Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Hi cbaron. Thanks for your post. I agree with most of it. Two things I would disagree with though. 1. You state we didn't achieve commercial flow rates this season, and taken in isolation, that it true. But I would put it to you that was neither the objective, nor the expectation. The drilling and flow testing was never promised or expected to prove commercial flow rates. These were test wells, not production wells, and the tests (existence, quality, moveability) were passed. Production wells as you know are drilled totally differently. Long laterals multi-stage fracked.
2. "are now able to to render flow tests / rates obsolete". I appreciate you are attributing that to someone else, rather than stating it as your own opinion. But this is manifestly false isn't it? If it were to, there would be no need to conduct flow test wells. Wild-cat drilling wouldn't exist. The whole point is that your geological model / Seismic etc only get you so far. That is why you have to drill. And, in my opinion, why we can be so much more confident about the (as yet still not 100% proven - admittedly) commercial potential of these resources.
That is definitely true! I posted a long comment yday about travel Vs arrive.
Genuine question: why did you think that? What was incrementally negative in the RNS? That they're not further testing TW?
To all the glass half empty naysayers, I ask a simple question: whether or not you think the flow rates at Talitha and Theta West are "disappointing" (ridiculous in my opinion, but that is only my opinion), prior to this drilling campaign, what % discount would you have thought appropriate to the $3.10 / bbl paid by Oilsearch, and now after it, what %?
With the share price at 114p, the EV is $1.3bn or $0.60 / bbl on the 2.2bn (which is about to be upgraded). Do you not think that is ridiculous? I do.
No I don’t think we get that prize. I am not an oil specialist but my understanding is that to reclassify resources as reserves you need, inter alia, to demonstrate long term production and that will not happen this year.
That is not to detract though from the fantastic and, in my view, misunderstood results at Talitha and Theta West.
We do still have coming: 1. Resources upgrade, 2. Webinar. 3. Possibly further flow testing at TW and 4. Alkaid in the summer.
This is excellent news.
I normally refrain from making comments about short term price movements, but I will make an exception here. I think this is a classic case of travel Vs Arrive. Everyone knew we were waiting for the TW flow test results, and that this is the big cahuna. And EVERYONE was positioned to "top slice" their holding on the disclosure of the (in my view) good news. When this group-action resulted in the shares not enjoying the spike they should (in my view) have, people started to question the RNS, their view, panicked, and sold even more.
I'm of the opinion this largel explains the post TW trading. Obviously today we are suffering some extrapolation from 88 results.
People have allowed themselved to worry about some of the (in my view unfounded) criticism of the TW results from the usual glass half empty suspects. Production wells are drilled very differently from vertical testing wells like this. Long horizontals, multi-stage fracked. We won't know until we know, but I would be of the view that the TW results should very much increase your confidence that this reservoir can be put into production.
Not to mention the forthcoming increase in the estimate of the resources.
One man's view.
Holy ****!
There are posters on here and the other place that have more specialist oil knowledge than I - I am a generalist. But production wells are drilled very differently - long horizontals, multi-stage fracked etc. I think the pessimism about the 59 BOPD from the 3 ten foot sections is misplaced.
Not to mention the TW results confirm the play DOES extend the 10.5 miles from Talitha.
Thanks, SeaHawk. But didn't we already know that? The LBFF well at TW was never expected to lead to a resul where the company would be able to say the field is commercial was it? The question was whether the oil was there, whether it flowed, was it moveable, was the geological model correct. The answers to all those questions might have been "no" and the stock would have been down big. Now we know the answer is "yes" so doesn't that mean the probabilities attached to the 1.4bn bbl have just increased significantly? Not to mention that based on their wording, i think we can expect an increase in the resource estimate. I don't really see what else we could have wished for. But perhaps you're right that some investors are travelling Vs arriving and most of the near term catalyts are no behind us.
Why are so many people disappointed with the TW flow rates? Am I missing something here? The flow was from three ten foot sections in a 1,000 foot column. The well was not horizontally fracked or stimulated. Is it not reasonable to suppose then that if this well were to be put in production, its flow would be orders of magnitude higher, right?
And in the meantime, the company stated that "The Theta West LBFF has now been proven as an extensive oil reservoir", "The test result confirms a vast oil resource and also confirms our geologic model", and "the Company believes supports, and likely exceeds, its pre-drill resource estimates of 1.2 billion barrels of oil (recoverable)".
Does the news get any better than that? This feeble share price reaction is risible!
If the share price does not adequately adjust, we are going to end up getting bought out for a paltry premium, which would be ridiculous given how much this morning's RNS derisks the reservoir. IMHO, first stop is the $3.10 that Oilsearch paid, and that would equate to 675p / sh.
You think we will have news next week? At Theta West? Why?
I suppose that what this does tell us is that given the casing has been done, and the well is being fractured and stimulated, the flow test results cannot be far away.
Can't hurt, but if they were planning on saying anything price sensitive, there would be an RNS.
IMHO this is a small negative. Remember that of the 2.2bn bbl resources, SMD is contained within the Greater Alkaid number of 404m bbl. So the most extreme interpretation would be that we have lost 20% of the resources. But SMD is only a fraction of that (do we have an actual number?), and in any event, the fact that the frac fluid did not return suggests strongly that the company's interpretation of this as a blockage is correct. Meanwhile as they say, based on data so far, "the Company's expectation for the SMD is that it should produce better than the two lower zones already tested".
So yes of course the stock should be down a bit, but no need to panic, in my view.
Onto TW!
People seem to be getting quite animated about the rig move. Why? Am I missing something? Wasn't this always going to happen? Fingers crossed for the TW flow test results.
Well remember that the phrase in the 15 Feb 22 statement was "The Company is now preparing to set casing prior to flow testing within both horizons over the coming weeks.". That could mean this week. Could mean next week. I am also like the kid the night before Christmas! But not long now!
https://www.google.com/search?q=weather+in+deadhorse+alaska&rlz=1C1GCEA_enGB958GB958&oq=weather+in+deadhorse&aqs=chrome.0.0i512j69i57j0i22i30l2j0i390l3.6234j1j7&sourceid=chrome&ie=UTF-8
This looks more promising!
Chaps, I've said it before and I will say it again. You cannot predict or explain or anticipate short term share price movements in a minute / hour / day. They are fundamentally random. You'll give yourself an ulcer if you persist in thinking you can anticipate what a share is going to do in the short term, or why.
Lets face it - the share has enjoyed a massive increase (with good reason) and we are all rightfully very happy. When this happens, periodic pull backs are almost a racing certainty. Now if you're asking me if I was expecting to be higher on the back of yesterday's statement, then yes I do. But I am only one man with one opinion, and I cannot control the share price.
We know the elephant in the room is the Theta West flow rates. Inshallah, these will be favourable, and there will be a substantial boost then. I am personally of the opinion that if this is successful, then it will be hard for the market to ascribe a $ / bbl of less than the $3.10 Oilsearch paid, and that would be a share price many times higher than where we are right now.