Member Info for KeithOz

Taking a look during breakfast - wow, more posts than trades. Clearly still a lot of confusion.

Paul clearly hung out the 'For Sale' sign in the RNS of 8th November 2022. I read "corporate transaction" as the whole Moroccan subsidiary, not just CNG. The RNS of 4th April 2023 pointedly referred to " Predator Gas Ventures Morocco Branch ("PGVMB"). On Sunday he was not changing strategy, just adding a price tag of $150-200M for 40Bcf. That was just an example - the CPR confirms P90/P50/P10 of 294/819/1823 Bcf for just the MOU-Fan - that's one hell of a lot more than 40 Bcf, and I believe those CPR numbers to be very much on the conservative side.

If you were selling a house, you would want to get the most profit, not just the highest selling price. You could add a swimming pool, refurbish the kitchen and bathroom, and get a higher sales price. But no one sane would do that if the extra price achieved was less than the cost of renovations, and it took a year to get finished. This is exactly Paul's strategy - get the best profit in the least time, re-invest in other attractive opportunities. All successful trading businesses look at 'turn' as well as profit - this is how quickly you can realise one lot of profit, reinvest it, and profit again.

Q. Why are investors throwing tantrums and throwing their shares out of the pram?
A. (1) They can't read. (2) They don't understand the basics of business.

@triplestar - all 6 of the en-route countries you named have war zones. It's coming by sea.

From FluentCargo "The quickest way to get from Tunisia to Tanzania by ship will take about 28 days 11h and departs from Tunis (TNTUN) and arrives into Dar es Salaam (TZDAR). There are ships departing every 2-4 weeks on this route."

SPAngel (JAY's NOMAD & broker) has issued a detailed note to their clients on JAY today. Copyright does not allow me to reproduce very much, but I'm sure John Meyer & team will not mind me quoting a couple of sentences:

"Bluejay Mining report their cancellation of the equity subscription arrangement with TNZ ‘Toward Net Zero’. We see this as a net positive." .... "Kangerluarsuk ... Drilling will start this summer to test what sound like some pretty clear targets."

and

(Disko-Nuussuaq) "should see first drilling this year following two years of exhaustive analysis" .... "this should be a big year for the project at least in terms of expenditure."

If you subscribe to Wisdom Tree Research, you will be able to access the full text.

I'm not sure why it has descended into squabbling again. As far as I can see, the various share price forecasts are all in the same ballpark. It is important to understand that some were undiscounted, others (including mine) were processed to provide a value TODAY. To do this you assume that money has a cost - my assumption is 10% per annum, which is the interest rate you will have to pay to borrow capital for a project of this nature. So to get a 10-year Net Present Value, you reduce the profits in Year 2 by 10%, those in Year 3 by 10%, then 10% again, Year 3 there are 3 sequential 10% discounts applied, and so on. You then add up the discounted profits from Years 1 -10. There are plenty of NPV spreadsheets available free online if you look for them, mostly with instructions for use.

With regard to the 'pie-in-the-sky' forecasts that some are saying are now impossible: in my workings for part 3, gas to Europe, I stated that around 4Tcf was needed to produce 1 Bcfgd. The 'high' forecasts on here were based on 20Tcf. I calculated that 4Tcf over 10 years would give a NPV of £3.00 per share, so 20Tcf could reasonably be expected to provide £15 per share - plus oil, plus T & T, plus Ireland. The undiscounted figure for Morocco alone, which would not normally be used in business projections of this sort, would be around £25 - £30.

@Porters - You said "De risking a new basin without even the need to flow test a single well and thats going to be worth 120 million minimum. I don't buy into that sorry". The nearest parallel I can think of is the Origin Energy deal with Falcon Oil & Gas. This was for a Prospective Resource of 6.6 Tcf GIIP (undrilled, untested) in the Beetaloo Basin here in Oz. Falcon retained 22.5%, Origin had to finance the first AUD 263.8 M (= £142 M, USD 180 M) of development costs. The Beetaloo is tight shale gas requiring expensive horizontal drilling & fracking, there's no way you would get anything like 6.6 Tcf recoverable from it.

@MEM - you said " It could be years until meaningful Dividends are paid." I strongly disagree - the whole point of someone with deep pockets coming in is to get things moving very quickl.

I'm off to bed.

Clearly being a risk analyst does not require a knowledge of geography. The Suez canal is certainly not 400km long, and does not go anywhere near Sudan. Sudan does have a Red Sea coastline, but I have to smile at the idea of a Sudanese rebel inflatable dinghy taking on the cruiser USS Truxton & expeditionary sea base (think small aircraft carrier) USS Lewis B Puller, both of which are currently stationed in the Red Sea off the Sudanese coastline. India & France also have warships present - all these craft are there to protect/evacuate both their own nationals in Sudan, and maintain international interests.
Tanzania is well away from any trouble, and is now a well-governed, peaceful and stable nation. It is recognised as being in the top three stable countries in Africa - along with Lesotho & Morocco. No need for rose-tinted glasses, nor indeed any glasses - there's nothing to see here.

@affc - Hope you & your canine enjoyed the walk. If someone told me that you could buy shares in a debt-free company on the London main market for a forward P/E of less than 0.1, I would assume they were from the Land of Oz. Oh, hang on a minute....

@lambo - why a red flag? JAY obviously have a better deal lined up, and therefore JAY management (NOT the lender) terminated the arrangement. A better deal indicates to me something other than a placing at a depressed share price. I do not understand why you think this indicates that KoBold is pulling out?

@soutie - I just wish they would hurry up and offload Dundas. The years-long litany of delays & missteps demonstrates that JAY management do not have the requisite experience and skillsets to develop a project of this scale and complexity. What they are very good at is geoexploration in a hostile environment. That is what they should concentrate on - get projects up to discovery level and sell on. There is still plenty of untapped potential in Greenland, and the JAY team have better contacts and local knowledge than just about anyone else.

The CLN 'death spiral' funding has been terminated, and the $2 million repaid, no shares issued. JAY "still expects to commence the drilling campaign at Kangerluarsuk in the summer, and is in discussions regarding progressing alternative financing plans."

Presumably you would not give back $2M unless you were pretty sure you were going to get it from somewhere else. An extension of the KoBold agreement possibly? The market will like the cancellation of the CLN agreement, but will not like the uncertainty around this year's campaign finance.

@nametrade - Just measured it on the small-scale map - MOU-3 is almost exactly 3km due west of MOU-2. Don't know why Paul said 1km and a bit.

@O&W - agree with all your points. I would add that there may be additional reasons for a timely exit:

*PRD is under pressure from ONHYM & people above to accelerate hydrocarbon production in meaningful amounts, because it will have a transformational effect on the Moroccan economy.
*Money is needed to drill Cory Moruga.
*Money is needed to pay for Cory Moruga.
*Money is needed to invest in CO2EOR.
*As @donalb pointed out yesterday, the Irish government may be looking for proof of financial stability before progressing discussions on the Successor Authorisations & Mag Mell.
*Paul is 70 years old, and the stress he is under must be increasingly taking a toll, and his partner in Theseus is 83 and maybe wants to throw a great farewell party.

A potential purchaser will be looking at 4 businesses, all in a low-tax, safe jurisdiction, with relatively low capital costs. The biggest variable will be the gas price, for these calculations I have assumed $16/mcf for CNG, $12/mcf for gas-to-power and gas-to-Europe. 25% of capital cost from and profit to ONHYM, 10% net sales royalty to Predator, upfront payment of $200M

1. CNG at 50MMcfgd. This requires 18 Bcf per year. Low initial capital required, most of planning, drilling and customer identification already done, start up after one year. Margins, costs, etc., as in PRD presentation Sept 07 2022, pp 6 & 7. Purchaser gets net income of $137M pa, with a 10-yr NPV of $755M PRD gets $22M pa, with a 10-yr NPV of $121.5M.

2. G2P at 250MMcfgd. This requires 90 Bcf per year. May require up to 20 wells (not all will be successful!), 3D Seismic, plus connection to the Trans Maghreb Pipeline – assume capital cost of $300M. Provides sales of $810M pa, minus $81M royalty to PRD. I assume a 50% margin - i.e. net profit of $6/mcf. 10-yr NPV of $1450M for purchaser, $373M PRD.


3. G2EU at 1Bcfgd. This requires 360Bcf per year, so is theoretical at this stage, as dependent that 4+ Tcf can be located. Gas price and margins as for G2P scenario, capital costs extra $300M for more seismic & wells. NPV of around $5Bn for purchaser, $1.5Bn for PRD

4. Oil. Too many unknown even to guess, may be dependent upon re-opening of the SAMIR refinery between Rabat & Casablanca – 450km away down the A2. See:
https://raseef22.net/english/article/1091530-samir-refinery-the-pride-of-moroccan-industry-turns-into-a-financial-disaster

Converted at £1 : $1.25 gives a current value per share of:

30p upfront payment
24p CNG
75p G2P
300p G2EU + possible upside for additional TCFs
??? Oil

You should always assume that a theoretical NPV will be heavily discounted by the market until real cash flow is accruing, to account for the many and varied risks. Please note these are all theoretical calculations, done primarily for my own purposes, and you should treat them with considerable caution!

Shame on you, Aligator, this is really small-time FUD. How about raising your game? Why don't you highlight the threat of the East African Rift System split accelerating, releasing all the helium, and flooding the whole lot with deep seawater? Of course, that's after the meteorite impact causing a magnetic pole inversion, and the US-China war uses up all the nuclear weapons that we could have used against the invasion of hostile helium-breathing alien life-forms.

The fear of that scenario could get the share price down to your (missed) entry target.

My assumptions for this simple calculation are for MOU CNG only. I would hope that Paul would negotiate either 10% royalty for the whole future hydrocarbon production, or else retain a stub equity for the whole lot. Unclear to me what he meant at the moment.

$1.25 : £1 !!!

Assumptions - upfront payment of $150M - $ 200M, 400M shares in issue, 125 USD :1 GBP = 30p - 40p per share.

10% Royalty on CNG sales only. No sales Year 1, Year 2: 50MM cfd @ $16/ Mcf. Year 3: 100MM cfd @ $14 / Mcf. Years 4 - 10: 250MMcfd @ $12 / Mcf. Royalty discounted at 10%. Gives NPV of $407M = 81p / share.

No value assigned to any other gas or oil prospect, value per share on day of deal = 111p - 121p. Less than some were hoping for, but Paul was claiming that T & T would have similar value to Morocco, and Ireland General Election must be held before March 2025.

Thanks, Terrence, here's the info:

https://www.tdtoolsinc.com/

The priority is monetisation of CNG business, preferably by this summer. Paul believes this can be achieved by MOU-3 alone, but is intending to test MOU-1 as well, using a new testing method (Sandject? sp? can't find on Google) which can test the main 8m deep zone plus three shallow zones for the same price as just the one zone using previously planned method. Cost around $250K, equipment in-country 'in a couple of weeks', but no actual testing timetable given.

He is looking for $200M buy-in for a proven 40-50 BCF. Buyer may or may not finance an additional well MOU-4, and/or finish MOU-2, which they believe they can do using Ultradrill mud, as was used for MOU-1.

Didn't address any of my questions that I wrote in a week ago, these included questions on MOU-NE and its CPR.

Despite the intention for early monetisation, which I see as a positive, I feel the perceived change of strategy re MOU-1, MOU-2 and now MOU-4, will not be taken well by the market - particularly the mention several times of 'proving up 40 BCF', when an expectation of 1 TCF has been dangled.

What are other folks' views on the Morocco situation?

Thank you for the detailed information. Unfortunately, I can't edit the post that originated this discussion. Wouldn't work out here, there's only kangaroos as spectators, and they are too interested in their own activity.

It would be normal to reach 1500m in 10-15 days with a standard O & G rig, dependent upon ground conditions. The first few hundred meters at Tai are through the Lake Beds, which have lots of alternating layers of unconsolidated sands and expanding clays, so they will take it slow through the first third of the drill. After that, you have more consistent massive sandstone, so drilling can proceed a lot faster. They will log while drilling, then do more accurate DSTs (drill stem tests) at each gas-bearing horizon to determine flow rates and composition. I would expect maximum 15 days drilling, plus up to 5 days to complete testing sufficient to declare a discovery.