Member Info for KeithOz

Slightly longer answer - Yes, because we already know there is plenty of gas in the sand, under pressure, under seal, so the more sand the better. Not really PhD stuff.

@gg ??? My posts this morning appear under the name KeithOz - whose have you been looking at?

@MEM. No, there isn't enough information to calculate anything. I think that is good, btw, because it makes it very difficult for a hostile bidder. Doubtless there will be some here claiming that it indicates there is no gas. They will just have to wait a few weeks to find out they are wrong.

Almost 76m gross reservoir - unexpected shallow M1 sands - how far do these go? - clearly much more extensive than thought. MOU-Fan once again is found to be larger than previously thought. Main risk for Jurassic - the seal - is pretty much removed, and seems that another drill will need to be made into the high spot 2.5km away. All sounds very promising, but I suspect the market will not be impressed due to the absences of the words 'gas' & 'discovery'

I assume there is a very good reason why no mention is made of gas - and that reason is not that there isn't any.

Answers on a postcard

So CHAR is raising £28M to start drilling what could be an upside of 50M BCF Prospective Resources. PRD market cap is £58M - and how many BCF do we have Prospective Resources? Contingent Resources?? How much at the end of next month???

Obviously I should stop going to sleep, everything happens during my night time. However, I am sure that much of the last three pages of speculation here is incorrect. This has nothing to do with PRD or the Guercif licence. Try reading the notes below the CHAR RNS, in particular "Chariot is seeking investment for a new onshore Moroccan Licence that is nearing award, which is adjacent to and shares a common geological setting with Lixus." and " A four well work programme is planned, targeting high-graded prospects ranging from 8-18 Bcf of best estimate prospective resource potential (Chariot preliminary internal estimates)"

This is Rharb basin small-prospect stuff on the Atlantic Coast, similar to the tiddlers that SDX has been failing to commercialise. Nothing to see here, move along.

The bizarre PRD share price movement is a response to whispers of a Morocco onshore placing. Since the reality that it was not PRD came after hours, expect a major bounce back tomorrow (today for me!).

@Awacker - Jimmy is quite correct that thin sands that have undergone so many events are more likely to be compartmentalised. However, the main reservoir sands that have been encountered so far are the opposite of 'thin' - in fact substantially exceed pre-drill expectations. This will increase the chance of good connectivity. The 19th July 2022 RNS stated: "Post-well seismic ties validated a seismic amplitude signature for the MOU-4 Fan covering an area of greater than 30 km² .... The potential for multiple gas-water contacts may exist as is the case in the Anchois discovery and appraisal wells. However at this well location there is little seismic evidence for compartmentalisation of the target reservoir section." Jimmy also mentioned in his 28th June post "the mou fan now needs to be remapped as more of structure is up dip of proven gas at mou 1, and hence the risk of their being a gas water contact directly between the two wells is much reduced."

Additionally, the Ma sands intersected in MOU-3 now appear to be continuous over a larger area than anticipated.

There may also be benefits to the extensive tectonic movement for the chances of finding gas in the Jurassic, as Jimmy suggested in his post of 7th July: "The Jurassic carbonates in mou 4 will be very interesting as the cpr stated that fracture porosity will be important for reservoir quality. As the Jurassic is at an elevated depth compared to elsewhere in the basin it is well placed to benefit from fractures arising from the six periods of compression and two periods of inversion that this basin has encountered."

So I guess the answer is we might win some, we might lose some. All will become apparent in the next few weeks.

Aaargh! "most definitely NOT up to speed on UK taxation matters"

@LL. I would expect that on payment of a special dividend, the share would change from cum-dividend to ex-dividend, and the share price would decrease by the amount of the dividend. There may be a little variation on that should some investors want income rather than capital gain for tax purposes, but I am most definitely up to speed on UK taxation matters.

No, no that. I forgot that someone asked if there was anything significant about this sentence in the last RNS: "The well is currently setting the 9 5/8" casing". I had a look at the MOU-2 striplog (under Media on the PRD website) and saw that the 9 5/8 casing there was set at 680m, after 11 days drilling. If they have set at the same depth for MOU-4 (just an assumption) that was only after 5 days. If drilling continued at that rate (another assumption), that would imply they are at the base of the Jurassic about now, so you might expect a TD/wireline announcement perhaps on Thursday 13th. If the intention is to test the Triassic as well (third assumption!), then add perhaps 3-4 days, giving Tuesday 18th.

A) There is no gas. I have seen this comment (not here) “I wouldn't invest in PRD, all they have done is drilled dusters” and one here, stating “there is no proof of gas – there has never been a discovery mentioned”. I am not sure if this is genuine lack of knowledge and understanding, or a poor attempt at FUD by those with an agenda. Try looking up the meaning of Contingent Resource, and re-read the various RNSs that do use the word 'discovery' and present formation gas concentration and chemical content. A poster here has suggested that PRD may find wet gas or gas containing CO2. Not so, both MOU-1 and MOU-3 have overpressured dry gas with clearly stated hydrocarbon (methane and longer-chain) content.

b) There won't be enough gas. Only 36 BCF is required to support a 10mmcfgd CNG operation. There is already a P50 Contingent Resource that covers that multiple times. That P50 amount was predicated on a certain reservoir thickness that has been very comfortably exceeded in MOU-2 & -3. We will shortly get the complete numbers for MOU-1, -3 & -4. I am very comfortable that MOU-3 Ma sands extend over a much greater area than assumed in the CPR, that the MOU-3 reservoirs are at least 2½ times thicker than expected. MOU-4 is testing the same sands up dip from 1 & 3.so will also find gas. There are good seals in place, and petrological studies have suggested excellent porosity & permeability. Oh, did I mention the word 'overpressured'?

c) Iindustry will keep running on diesel or switch to electricity. Some fundamental misunderstanding here. Two of Morocco's largest industries – fertiliser and cement – use natural gas for its chemical as well as thermal properties. Gas+phosphate=fertiliser, gas+limestone=cement. The extensive ceramics plants are all equipped with gas kilns – changing them to electric would be prohibitively expensive. There is no operating refinery in Morocco, so all diesel is imported, making it very expensive. Capex for converting diesel to CNG is relatively low, making this a realistic proposition. Lastly, Lonny was country manager for SDX, the only company with experience of selling indigenous gas to industry, so I would guess he knows a little more about this than anyone popping up on here.

d) PRD won't be able to sell large volumes. Even if Alexei Navalny replaces Putin, it will still take years to restore trust in Russian gas and to rebuild production & supply infrastructure. Europe is having to outbid Asia to maintain supply. US shale gas production has peaked, and it is difficult to see where adequate supply is coming from 5 -10 yrs – unless of course someone has a very large supply sitting astride an under-utilised pipeline direct to the EU.

I have run these numbers through an NPV spreadsheet – the key difference is I have applied a 12% discount rate to reflect that the cost of money has increased considerably over the last year. For those not familiar with an NPV, this assumes that money has a cost, so is like reverse compounded interest, in that future value of income is decreased each year - in this model by 12% each year, compounded – so income by year 10 is not worth very much! So the NPV is the value TODAY of the future cash flows (profits).

We will initially look at two of the possibilities, both with the 50% inflated capex as per the above presentation: 10mmcfgd giving net profit of $10.28 per mmcf, and 50mmcfgd giving $9.79 per mmcf. Production ramp up assumptions, capex (now increased by 50%) as per the above RNS. The 10-yr NPV12 for the 10mmcfgd operation is $177M (£138M), and for the 50mmcfgd is $795M (£619M), both assuming 360 days per year operation.

Now that isn't the whole story – 10mmcfgd only uses 34 BCF over a 10-year period, 50mmcfgd uses 171 BCF over 10 years. As Paul said “what the hell do we do with all the gas?” The answer is gas to power or to Europe. For G2P & G2EU, I am assuming a price of only $10 per mmcf, giving a net profit of just $7 per mmcf, and capital expenditure of $100M, which is generous for a short connection to the Trans Maghreb Pipeline. This gives a NPV12 of $3225M (£2511M), and requires 900 BCF. There have been a number of suggestions that PRD will achieve the CPR P10 figure of 1.8 TCF just for drilling so far.

Multiply the above by 75% to get nett to PRD, then assume 450M shares, this gives a current value per share of 23p for 10mmcfgd, £1.03p for 50mmcfgd (both G2I) and £4.18p for 250mmcfgd G2P/G2EU. 50 G2I + 250 G2P/G2EU gives over £5 per share.

We have seen that utilising 250mmcfgd for 10 years provides an NPV12 of $3225M. That works out at $3.58M per BCF, after discounting over a 10 year period. Were PRD to achieve a recoverable volume of 1.8 TCF, that still leaves 900BCF unused. If you were to additionally extract that remaining 900 Bcf, so that the entire P10 resource was used up in 10 years, then the NPV12 moves up to $6450M (£5023M / £11.16p per share). If you could extract it faster, then the money comes in sooner, and the negative effects of discounting at a compound rate of 12% are reduced, so the value is correspondingly higher.

This is just for 10-year output from the MOU-Fan & Ma sands at the current drilled boreholes MOU-1, -3 & -4. Nothing for any residual MOU-Fan gas. Nothing for anything else – not Jurassic or Triassic at MOU-4, nor for any of the many Neogene, Jurassic or Triassic prospects already identified across the licence area equivalent to 60 North Sea Blocks. Nothing for Ireland, nothing for T&T.

You can see why Paul is talking about trying to retain a 10% royalty or stub equity in any deal.

We should have initial log results from MOU-4 this week or next week, dependant upon depth, followed by comprehensive testing of all wells (late July – mid August), including flow rates, porosity & permeability, likely areal extent of reservoirs. These tests will enable calculation of gas volumes for the MOU-Fan, Ma sands, Jurassic carbonate reef if successful, and possibly Triassic if the drill is going that deep. These will be incorporated into an independent CPR

Paul & Lonny are playing their cards close to their chests, with the intention of releasing comprehensive results in the shortest time frame possible. Why the hurry? There is widespread speculation that the Guercif gas volumes and flow rates could be spectacular. If this is the case, in combination with the low development costs and highly favourable tax environment, it will attract substantial interest, including the very real possibility of a hostile bid for the whole company.

If this were to happen, it is important that shareholders should have a good idea of the value of what they own, and thus not take the easy route and sell out at the first offer, which is highly likely to undervalue their holding. If there is a hostile bid, it will not be the only one, and an auction process is likely to be triggered. If such a bid comes before the current work programme is completed, or before a CPR is issued, it will be lower, so it is even more important to resist selling out at the first offer.

We have seen GRH's 'Michael Caine' post - as in “You only had to blow the bloody doors off!” This decoded the rather opaque RNS of 18th March 2021, and presented the value to shareholders for development of a CNG business based on MOU-Fan gas. Several factors have changed substantially in the last 2½ years, and a number of posters have questioned the validity of some more recent forecasts. It is important to remember that 'MC' was based on examples, not the actual numbers – since we will not know these in full until next month.

I am reminded of the old joke about a motorist lost in the countryside, who stops to ask a local the best way to get back to the capital city, and is told “Well, I wouldn't start from here if I were you”. I hope that Graham will excuse me for taking a slightly different approach, which is to try and value the business in the way that a potential purchaser would do – in terms of discounted cash flow. I will do this for 10mmcfgd and 50mmcfgd CNG gas-to-industry operations, and a 250mmcfgd gas-to-power/gas-to-Europe setup. I will then revisit the original $ per BCF valuation in an attempt to value what remains after full utilisation of the gas required for the CNG G2I and G2P/G2EU operations.

Fortunately PRD management have already done much of the hard work, and I use the numbers from p.6 of the 8th September 2022 presentation as the basis for the following calculations.

There's a few people on here who owe Lorna & team an apology. This is the best possible outcome, with our own rig for ongoing use, operated by Baker Hughes.

Boys, girls & others. Can we please return to a degree of civility? One way to do this is to debate the content of a post rather than the character of a poster whom in most cases we have never met and probably never will. I have genuine questions for two of the most prominent posters yesterday, for which I would welcome genuine, open answers.

1. @ Nordell. I agree there is little value in making any kind of share price forecast unless the assumptions underlying that forecast are also presented. I do not recall seeing any assumptions from you which negate any of the many other detailed forecasts that have been presented on this board over the last year or so. Is it therefore fair and reasonable to be judging others without saying why you think their projections are incorrect? In short what do you think will be the future value of the Morocco assets & most importantly, what is your basis for that conclusion?

2. Carjcarj. I would have hoped that your opinion as a geologist working in the O &G industry would have carried some weight here. Maybe it would help if you were to provide some useful information rather than just say that there is nothing that indicates a commercial discovery in any PRD RNS. As a starter, could I please hear your opinion on the predictive value of a combination of HSSI and seismic in the positioning of boreholes? Genuine question - I have received some information on this, but do not have the practical experience to evaluate what I have been told.

Thanks, Keith

@nordell - you said: "The price is 15.3p ... many are talking it UP - with zero rationale". I have seen many detailed and very reasonable rationales as to why the share price should be at a certain figure. If you think this is just ramping, could you please explain how you have calculated what you consider a reasonable market capitalisation/share price, and what assumptions you have made and why.

This is a serious request, I genuinely want to know the issues that folks see as negatives for PRD, and the reasoning behind their viewpoints. If you are unable to do this, then clearly you are just deramping, and therefore it is reasonable for other board members to ignore you in future. Thanks in anticipation.

@Rinkidink. The deeper into the hole, the smaller drill you use. Each time you change diameter you would case the borehole. 9 5/8" is a middling-size drill diameter, so the fact that they were finishing casing at that diameter would imply they had gone a good distance down -perhaps one third to one half.

1. It now takes longer to read the overnight posts than it does to eat my breakfast - a positive sign of greatly increased interest in PRD.

2. No need to sell through a broker - by the end of the month various characters will be phoning you with offers to sell off-market.

3. Mr Taxman - you received a rather hostile reception, since there are rather a lot of new accounts popping up with subtle and not-so-subtle attempts at casting doubt on the positive potential for this company. If you are a genuine shareholder, welcome aboard and my apologies on behalf of the wolf pack. If not genuine, may I suggest you copulate while travelling.

4. Impossible to know if we are halfway, since we have (deliberately) not been told the depth of the drill. Budget permitting, with a potential hostile bid in the background, I would keep going as long as there are gas shows, so the TD would be the lesser of the length of drill pipe available, or 3000m, which is the limit for SV-101.

5. Our beloved drilling manager Moyra Scott spells her name with a Y not an I. In the early days of word processing, I had two fellow directors called Stan & Chris, whose names were circulated on a company-wide memo, auto-changed to Satan & Christ.