Member Info for LiveLongnProsper

Broad, my take (of course DYOR etc.!). The placing RNS suggests the balance (after El Romeral 49.9%) of proceeds will be used for Tesorillo and general working capital. We have indicated our intention to increase generating output from the current 22%. The current constraint is the gas supply from the producing wells, only 1 (of 2 serviceable) generator(s) running 16 hours per day and the 3rd requiring some “remedial work”. So looks to me like we need to increase gas production by tapping into the 2 development locations or a couple of the 11 additional prospects and also fixing the 3rd generator. To get the revenue up we need to spend some capex on drilling, pipeline connections and equipment. This, the continuing Tesorillo G&G work and commissioning a CPR update, I’m guessing, will take a fair amount of cash. We also have more loan note interest to pay mid-year. Re Selva, the reserve status should mean we can stand more debt financing against this. I may be being overly cautious about Bainet income (guessed net £20-30k per month), but I suspect just about enough for salaries and other run-rate costs? So on balance, just don’t think there is enough headroom to fund the Selva €400k out of this raise or current revenue. Would be delighted if proven wrong!

Nothing really new on Tesorillo, though WGO think “permitting will result in resolution in the first half of 2020”, whereas the PXOG plan has “well permitting” going through to end 2020 – maybe different permits? Plenty on El Romeral, which now seems to be to be the priority in Spain.
https://www.asx.com.au/asxpdf/20200131/pdf/44dnxchfzf77bn.pdf
For PVE, work underway to prepare Selva for production and expecting final approval in Q2. Just one catch (see page 4 of cash flow report) – they have just about run out of money! Of the €2.3m left to bring into production, PXOG need to find ~€400k (maybe loan notes?), UOG ~€470k, leaving ~€1430k for PVE. Watch out for a PVE raise.
https://www.asx.com.au/asxpdf/20200131/pdf/44dp1v146x5mc2.pdf
https://www.asx.com.au/asxpdf/20200131/pdf/44dp40yfhyjp0j.pdf
Seems like a reasonably focused placing yesterday, particularly like Director participation and Simon Chantler’s confidence. Enough to pay for 49.9% of El Romeral and a more – fixing that 3rd generator, ramping up production and completing the Tesorillo G&G and getting the updated CPR out, etc. for example. As noted above, suspect the remaining Selva funding we require (€400k) will be additional.
Remaining positive, please DYOR, GLA.

Re Tesorillo €1725k timing – good point re 2023, perhaps all the more reason to focus on El Romeral and Selva and get the revenue streams established. Having said that, Warrego have previously indicated a 2020 date for drilling, though somewhat caveated in the last presentation by the words ‘dependent on Government approval’! Ed’s latest plan is now showing the well location decision in Q2 and permitting running through Q3/Q4, so perhaps suggests drilling in 2021? This would push back the ‘heavy’ funding pressure to after Selva revenue. Would have thought the updated CPR should be end Q1 / early Q2 though? In the meantime the clock is running down on El Romeral funding, will be watching out for WGO and PVE quarterly updates later this week and anything else out of 'left field'!
GLA

The 12/03/19 RNS re Bainet production is possibly slightly ambiguous in the mention of 15,000 M3 per day budgeted production for the JV – but I would take it that this means 7,500 M3 to PXOG. Please someone tell me if you believe the 15,000 M3 is to PXOG, as this clearly makes a big difference.
My conversion of the originally mentioned €6 per mcf gives €0.212 per M3, so €1,590 per day (on 7,500 M3) or (say) €47,700 per month before opex and tax. Depending on the contracts with the grid this might be less now as the European gas price has eased off quite a bit. I make it ~€0.15 per M3 based on the link below ...
https://ycharts.com/indicators/europe_natural_gas_price
If this is now the price, then that would mean revenue of €33,750 per month. On this, over 2019, allowing for price and currency fluctuations, I would guess we’ve been bringing home somewhere between £20k and £30k per month. While probably a bit less than run rate (?), this is still pretty good.
(Please DYOR on all the above factors and please also DYO calculations!)
On the issue of an SP re-rate, my view is that we need clarity on funding - €375k for 49.9% of El Romeral, €400k for Selva production (page 13 of corporate presentation), and €1725k to go up to 49.9% of Tesorillo. In addition Tesorillo drilling costs are going to be in the low €millions. Would have thought funding El Romeral – for immediate revenue, and Selva for Q4 (?) revenue will be the priority? Resolution of these 2 costs should be imminent? For Tesorillo we need the updated CPR to understand the ‘size of the prize’, running late due to additional G&G work.
Again, please DYOR. I remain a positive LTH.
GLA

8.7m at top of spread. Interesting?
GLA

Broad, yesterday WGO announced their intention to open a Perth office and for Dennis Donald (CEO) to relocate there. Some suspicion that this is really about shaking out a potential deal in the context of wider Perth area gas economy development, for example …
https://hotcopper.com.au/threads/afr.5183179/?post_id=42488434
Despite their recent raise WGO probably don’t have the cash to drill the additional well or 2 to fully confirm the (overall ~1TCF) resource and book West Erregulla as ‘reserves’. Does look like ‘somethings afoot’ though.
Would be good if WGO sold out of Australia and used the cash to develop Spain with PXOG.
Regarding PVE, suspect the rise today is about the fairly wide bid/offer spread with sells at bottom and buys at top. Nudging back up though, so hopefully indicative of final permits being sorted.
GLA and please DYOR

While we wait. What info still on the ‘inside’? How to fund El Romeral, status of Tesorillo – CPR update, how to fund the €1725k and then drilling? Italy final approval progress, other stuff going on? Regarding Tesorillo – MT survey, data re-processing, G&G, etc. work been ongoing for over a year – so would expect that Ed has a good idea of the resource by now? Would seem reasonable that this is considered ‘inside’ info. Should soon be on the ‘outside’ though! Funding and Tesorillo resource the big unknowns – certainly interesting just now.
GLA and please DYOR

Interesting thought. Wild speculation - but if WGO divested their West Erregulla assets to STX that would leave a cash rich shell co. ripe for a RTO! Only reason (I can see) that PXOG so undervalued just now is funding uncertainty. Of course please DYOR!
GLA

Good progress on Italy and, indeed, exciting times. Regarding the near term …
We need to pay €375k for 49.9% of El Romeral and €1725k to increase to 49.9% of Tesorillo. We have received £75k from WGO for ‘due diligence’ work – but we should just have paid some loan note interest that could well take most of this. So let’s say €375k needed within next 2 months, followed by Tesorillo. How to fund …?
Ed mentioned ‘chipping a bit off the side’ of the existing portfolio – maybe sell the stake in Romania and swap Romania income for El Romeral income? Sale might just generate enough to pay for most of immediate (not drilling) Spanish costs (Peterhouse NPV €1.9m for Bainet, though 2018 numbers)?
Resource based lending (loan notes) on back of Italy reserves? Another raise – only makes sense on back of positive Tesorillo CPR and re-rate?
Any others …?
GLA and please DYOR

This should help sentiment ...

https://www.asx.com.au/asxpdf/20200107/pdf/44d3bj9wwlt6x7.pdf

Let's see if any further comment from Ed.
GLA

More content than usual and mostly good questions, though disappointingly nothing about the Tesorillo CPR update. But well worth a careful listen. A few points I thought of particular interest (of course please DYOR) …
Regarding funds for step up in production - “arguably we could chip a bit off the side” [of the existing portfolio] “to help fund the rest of it”.
Progress in Italy important, close to final award, Italy asset has reserves and follow-on in that block. Use that asset, leverage Italy to support development of rest of portfolio.
Opportunity for 49.9% of Spanish project (El Romeral), will look at new funding – not sure if that meant a raise?
Regarding Board shareholding – Ed personally would like bigger stake in company but has “been 'inside' since last bought stock in company”, “suspect we [Board] will increase our stakes in the company in due course”.
Revenue generation in Spain (El Romeral), €800k-€1m pa, on 22% utilisation. Objective to bring up to 100%.
Leave 3 producing wells as is, consider work over of 1 discovery not producing, look to drill some of others.
Co. will “morph” – overall energy transition context.
News expected soon from Italy regarding final permits – Christmas present for shareholders!
Overall I thought very encouraging.
GLA

Spain certainly looks exciting and the recent news explains why so quiet over the summer, let's not forget Italy though ...
https://www.asx.com.au/asxpdf/20191223/pdf/44cty26cxtydxz.pdf
This lady looks like she should have the right kind of influence to help move things forward?
2020 should be good for PXOG.
GLA

Source of ‘”whispers” re SRO would be appreciated. Looks like a ‘shell’ co. with ~$AUD2.1m cash as at June 2019 (from annual report). Not enough to acquire PXOG by a long way without other financing – though they need to do a RTO or similar by Feb 2020 or be wound up, so no doubt looking at options. Seem to have invested in Lignite licences (one of the worst polluting hydrocarbons), so not really aligned to PXOG ‘energy transition’ via gas thinking? Please DYOR though.
In the meantime, a bit of an increase in trading volume (also on Nex) and SP heading in the right direction, but a long, long way to go to a sensible valuation.
GLA

Why so hard! https://**********.co.uk - apologies for lack of 'copy and paste' skill

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First bit of URL!

****************************/articles/hummingbird-resources-prospex-oil-gas-clear-leisure-1f463e4/

****************************/articles/hummingbird-resources-prospex-oil-gas-clear-leisure-1f463e4/

Ed 5min in. Pretty good stuff, mentions funding options ' "external" and "internal" (would be good). Also focus on ramping up power plant utilisation. Quite a lot to take away strategy wise.
GLA

Panda, on re reading does look like €375k due to wgo (50% of initial consideration)? If so correction to my earlier post. Are you assuming tesorillo comes later?
Please dyor and gla

Very significant investment in a new Spanish asset. Net 2.5 Bcf Contingent Resources and 44.8 Bcf Unrisked Prospective Resources. 3 producing wells with gross 2P reserves of 0.3 Bcf. Power station (that cost €10m) with underutilised capacity and generating some, albeit small (€65k / month), revenue.
We receive £75k from WGO for due diligence work – should help pay the interest due (about now) on loan notes, though not sure if anything leftover for staff Xmas party! €750k to pay within 3 months for a 49.9% stake (plus the €1725k outstanding to move up to 49.9% of Tesorillo).
Big and clear commitment to Spain, should open up access to government (when they form one!) channels. Remember Spain imports most of their gas, this predominately from North Africa. No doubt all seen Tarba activity recently positioning gas as ‘Transition’ energy source and bemoaning reliance on imports.
OK, so this is now (even more) all about funding, seems like we need ~£2.5m (?) for both Tesorillo and El Romeral plus some G&A, possibilities (?) ….
Raise – aaagh, the dilution at current sp!
Resource based lending?
Sell Romania stake – producing asset, though only another ~8 years on declining balance, still worth a ‘few bob’
Sell Italy stake – to UOG (their strategy not really clear), to PVE (totally focused on Italy)
Reduce Spain stake in favour of WGO – no suggestion of this in RNS
BoD take large / controlling stake – would be nice, but no evidence so far
Others???
Need to see Ed on Vox media with intelligent questions from Justin all about funding.
Interesting times though, more news to come.
GLA and please DYOR

Did wonder about some kind of link-up with UOG myself. But I think UOG’s strategy is quite different and seems higher risk – mostly oil in the exploration / development stage, onshore / offshore UK and offshore Jamaica (via Tullow, hmm!). The only thing in common is Selva. Looks to me like UOG have been fairly desperate to get hold of a producing asset and hence the deal with RKH Egypt. This at the expense of selling on their ‘Crown’ asset, ~$8m in finance from BP and the placement the other day which I think includes a ~$5m take up of shares by RKH giving them a substantial stake.
In comparison PXOG have a focused strategy (onshore European gas) and have fairly reliable (if sub run rate) income from Romania. So rather than be acquired by UOG, I’m now wondering if UOG’s stake in Selva might be up for grabs, particularly if they chose to fund expansion in Egypt and development of their other oil resources?
Please DYOR and GLA