Member Info for LiveLongnProsper

Today’s RNS significantly strengthens PXOG’s position in terms of both underling asset value and likely future cash flow. The path to Selva production – 150,000M3/day, is clear and funded.

Looking ahead to East Selva (mid 2C 17Bcf, mid prospective 35Bcf, 5.9 Bcf to PXOG) and Riccardina (mid prospective 35Bcf, 5.9 to PXOG) which requires a €3m seismic programme in 2019. The announcements from PVE, UOG and PXOG all mention the ‘planned’ (PXOG) or ‘upcoming’ (UOG and PVE) 3D seismic programme aimed at de-risking East Selva and Riccardina.

From Peterhouse …
Page 9 – “It is very important to note that a production concession covering the area shown on the map below will enable subsequent gas discoveries adjacent to Selva to be tied in quickly with gas production infrastructure across the whole permit.” The map shows East Selva, Fondo Pierino, Cembalina and Riccardina within the ‘Production Concession’.

Page 25 – The Peterhouse (conservative) valuation of the first 3 is a fully risked €3.9m, with a CoS for East Selva of 30% - the 3D seismic survey is expected to take this up to 80%/90%.

So Peterhouse value the Italy assets at ~€9m (based on 30% CoS for East Selva and not including Riccardina). What could you do with €9m (likely more)?

Decisions …?
Run with Italy, pay our 17% of the €3m 3D seismic programme – loan notes? Looks very sensible?
Develop Spain through to production and 49.9%, how to fund – farm out (OK), placement (no thanks), more debt (no, would be too much), or asset sale (hmmm?)?
Next steps for Romania – Grancesti, other?

Next news …?
Romania production update, more development?
Italy 3D seismics confirmed and funding?
Spain geology / AMT report – good enough to determine test well site?
Etc.

PXOG hugely undervalued, many options going forward, news to come on several fronts. As per the RNS, I am very much looking forward to being provided with “further updates on [our] progress” and, as a shareholder, being exposed “to a continuous pipeline of opportunities that offer significant re-rating potential.”

Great start to the year. Cmon Ed!

IMHO / DYOR / GLA

Also talking about more drilling 'subject to successful seismic results from the upcoming program'. This suggests that the work is commissioned and scheduled - let's see if PXOG are in the wider Italy 'game'.

Good start to the year, more to come ...

IMHO / DYOR / GLA

Yes sbrown, thanks just seen this also. Long awaited production concession for Selva - albeit 'preliminary'.

https://www.asx.com.au/asxpdf/20190115/pdf/441w24zgskqbr2.pdf

Would expect an rns from PXOG. Should help sentiment tomorrow.

IMHO / DYOR / GLA

From Peterhouse (page 28) …
“For a mid-case scenario, we have elected to apply a 10% CoS which is likely to be conservative post the AMT survey and further log and DST analysis conducted by the operator.”

The valuation they calculate is €22.3m – on the basis of 49.9% of 830BCF, 50% commercial risk and 10% CoS, so ~£20m. On 1344m shares (including all options and warrants) that’s 1.5p/share (Spain only).

It’s easy to adjust the arithmetic and substitute a better CoS or higher reserves, but while the Peterhouse NPV model factors in the costs associated with exploration and field development etc., I can’t see that it actually reflects the consequences of those full field development costs, i.e. more shares, more debt (loan notes, etc.) or reduced asset ownership through a farm out (I would really need to see the full workings).

How do you get the £500m valuation Ed has hinted at, easy – 100% CoS and 2.2TCF! I would be happy with an updated CPR confirming 830BCF, some great geology / MT results enabling the CoS to move up to 50%+ and a farm out that leaves PXOG with at least 25% (after going up to 49.9%) and pays for the costs through to production with no share dilution or excess debt, i.e. ~£50m or ~3.7p / share.

The numbers published by Peterhouse and the proximity of the next news on Spain are all part of what makes this share so interesting. And remember run rate costs being covered by Romania, route to production clear for Selva, and more exploration / development opportunity in both of these.

Oh, and it looks like it’s quite cold in Europe just now! Perhaps might be an idea to develop European gas production capacity rather than pay the Russians? Just a crazy idea.

IMHO / DYOR / GLA

Code 200 on NEX (apparently means ‘need shares badly’ – if you believe this stuff?)!

More to the point …

Italy – News on Selva ‘Exploitation Licence’ soon, also waiting to hear if PXOG are in for the next stage of exploration (East Selva and Riccardina).

Romania – Update on production would be helpful, latest gas price (EU Natural Gas Import Price 31/12/18) I can find is USD$7.976/MMBtu which converts to ~ €0.25/M3. Also looking forward to confirmation of further drilling (Grancesti workover, other?).

Spain – Yes, Spain ‘is the biggy’, we have 15% (without more Loan Notes), the ‘structural geology’ has been mapped and presented to the Spanish Geological Survey (IGME) – would be good to see this presentation on the PXOG website, numbers are being ‘crunched’ to (hopefully) determine the location to drill, Ed has suggested the CPR will be ‘moved on’ – onnwards and (maybe) upwards from 830BCF (mid) / 2.2TCF (high) to +++?

Looks to me like the current price bears no relationship to a sensible asset based valuation. Ed has suggested looking at the Peterhouse numbers – they look quite reasonable, but note the key ‘factor’ in the Spain component is the ‘Chance of Success’ (CoS) – currently only 10%. Slight aside, possibly not a direct comparison, but UOG’s view on the next stage of exploration in Italy was that the seismics results could move the CoS there from 30% to 80%/90% - now that would be interesting if we could make the same ‘adjustment’ for the Spain valuation.

All-in-all plenty of excitement for shareholders.

IMHO / DYOR / GLA

Notes from UOG (20% Selva) conf. call earlier today …

Italy (Selva - Podere Maiar well) progressing to production, operator (PVE/PVO) doing good job, waiting for response on submission of Exploitation Licence to Italian Ministry, expected 2-3 weeks. Net cash to UOG expected to be $2-2.5m pa, so Ed’s estimate of €1-2m pa to PXOG looks consistent.

Re further Selva exploration / development, have finalised the ‘acquisition parameters’ for 3D seismics. So big decision for PXOG to participate as (?) estimated at ~€3m, so would be €510k to PXOG, perhaps more Loan Notes?

Next bit on this pretty funny, I know PXOG holders will appreciate, 3D seismics to be done either Q1 or from Sept. 2019, why you ask, of course, ‘the agricultural season’ – guess there are ‘harvests’ in Italy as well as Spain!

Potential additional resources from Selva exploration - East Selva 2x, Riccardina 3x. 3D seismics targeting improving CoS from 30% to 80/90%.

Question asked about selling Selva, response $8m valuation (to UOG) as is. Then went on to talk about much higher valuations after 3D seismics.

Dear Ed,
Informative and positive shareholder webex / call from our Italy partner UOG, very useful approach to keeping shareholders updated. Perhaps we could do one?
Many thanks and Regards
.
IMHO / DYOR / GLA

UOG (20% Selva) Corporate Presentation December 2018 covers their portfolio status and plans including Selva (pages 8–11).

https://www.uogplc.com/wp-content/uploads/2018/12/Corporate-Presentation-December-2018-1.pdf

Just picking a couple of points – Selva NPV to UOG is $7.9m, which is consistent with our Peterhouse NPV of €5.1m (taking into account our 17% vs their 20% and exchange rates), would say our number more conservative. Also UOG estimate of exploration is $6.1m risked to $24.3m unrisked vs. PXOG €5.1m risked to €$15.7m unrisked, again fairly consistent. UOG have a conf. call update to shareholders today @ 13:00 (see their RNS 18/12 for details). Might be worth a listen for any update on Italy?

Ed suggested looking at the Peterhouse numbers. For Italy the (conservative, on gas @ €0.21/m3) valuation for Selva was 0.34p plus 0.25p for exploration. We have Romania on production, plus Romania exploration (not covered by Peterhouse), plus+++ (the ‘company maker’) Spain.

IMHO / DYOR / GLA

PVE have raise A$1.2m @ 0.042 for Selva (and their Teoderico) development. Share price closed up. We've already raised our contribution through Loan Notes. Looking forward to some positive news on recent ministry submissions (Ed said went well in VOX interview) and commencement of development. Remember €1-2m net to us when on production, albeit 2020.

https://www.asx.com.au/asxpdf/20181219/pdf/441c7wbyvsg3r4.pdf

IMHO / DYOR / GLA

On Romania I think there was mention of 'further drilling', 'quick tie backs', and [leading to] 'put on production'. Possibly not quite verbatim as Ed fairly quietly spoken. Maybe the Grancesti workover? Did takeaway that all projects progressing in parallel and general positivity. Would like to have seen the Tarba presentation to IGME posted on the web site, but look forward to the 'integrated geological model' and revised CPR for Spain.

IMHO / DYOR / GLA

What could (?) happen (with some workings!).

From Peterhouse 02/07/18 page 28 – “For a md-case scenario we have elected to apply a 10% CoS [Chance of Success – to their valuation] which is likely to be conservative post the AMT survey …”.

From Petrel Energy quarterly report 31/10/18 for the quarter to Sept. 2018 …
“MT test stations have yielded good data ahead of the main acquisition programme”. (Loads @ 10:45). Also - “Field mapping has greatly improved structural interpretation”.

So if it can be inferred that there are indeed some preliminary AMT results and, further, if these were to be positive, it might perhaps be possible to improve the 10% CoS to (say) 30%.

The mid-case valuation (i.e. on 830BCF), note with an additional ‘commercial risk factor’ applied of 50%, and with the gas price @ €0.21, was €22.3m. So just adjusting this for a 30% CoS gives €66.9m @ 1.12 €/£ = £60m, or ~5p / share.

Without Spain we have a viable and currently undervalued company covering their costs and having provided funding for Selva production. Plus further upside in both Romania and Italy.

The initial focus on Spain is de-risking a field with a 2015 CPR mid-case 830BCF high-case 2TCF through the AMT and further analysis of the historical results. So if the risk profile is improved (from 10% CoS to say 30% or better) we should move top stage 3 and drill the test well(s). Would then expect things to move quickly – partners, farm-out, asset sale, co. sale, etc.

All above on basis of published numbers (Peterhouse, PRL) and my speculation on risk reduction through the AMT results etc. Thoughts appreciated.

IMHO / DYOR / GLA

Sorry, copy and paste a bit unaligned.

Options at 31 December 2017 Exercise price Date of grant First date of exercise Final date of exercise
Edward Dawson 680,212 3.05p 14/04/2015 14/04/2015 14/04/2025
Edward Dawson 971,663 1.00p 22/09/2016 22/09/2016 22/09/2019
Edward Dawson * 4,438,000 1.00p 22/09/2016 22/09/2016 22/09/2019
Edward Dawson * 1,292,000 1.10p 22/09/2016 22/09/2016 22/09/2019
Edward Dawson 16,940,273 0.52p 13/11/2017 13/11/2017 13/11/2020
Richard Mays 541,726 3.05p 14/04/2015 14/04/2015 14/04/2025
Richard Mays 20,196 1.00p 22/09/2016 22/09/2016 22/09/2019
Richard Mays * 2,327,418 1.00p 22/09/2016 22/09/2016 22/09/2019
Richard Mays * 1,436,000 1.10p 22/09/2016 22/09/2016 22/09/2019
Richard Mays 10,395,168 0.52p 13/11/2017 13/11/2017 13/11/2020
William Smith 541,726 3.05p 14/04/2015 14/04/2015 14/04/2025
William Smith 20,196 1.00p 22/09/2016 22/09/2016 22/09/2019
William Smith * 2,327,418 1.00p 22/09/2016 22/09/2016 22/09/2019
William Smith * 1,436,000 1.10p 22/09/2016 22/09/2016 22/09/2019
William Smith 10,395,168 0.52p 13/11/2017 13/11/2017 13/11/2020
James Smith * 1,436,000 1.10p 23/12/2106 23/12/2106 23/12/2019
James Smith 10,395,168 0.52p 13/11/2017 13/11/2017 13/11/2020
* These options vest once the share price of the Company has closed at 5p or higher for 5 consecutive trading days.

Also, Warrants issued with Loan Note convert @ 0.6p after 2 years.

IMHO / DYOR / GLA

Also in the same ball park re average.

As previously noted, my reading of the Peterhouse report (02/07/18) suggests we are currently priced at ~50% of the (conservative) valuation of proven assets, i.e. no value included from Romania expansion (Grancesti), or Italy exploration (East Selva, Riccardina) and nothing for Spain (Tesorillo – which actually has a CPR in place). Also, this report was based on a gas price of €0.21/m3 (now ~€0.3).

We are both a producer and an exploration company. Running costs should be just about covered by Romania income. So if we assume that company survival is reasonably secure then this leaves the BoD free to make rational, focused and relatively low risk investment decisions.

Spain should be an example here – the 2015 CPR indicates a mid-range of 830BCF, so the AMT is all about de-risking by better understanding the geological structure of the field. We need to spend €280k (by end December) to move to 15% ownership of the concession, but presumably only if the preliminary AMT results are encouraging.

While not of the potential scale of Spain, we shouldn’t forget the significant additional potential from Romania and Italy.

Perhaps also worth considering the BoD’s financial motivation. As things stand Ed has ~5.3m shares but has options on 16.9m @ 0.52p by 13/11/20. Also options on 5.4m @ 1.0p and 1.3m @ 1.1p by 22/09/19 – of these 4.4m require the share price to be at 5p. Now that seems like a more sensible valuation! IMHO £60m mcap perfectly feasible if good news on Spain.

IMHO / DYOR / GLA

https://soundcloud.com/doc-h-4/1-12-dlc-stepping-out-of-the

PXOG starts at 22:50 (not necessarily verbatim quotes below).

Starts badly - 'been an absolute disaster', blames the Beaufort raise - though whatever the issues with Beaufort the capital raised has got us through to Romania production.

Then gets more positive - 'gift at 0.25p', 'focus on assets', 'finance to take us through the passage of time', 'market perhaps has got this one wrong'.

News on Spain anytime - need to increase to 15% by 31 Dec - watch PRL on ASX, Tarba Energy (Spain PRL subsidiary own the balance of Tesorillo), GeoProsys and GeogNosia - expert sub-contractors for AMT.

News on Italian ministry progress anytime (not sure about soon!) - watch PVE on ASX.

In the meantime Romania pumping gas and (hopefully paying our costs) - would be nice to see some numbers here. Also what news on the Grancesti workover to increase Romania production for, perhaps, not too much?

Doc says he's been speaking with Ed. Time to update the investors directly - please Ed.

IMHO / DYOR / GLA

PRL have released a presentation on their proposed reverse takeover.

https://www.asx.com.au/asxpdf/20181129/pdf/440rr1v59q4b7v.pdf

Slide 7 indicates plan for 2nd half 2019 "Drilling Tesorillo Spain'.

That's it as far as I can see, the rest is about the Australian assets.

Let's hope it's a real commitment and not just something leftover from the powerpoint before last!

Time for an update on preliminary AMT, also Romania payment / production level / gas price, and Italian ministry progress, etc. - please Ed.

IMHO / DYOR / GLA

From PVE update (on ASX, PVE own PVO) - Selva Malvezzi shared concession (PVE/PVO – 63%, UOG 20%, PXOG 17%).

Confirms €3m for Podere Maiar 1dir production (17% to PXOG = £451k @ 1.13 €/£, funded by £480k loan notes). As noted by SS459, Italian bureaucrats seem to be the rate determining steps. First gas Q4/2020.

Note that PXOG coverage from Peterhouse assumed €0.21/m3 for their (I think, already conservative) assessment of net cash to PXOG of €1.0-1.5m pa for several years, higher in first 12 months. Gas price now circa €0.3/m3

Looking ahead to East Selva (mid 2C 17Bcf, mid prospective 35Bcf, 5.9 Bcf to PXOG) and Riccardina (mid prospective 35Bcf, 5.9 to PXOG) which requires €3m seismic programme in Q2 2019 – unfunded. No doubt being discussed with Ed et al.

What seems quite remarkable is that Italy apparently imports 91% of its gas the majority from Russia, surely incentive for a speed-up of the bureaucracy.

Currently less than half of Podere Maiar 1dir in the PXOG share price and nothing for East Selva / Riccardina exploration (also nothing for Spain – any good news here and lift off!).

So we have production in Romania and gas prices rising and this pays for the run rate stuff. We have solid assets in Italy with production in 2 years plus exploration upside (also in Romania – Grancesti workover), and a prospective 830Bcf (or more) in Spain – apparently with preliminary MT data collected and being analysed.

Time for an update please Ed.

IMHO / DYO / GLA

https://www.asx.com.au/asxpdf/20181119/pdf/440dmywxpd7slp.pdf

Reverse takeover of Warrego, UK AIM listed co. with single Australian asset, and listing of new co. on AIM.

Doesn't look like direct impact on PXOG, but financials a little involved so more scrutiny.

IMHO / DYOR / GLA

Some light hearted (I think) 'speculation' from down under.

https://hotcopper.com.au/asx/prl/discussion/

Quick summary would be something like ...
- A takeover of PRL
- Delisting of PRL to go private
- Diversifying into cannabis 'oil' (get it) or energy drinks for birds (haha!) - my favourite!
- Sale of an (unspecified) Asset
- Sale of / Change of control re / Partner for - Uruguay

Very little mention of Spain / Prospex / Tesorillo

We'll see what's announced late Sunday night on ASX.

IMHO / DYOR / GLA

PRL do seem to have a problem with Uruguay, have swapped out 2 for 1 new non-exec, seem to want to concentrate their efforts 'down under', and certainly need cash.

On the plus side the MT work is sub-contracted to specialists (GeoProSys and Geognosia) and in their last report PRL seem to suggest that PXOG are really running the show in Spain - which must be good.

IMHO / DYOR / GLA

PRL bid doubled to 0..004 just prior to halt, could be positive sign? Looks like we're up a bit so far Interesting day or 2 to come.

GLA