Member Info for KeithOz

Of course the 4th option is first either (1) or (2), then (3)! Such an outcome could even be catered for by including (3) as a call or put option within (1) and/or (2).

I can see three possible structures:

1. Loan for CNG equipment, freed up cash left from last placing used to drill JUR-1 and twinned MOU-3 to appraise the high pressure shallow gas. Possibly wrapped up with a forward gas sales agreement that will be dependent upon meeting agreed flow rates. This has the advantage of retaining management control and 75% ownership of the whole operation, but the disadvantages of taking on debt and a whole shed load of management time & effort.

2. Sale of small stake in PGVM, in exchange for funding and setting up the CNG operation, and for drilling costs for further development of the MOU-Fan, MOU-NE (which will ultimately require 10+ wells plus pipelines), and potentially exploration of further prospects - although the latter may be paid for in proportion to ownership of PGVM. Advantage is that everything becomes easier & faster with a cashed-up partner with many staff, disadvantage is that you no longer have 75% and probably not management control.

3. Sale of majority stake in PGVM for cash, plus either royalty or stub equity. Advantage is you get your money now, disadvantage is it maybe could be worth more in a year's time after further development.

It wasn't that long ago that Paul said they could exit Morocco this summer, of which there is very little left. Nothing we can do to influence things at this stage, so I'm happy to sit back and trust Paul & Lonny.

I suspect there is a more comprehensive confidentiality agreement(s) already in place. Such agreements usually contain a clause that neither party will reveal that discussions are in progress until concluded. Patience will be necessary.

...and then a few seconds later we learn that Disko is not dead, just sleeping for a year. The 2022 exploration results don't look too bad, maybe there will be some actual drilling in 2024, assuming that JAY is still around.

"It is our conclusion, based on the updated MRE 2023, combined with the broadly finalised Interim Assessment Study work streams undertaken by our consulting team, that there is a very low probability of the Dundas deposit being economic with its current resource base - and certainly so without a significant contribution from either the potential adjacent known onshore and offshore resources which would require more investigation, and therefore, cost. Bluejay will seek alternatives for realising value from Dundas whether through a partnership, disposal or combinations thereof."

You just couldn't make this stuff up. Will the board of directors now return their salaries of the last few years to the remaining shareholders?

@Bob - do you remember the old fireworks that had labels saying "light the blue touch paper and RETIRE IMMEDIATELY"?

Already achieved for you, but might apply to some younger ones here!

'Stuff' is a technical term used by drilling crews 😋. NHE's rig was unloaded at their drill pad yesterday, with remaining stuff arriving today, so I believe that by some remarkable and unfathomable coincidence that our remaining stuff will arrive at the same time.

And some more:

"The Company has sufficient funding, if required to execute the acquisition of TRex Holdings (Trinidad) Limited within the next 12 months and also to contribute to the initial costs for a CNG development in Morocco subject to the award of an Exploitation Concession. The Company has interest from two lenders to provide debt financing for a CNG development which is expected to require a minimum of US$5 million (net the Company's 75% equity stake) for the "Proof of Concept" development case. If following the debt financing route proved sufficiently attractive, discretionary cash on the Company's balance sheet could contribute to additional drilling in Morocco. Accordingly, either an appraisal of the Jurassic structure or CNG development wells for upscaling gas deliveries could be considered."

👍🏽 Should be just possible to drill one 1200m and one 800m hole with $5M, if either of the interested debt providers pays for the CNG equipment.

"The Company recognised considerable upside in Cory Moruga. PAREX had indicated gross P50 recoverable oil resources for seven Herrera Sands not included in the FDP, but which tested oil in the Rochard-1 well in Cory Moruga Licence and in the adjoining Moruga West Field, of 18.5 million barrels (15.5 mm net to TRex)"

👍🏽 So 50c per in-ground barrel for Cory Moruga, incredibly cheap - POO looks like it will be over $100 a barrel by next month

@allis. The stated field trip will help the objective of proving up & selling out.

MOU-4 was designed to have the secondary objective of penetrating the Jurassic structure, which it achieved - however, the potentially gas-bearing zone was considerably deeper than expected. This has resulted in the need to reinterpret the seismic data. The same Jurassic strata outcrop (appear at the surface) to the south of Guercif town, so the idea is to survey these thoroughly, to determine the true sequence of the strata. This observed data can then be correlated with both the existing seismic and the actual drill observations, giving a much more accurate idea of the depth and structure of the potential reservoir zone(s).

This will then optimise the drill position for JUR-1 / TIT-1 / MOU-5.

Most of this is historic, but did you see:

"Importantly MOU-3 confirmed the interpretation of the results of the MOU-1 well completed in July 2021 and established a new gas basin covering up to 240 km² in the northwest corner of the Guercif Licence. This has created the opportunity to re-assess a previously unexplored part of the Guercif Licence from the perspective of developing new gas prospects at several different geological levels."

👍🏽That's a little bit larger than most had realised.

"The outlook for the remainder of 2023 will see the rigless testing programme in Morocco initiated and completed and, subject to results, the CNG development plan being progressed targeting "First Gas" in 2024."

🤞🏽 So maybe testing hasn't started yet.

"Due to the unexpected presence of over-pressured shallow gas a different well design would need to be considered and the MOU-3 well twinned to approximately 800 metres depth to safely conduct a rigless test in this interval. Structural closure is estimated to be up to 6 km² within this gross interval of 450 metres with several levels of gas-bearing sands. Potentially material gas resources may be present within this structural closure."

👍🏽 That's why a new borehole twinned to MOU-3 is needed.

I suspect the next RNS (this week or next) will be very interesting, even if it does not include anything about testing.

Bob - maybe you could get them to build a replica Aswan dam across the River Tees? Enjoy your hols, don't get sunburnt!

Since a number of my previous posts on valuation have been re-posted by others this week, I feel I should put these into context, particularly for new readers.

🦕 The calculations of intrinsic value - projected market cap of net present value - are derived from the company's own numbers as provided in presentations and RNS's. I have merely processed these through a standard NPV/IRR spreadsheet.

🦕 The conversions of these numbers into value per share are out of date - it is now necessary to divide the NPV figures by 562.5M, which is the number of shares currently in issue - this gives the undiluted price. To get the (more accurate) diluted value, accounting for options/warrants in issue, it is necessary to add the value of exercising these (# of options x exercise price) to the NAV, then divide by the total number of shares + unexercised options. This only makes a few percent difference.

🦕 I must emphasize that these numbers relate only to the gas projected to be in the MOU-Fan and shallow horizons above - a very small area of the total Guercif licence. Nothing for MOU-Ne Jurassic and several lookalikes. Nothing for Ireland. Nothing for T &T. Nothing for green hydrogen.

🦕 No company still at the development stage trades at full intrinsic value, nor will this be paid by an acquiror. This is because there are still risks, which may be geological, executional or market-related. Typically, you could expect a valuation of 25% of intrinsic value at this stage, that discount will decrease rapidly as the project is de-risked.

🦕 The key de-risking events for Morocco are *gas flow rates, *calculation of reservoir volumes, *gas sales agreement, *financing of CNG equipment, *confirmation of Jurassic potential, *JV or acquisition of Guercif licences. For Ireland it will be approval of Corrib South SA's and/or political change. For T & T it will be *approval of Cory Moruga development plan & mitigation of historic costs, *establishment of a CO2EOR business in partnership with another company.

🦕 You should not just look at the quantity of an NPV (how big is it?). A potential acquiror or JV partner will also look at other factors which include the internal rate of return (IRR) and time to payback. I have previously commented that the IRR for the gas to power / gas to Europe scenario, at over 300%, is the highest I have ever seen, with a correspondingly attractive payback period. An acquiror / JV-er will also assess a project for strategic fit - how well does a large volume of gas, sitting astride an underutilised pipeline to Europe, in a stable & low tax jurisdiction, complement their existing business?

🦕 I do these sorts of calculations, and ask the same questions, for my own evaluation of any company. I am happy to share these, and equally happy to receive feedback. Disclaimer - It is obvious that I consider this an extraordinary opportunity and have invested accordingly.

@Ibiza - You are correct - should be 562.5M.

...and these are the new numbers, thanks to our AI friend:

"Let's recalculate the values using 526.5 million shares in issue and summarize the results:

10mmcfgd Operation:

Original NPV12: $177 million (£138 million)

Current value per share: (£138 million / 526.5 million shares) = £0.26 per share

50mmcfgd Operation:

Original NPV12: $795 million (£619 million)

Current value per share: (£619 million / 526.5 million shares) = £1.18 per share

Excess Gas Utilization:

Original NPV12: $3,225 million (£2,511 million)

Current value per share: (£2,511 million / 526.5 million shares) = £4.76 per share

Combined Value of 50mmcfgd and Excess Gas Utilization:

Total value per share: (£1.18 per share + £4.76 per share) = £5.94 per share

Entire Estimated Recoverable Gas Volume (1.8 TCF):

NPV12: $6,450 million (£5,023 million)

Current value per share: (£5,023 million / 526.5 million shares) = £9.54 per share

So, when considering 526.5 million shares in issue, the current value per share for the different scenarios are as follows:

10mmcfgd: £0.26 per share

50mmcfgd: £1.18 per share

Excess Gas Utilization: £4.76 per share

Combined 50mmcfgd and Excess Gas Utilization: £5.94 per share

Entire Estimated Recoverable Gas Volume (1.8 TCF): £9.54 per share

It's worth noting that these calculations are based on the provided data and assumptions and may not account for all factors influencing the company's share value. Additionally, the author's analysis did not consider other potential resources across the license area, which could impact the overall value."

I have just started playing with Chat-GPT 4.0, which still has a few bugs, but should be even better.

Curious that several recent posts have been re-posted by bots posing as new board members. Not sure what the objective is, but the programme they are using is rubbish, having somehow managed to mangle the original posts in the process. To save our newly joined bots the trouble, I have Chat-GPT3.5'd the post originally by me, re-posted yesterday by SmartBeds.

"The author analyzed data from a presentation dated September 8, 2022, using a 12% discount rate to account for increased costs of money over the past year. They employed the Net Present Value (NPV) approach to assess the current value of future cash flows. In this analysis, they considered two scenarios with a 50% inflated capital expenditure: one involving a production rate of 10 million cubic feet per day (mmcfgd) with a net profit of $10.28 per mmcf, and another with 50mmcfgd and a net profit of $9.79 per mmcf. The 10-year NPV12 for the 10mmcfgd operation was estimated at $177 million (£138 million), while for the 50mmcfgd operation, it was $795 million (£619 million).

The author also discussed the possibility of using excess gas for power generation or exporting to Europe at a lower price of $10 per mmcf. They estimated a NPV12 of $3,225 million (£2,511 million) for this scenario, requiring 900 billion cubic feet (BCF) of gas.

When applying these calculations to the company's shares, factoring in a 75% ownership share, and assuming 450 million shares outstanding, they arrived at a current value per share of 23p for 10mmcfgd, £1.03p for 50mmcfgd, and £4.18p for 250mmcfgd. Combining 50mmcfgd and 250mmcfgd resulted in a total value of over £5 per share.

The author further speculated that if the entire estimated recoverable gas volume of 1.8 trillion cubic feet (TCF) were utilized over ten years, the NPV12 would increase to $6,450 million (£5,023 million or £11.16p per share). They noted that extracting the gas more quickly would yield higher value due to reduced discounting effects.

Finally, the analysis only considered the output from the MOU-Fan & Ma sands at specific boreholes, without factoring in other potential resources across the license area."

I then asked it to recalculate the numbers using 526.5M shares and re-summarise - results to follow.

A short response to some comments, if I may. No, there was not an earthquake anywhere near Guercif yesterday. There are plenty of small earthquakes out in the Mediterranean about 200-250km to the north of Guercif, monthly on average. The last one that would have been felt in Guercif (but no damage) was January 25th 2016. (source - USGS).

Very unsettling seeing names of towns and villages where I have stayed for work and/or leisure being hit. I expect Paul will issue a statement on Monday, but I don't expect it will include an update on progress. These tectonic features are all well-known and do not affect the geological interpretation of PRD licences. I see no reason at all why this tragic event should disrupt anything to with PRD's operations, but I agree that will not stop the rats attempting to make some small money out of other peoples' misfortunes - this is their modus operandi. Name & Shame, then filter. Lucain, you've just been deleted.

And the link didn't work! Try again.

https://chariotenergygroup.com/app/uploads/2023/09/AGM_070923_Presentation_Final_noapp.pdf

Some stuff in this of relevance to PRD, especially their proposed Moroccan gas marketing on p.14.

Over 1000km to the SW, probably wouldn't have felt anything in Guercif. Not good for Marrakech, lots of mud brick buildings.

@kn)wles. On 6th Sept, re changes between imagery of 31/8 and 5/9, I posted:

"I would suggest some caution when interpreting the latest satellite images, since the heavy rainfall of a few days ago has changed the appearance of many surfaces; fields appear darker, with pools and small rivers appearing in places not seen previously"

and

"MOU -3 - There appear to be equipment position changes here, but it is difficult to see detail because contrast is reduced by the effects of surface water, which are more marked at this location - the land to the west of the approach road by the pad entrance has flooded..."

I don't see any further changes at MOU-3 between the 5/9 and 7/9, other than the pool to the west of the entrance has decreased in size.