clearly knows what he is talking about, and I respect his requirement for confidentiality.

It would be informative if our 'usual suspects' could disclose their relevant experience, and their reasoning behind the view that there are no PGVM discussions nearing a conclusion.

Here are my thoughts (and only thoughts) on a potential outline Heads of Agreement.

🦕 ABC Co and PRD (the Parties) have agreed the following (the Agreement), subject to normal conditions precedent, including due diligence, necessary regulatory approvals, and compliance with applicable local laws.

🦕 ABC Co will pay PRD the sum of $X in exchange for the exclusive right to conclude the Agreement within a period of 90 days. This will be non-refundable if ABC Co withdraw from this Agreement, but refundable if PRD do so.

Maybe

🦕 [ Conditional upon combined flow rates of 100mmcfgd being achieved from wells MOU-1, MOU-2 & MOU-3, ]

ABC Co will acquire Y% of PGVM for an initial payment of $Z, and will become the Operator of the Guercif licences. ABC Co will fund 100% of exploration and development work on the licences from the date of this agreement, and produce, finance and execute the Field Development Plan.

🦕 An additional payment of $XX will be made by ABC Co to PRD for each TCF of Contingent Resource credited by an agreed independent Competent Person for the MOU-Fan and MOU shallow sands (more detail to be included).

🦕 Additional payments of $XY will be made by ABC Co to PRD for each TCF of Contingent Resource credited by an agreed independent Competent Person for the Titanosaurus Prospect. Additional payments of $XZ will be made by ABC Co to PRD for each TCF of Contingent Resource credited by an agreed independent Competent Person for other Prospects on the Guercif licences that have not yet been drilled by PRD.

🦕 The Parties will share profitability from production of hydrocarbons from the Guercif licences in proportion to their shareholdings in PGVM.

If finalisation is conditional upon testing, I would expect trading in RD would be suspended until testing is completed and the Agreement finalise – a possible reason

@PredFan. This has been running for perhaps 18 months. PRD last year mentioned discussions with an Abu Dhabi energy company, of which there are not many. Paul has mentioned that discussions are continuing, presumably with updates provided as well results come in. Fox-Davies Capital were appointed as joint broker at the end of last year, clearly for their expertise in handling sale negotiations - they have offices in London & Abu Dhabi.

NewMed announced publicly in November 2022 that they were looking at an onshore asset in Morocco. The Newmed / BP / ADNOC deal was announced in March 2023. I speculated here on May 22nd 2023 that NewMed and friends were talking to PRD - there were plenty of rumours circulating within the industry and on platforms such as twitter at the time. These rumours started hotting up during September. I re-stated my views here on 28th September, presenting the logic of such a tie-up. CUBE posted openly on Twitter on 29th September, linking Abu Dhabi, Israel & Fox-Davies to contractual

negotiations.

I do not claim to have inside information - I am just stating publicly known information, and linking it in a logical manner. Whether you believe I (and a number of other people who have come to the same conclusions) am/are correct or delusional is entirely up to you.

@ Others - I am not so hung up on the importance of flow testing as some on here are. Overpressured reservoirs tens of metres thick will flow adequately - to an acquiror, volume is all-important. If considered important, such issues can be addressed by conditional performance clauses in a contract - this is absolutely standard.

I don't suggest any deal will be done on the basis of "thanks for the $2Bn, it's all yours now". I anticipate a substantial upfront payment based on what is actually a very large amount of existing information, even without the beloved (and possibly unnecessary) flow rates. There would also be stage payments conditional upon the booking of Resouces / Reserves, with retention of equity by PRD and / or royalty payments.

The alternative to doing such a deal now on an exclusive basis, is for PRD to develop the assets further by working up the CNG business, drilling out the MOU-Fan further, appraising the Jurassic (or should I say JurassicS), getting some distribution agreements in place, and then being able to get a higher price from an auction process.

As a prospective purchaser with a strategic need for an asset such as Guercif, which alternative would you prefer?

Decision please, you have until the next solar eclipse to decide.

Hear, not here. Or maybe hear it here.

@Androcles. We can each come up with valuations until our neurons fuse, but the financial number is only part of the overall valuation. Each negotiator has to consider the strategic value of the asset. BP has a commitment to move away from oil towards a less carbon intensive alternative. ADNOC needs to diversify away Abu Dhabi - 100% of the business is in one small location, so high risk. NewMed needs to diversify away from the ultra-high tax jurisdiction of Israel. All three companies have compelling reasons to acquire a large volume, high profit gas business outside their normal sphere of operations.

Paul wants to get out of Morocco, but not at a giveaway price, especially when there are people potentially prepared to pay a premium. How do you resolve the conundrum of a keen seller getting the best price from keen bidders? The seller has to appear more reluctant to sell, and float credible alternatives to a sale. For example, you could produce spreadsheets showing how much more money you could produce by going it alone, and point out that you have the financial wherewithal to do just that, with or without local industrial partners. The potential acquirors may then realise that if they wait another six months, the assets will be further developed towards profitable production, the price will have gone up, so better pay up the asking price now.

This is why I think we are at the end game, and will shortly here the result.

..or two 600kg gorillas and one 100kg and growing fast. The first two are known to all only by their initials.

"and other parties are aware that we have funds to progress the Moroccan project should we decide that's the best course of action." Well spotted, @Bowlesd - that is an ace for a negotiating position, and the fundamental reason for the indecent haste of the recent placing. Imagine negotiating with the 600kg gorilla (dust or no dust) with no alternative plan and no money.

I echo the earlier request - what has Ian Cowie said? Are you talking about something that was written yesterday or just the stuff from two years ago? - I am unable to access the Sunday Times in Australia.

EOG today: "following the interpretation of recent seismic reprocessing, the Company's Pmean prospective resource estimate for Inishkea West has increased by 92% to 1.55 TCF.....This has resulted in a marked improvement in the imaging of both the Inishkea West and Inishkea prospects, with the Inishkea West structure now being mapped as a large 4-way closure, with a prospective resource Pmean of 1,554 BCF. ....For the Inishkea prospect, which relied on a degree of side seal for historic prognosed volumes, the reprocessing has confirmed the likelihood of side seal breach and therefore resulted in the downgrading of this prospect. In turn, the Inishkea structure has reduced in size and is now estimated to have a prospective resource of Pmean 146 BCF."

Add these to PRD's Corrib South, and Minister Ryan has a ready-made solution to the rapid depletion of Corrib.

This was said in November last year at a global investment symposium held in Marrakech, sponsored by the Jerusalem Post - here is a write-up:

https://www.jpost.com/business-and-innovation/article-722899

I am a little confused that he thinks the greatest opportunity is in the 'Moroccan Sahara', since there is very little Sahara in Morocco, and I am not aware of any gas prospectivity. There are three possible reasons for saying this:

* Maybe he means the Western Sahara, but Israel did not recognise this as a part of Morocco until July this year - and again, I am not aware of its gas prospectivity.

* There was a mis-translation between the three languages in use - some reports just said 'in the Moroccan desert', which could just imply onshore rather than offshore.

* Yossi knew damn well it was Guercif, but didn't want to reveal this for commercial confidentiality.

@Nevermined. This is how I did the calculation: NewMed has 45% of Leviathan, their holding company, Dekel, has 5%. $2Bn was for their 50% of 23 TCF = 11.5 BCF. $2Bn / 11.5 = $175M per TCF. That's how much industry is prepared to pay for low-profitability gas. Leviathan gas has high cost of extraction due to being deepwater offshore, a low sales price, and high taxes.

Guercif gas will be much higher profit per TCF - exactly how much higher I do not know, but a conservative guesstimate would be x5. That would make the price that industry would pay $870M per TCF.

Many on here, including me, have done detailed calculations of the net present value of a TCF of Guercif gas. Figures use different assumptions, but fall mostly in the range of $2-5 Bn per TCF. That is how much the asset might be worth in terms of future discounted cash flow were PRD to develop the asset themselves. However, I have pointed out on a number of occasions that O & G assets do not change ownership for the full value of the NPV. This is because the project at such an early stage is still far from being risk-free, and an acquiror will wish to discount the purchase price accordingly. The acquiror will also want to make a decent profit on the transaction, so again, will require sufficient discount on the NPV to enable them to do so.

I have stated a number of times that we should consider 25% of the NPV as a reasonable base for negotiations at this stage. Assuming a profit multiplier of 5x on the BP/ADNOC transaction as detailed above, that gives $870M per BCF. At current USD:GBP of 0.82, that gives £713M, with around 600M shares in issue after conversion of options, that equates to a fully-diluted share price of roughly £1.20p per TCF.

I would hope that the next CPR, previously scheduled for November, will demonstrate a Contingent Resource roughly the same as the P10 figure of the Feb 2022 CPR, which was 1.8TCF. It could well be in excess of this figure, since potential MOU-Fan reservoir sands appear to be substantially thicker than previously anticipated and of slightly greater areal extent, and previously unknown additional shallow reservoirs have since been discovered.

Based on the above very broad assumptions, I would hope that Yossi would be prepared to hand over £2 - 5 per share. Please note some on here clearly disagree, one for example having publicly stated that "I have mainly converted to cash, awaiting further announcement”. Clearly everyone should do their own research, reach their own conclusions, and accept the consequences of their own decisions.

Hope this clarifies the earlier post - Keith

@Lorenzo. Correct.

"With offices in London (UK) and Dubai (UAE), Fox-Davies Capital works with corporate clients and institutional investors located around the world.... Our philosophy is to identify quality companies with whom we want to work, and provide them with best in class services to help them meet their corporate and funding goals to the benefit of all stakeholders."

https://www.fox-davies.com/about

I hinted yesterday morning that this was the rumour going around, now Cube is brave enough to make it more obvious. Since he has, I'll add that maybe another flag is missing from the tweet, since BP is also a 25% shareholder of NewMed, along with ADNOC. If it really is a 5-way deal (PRD, ONHYM, NewMed, ADNOC & BP) there will be lots of i's to dot & t's to cross, but with this much open speculation around the industry I would think that something has to be announced sooner rather than later.

The_Cube

@__The_Cube__·

8m

🛢+ 🦊 + 👑 + 🇲🇦 +🖋 --> 💰

🛢+ 🦊 + 👑 + 🇮🇱 +🖋 --> 💰

🛢+ 🦊 + 👑 + 🇦🇪 +🖋 --> 💰

'Significant drilling breaks'

Tick tock... 🕖

From today's SDX interims:

* "In Morocco, we produced approximately 0.4 billion cubic feet (69,249 barrels of oil equivalent) during H1 2023. Gas and energy demand in general in the region remains high and, in June 2023, we renegotiated the gas sales agreement with one of our key customers and received a higher gas price for production with effect from 1 May 2023."

* Morocco net production averaged 2.30 MMscf/d for H1 2023.

* Average sales price of $11.80 per mcf

* Total Morocco gas sales for last 6 months $4.9M

From today's SCIR interims:

" At 1 January 2023 Scirocco held 2,906,088 shares in Helium One, 1 million of which were the subject of ongoing recovery discussions with the Pello Capital administrator, Evelyn Partners.

Within the period, 1,906,088 shares in Helium One were sold for an average price of 7.5p/share.

After the end of the period 1,000,000 shares in Helium One were delivered to Scirocco following consultation with Evelyn Partners pursuant to the options exercised by the Company in 2021. These shares were sold during August 2023 at an average price of 7.5p/share delivering net proceeds of c. £75,000.

Scirocco's remaining holding in Helium One is nil shares."

A telegram user had asked what study results we are expecting, and whether these were being done by NuTech. My response:

NuTech concentrate on wireline log analysis. Previously, for MOU-1, PRD have used other specialist companies for various analyses - Petrostrat for stratigraphy & QEMSCAN, Rockwash for sedimentology, and APT for geochemical source rock & maturity analysis. The results of these various studies informed the positioning of MOU-2, -3 & -4.

I assume they are doing a repeat of these on the Jurassic - once combined with the physical examination of outcropping Jurassic sequences, they will have a very good idea of the strata sequence, what strata are likely to contain reservoir quality rock, and to what extent this will be hydrocarbon charged. All will inform drill positioning.

No, SDX are using ONHYM's rig, we are tied in to Star Valley 101.

Good morning. Anyone fancy some breadcrumbs for breakfast?

Leviathan – named after the largest animal in the sea. Now, what was the largest animal on land called? Began with a T...

Leviathan prospect has 23TCF, NewMed Energy were 45% owner & operator of Leviathan, but earlier this year BP & ADNOC (Abu Dhabi National Oil Co) agreed to buy 50% of NewMed for $2Bn.

https://www.offshore-technology.com/news/bp-adnoc-newmed/?cf-view

$175M per TCF doesn't sound like much of a deal, until you take a closer look at the bottom line. Not much profit in Leviathan - it's offshore, deepwater, very high costs per drill, very high capital costs for undersea pipelines and processing equipment on shore. Gas is contracted to be sold mostly to Israel for around $5 per mmcf. Corporate tax is 23%. Additional hydrocarbon royalty and special profits levy is insane – up to 62.5% - see last paragraph on p.2 of this:

https://www.oecd.org/fossil-fuels/ISR_v2.pdf

So if I was Yossi Abu, with a couple of $ billion burning a hole in my pocket, in what would I invest? I would be looking for something big, but more profitable – lower cost (onshore), higher price ($10-16 per mmcf?) with a new, under-supplied, customer base, and a more favourable tax environment. Trouble is, most hydrocarbon opportunities geographically close to Israel are not at all close politically. Oh, look at this...

https://www.aljazeera.com/news/2023/7/17/israel-recognises-western-sahara-as-part-of-morocco

and this...

https://newmedenergy.com/regional-ties/

Halfway down you will see a photo of the top NewMed people, with on the left Amina Benkhadra, ONHYM Director, and on the right, Leila Benali, Morocco Minister of Energy Transition and Sustainable Development.

"For a long time now we have recognised a huge potential in Morocco for collaborations in both the natural gas and renewable energy sectors," NewMed CEO Yossi Abu said.

NewMed have agreed a 37.5% stake in a venture (with Adarco) exploring for Moroccan offshore gas, but this is years away from producing anything. Leviathan output is now fully contracted to Israel and neighbouring Middle East countries, whose immediate energy needs are now satisfied. NewMed need a deal that gives them near-term expansion, for which they need new resources and new customers.

I just happen to have a deal, right here under my coat....

If NewMed shareholders BP & ADNOC are involved in discussions, that could slow things a little, but Abu Dhabi & UK are both best chums with Morocco. Mañana can mean later on today, tomorrow (literally), maybe next week or even next month, but almost never next year.

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