Member Info for MountTeide

Future Nat Gas demand - Most, if not all the power supplied to build and operate Ibom Port, and the heavy and petrochemical industries in the new industrial city is almost certain to be supplied by the existing three regional gas fired power stations, which currently, are hugely under utilised and supplied exclusively with nat gas by Savannah Energy.

By way of example; as Touchstone Exploration shareholders well know, the petrochemical industry of the small island of Trinidad is globally important and uses 0.85 Trillion cubic feet of Nat Gas a year! Touchstone recently signed a multi $billion contract with the NGC to supply the entire 20+ year production from their Ortoire block for use by the petrochemical industry located some 10-20 miles away.

To provide some perspective as to what a 9 million TEU container port looks like.... this is Felixstowe Phase 1 (about 2.5 miles long) - it has a circa 2.3 million TEU annual container throughput capacity. The larger ships on the berth are circa 350 metres long (3 football pitches) while those in the foreground around 250 metres long.

https://i.dailymail.co.uk/1s/2020/09/23/16/33532148-0-image-a-12_1600873205139.jpg

This is a 9 million TEU container port in Malaysia ...... 2.5 Laps around it and you will have run a marathon!
https://finanswatch.dk/Billeder/article11909374.ece/ALTERNATES/native-app-960/doc792jruao16h1a4vhjar.jpg

The Akwa Ibom State Governor said the free trade zone would be 50,000 hectares, the largest in Africa, covering six local government areas: Ikot Abasi, Oruk Anam, Onna, Eastern Obolo, Mkpat Enin and Ibeno. Committed investments for the FTZ have been reported to be $10 billion. In discussions with the federal government, he has called for more energy infrastructure in Akwa Ibom.

The comments/interview in the Savannah Energy Annual Report with the Akwa Ibom State Governor(further to earlier meetings/discussions with SAVE management in connection with SAVE securing new gas fields in the area), perhaps offered a clue that Federal Government approval for this mega port and industrial city were not too far away; "We expect Savannah to continue to expand its operations in the state, which will create future opportunities for local employment, economic growth and sustainable investment. As Savannah expands gas supply to new industrial clusters and our planned deep-sea port, we hope many more international investors and industries will be be attracted to Akwa Ibom State".

The green light for Africa's first mega port and industrial city development will as sure as night follows day, provide an unprecedented opportunity for Savannah Energy to deliver a huge expansion of its high margin nat gas business over the decade ahead, supplying existing and new power stations/generators and large, high value industrial businesses.

Data Source: Mainly Lloyd's List

On the strength of this company making, transformational development I substantially increased my holding late last week to 2.0 million shares.

IBOM DEEP SEAPORT & INDUSTRIAL CITY
hTTps://www.youtube.com/watch?v=Q38wOq4T-L4

hTTps://www.savannah-energy.com/nigeria-assets

AIMHO/DYOR

In terms of project size and scale, the Ibom Deep Sea Port and Industrial City Project will be akin to building from scratch the Port of Rotterdam - Europe's largest Port and Industrial centre.

Over the coming years the new Port and Industrial City development will drive an exponential growth in energy demand across the region - the fast tracked $2.016 billion first phase port development will commence construction immediately and comprise ten port terminals with a combined quay length of 7.5km (4.75 miles), which will create 300,000 jobs in Akwa Ibom. The deepwater port will have an annual freight container throughput capacity of 9 million TEU, placing it in the top 15 container ports in the world - this is well over three times greater container throughput than the Port of Durban, currently the largest container port in Africa, and number 72 in the world.

Some 3,500 companies are expected to operate at the fast tracked deepwater port development by the end of 2023.

The 2,565 hectare (6,412 acre) Ibom Deep Sea Port (IDSP) project involves the development of a Greenfield Deepsea Port and accompanying Free Trade Zone (FTZ) in Akwa Ibom State in the South-East geopolitical zone of Nigeria. The FTZ Ibom Industrial City initiative will be built on a 50,000 hectares(125,000 acres) site donated by the Akwa Ibom State Government at no value.

The IDSP project is intended to become a major national and regional economic gateway that will provide huge additional freight container handling capacity for the country. In addition to containers, the IDSP is expected to handle petroleum products (export and import), crude oil and natural gas (export), vehicles (import) and bulk trade in natural resources (import and export).

The Ibom Deep Sea Port will also serve land-locked Niger, Equatorial Guinea, Cameroon, Angola, Gabon, Democratic Republic of Congo and Chad, as the African continent's first mega port has been designed with international multi model connectivity; offering direct access to coastal and inland railway lines, the Victor Attah International Airport, and new regional, national and international road networks.

Commissioner for Economic Development and Deep-sea Port, Akan Okon commended the federal government for approving the business case thereby giving the nod for the immediate commencement of the "mouth watering project", with Bollore and Power China Consultants as preferred bidders.

He stated that the project which would be built on 60/40 private public partnership would not only address the unemployment problem in the state, but would rake huge revenues into the coffers of the federal and state government.

He said, ”The procurement process for Ibom Deep-sea adopted an internationally recognised process which has been adjudged as the best by ICRC and most of our bidders participated electronically via virtual data room.

THE EAGLE HAS LANDED - Savannah Energy (SAVE) - wins the National lottery on rollover week !

The Port of Durban is the largest port in Africa - to handle the 2.7 million freight containers/30 million tonnes of cargo that pass across its quays and through it terminals each year, and drive its huge petrochemical and other industrial businesses requires enormous amounts of energy.

In addition to the Port of Durban's regional and national economic importance to South Africa, it's also a vital import/export artery for the fast growing landlocked and coastal Nations to the North.

Now, imagine what a new port of the size and cargo throughput capacity of Durban could do for a region like South East Nigeria, its hinterland and the land-locked, economically constrained Nation's to the east; and, in particular for a company that's the principal supplier, with daylight second, of natural gas for clean energy power generation in South East Nigeria - pop: 70 million, in a nation of 240 million, that is forecast to double by 2050.

Well, news was released late last week that should put an enormous smile on the faces of shareholders of Savannah Energy - because approval to build a new Mega Port and Industrial City in the South East of the country - in Savannah Energy's back garden to be more precise - was given by the Federal Government of Nigeria.

Incredibly, this new deep water port development, the first in West Africa, will be built to a design specification MORE than THREE TIMES the size and cargo handling capacity of the Port of Durban.

Nigeria's Ibom Deep Sea Mega Port will be Africa's largest and most important port - one of the fifteen largest freight container ports in the World ( 13 are in China and SE Asia) - it will be Africa's first Deepwater Port and industrial city designed to take on the Chinese and SE Asian giants.

The disclosure late last week by the Akwa Ibom State Government that the Federal Government of Nigeria has given approval to The Ibom Deep Sea Mega Port Project and Industrial City is akin to Savannah Energy and its shareholders winning the lottery in terms of its growth prospects over the decade ahead. As it will see the largest deepwater port and industrial city on the African Continent built on Savannah Energy's doorstep; in a region serviced by three modern but greatly under-utilised gas fired power stations - Alaoji, Calabar and Ibom - which are all powered with nat gas exclusively supplied under long term contract by Savannah Energy, the only major nat gas supplier in the region.

Savannah's Accugas midstream business owns and operates the Uquo gas central processing facility which is located at the very heart of the region where construction of the new mega port and industrial city will shortly commence and, owns the 260km of heavily under-utilised gas pipeline network (power station and industrial) that services the region.

I would remind everyone those figures are operating cash flow for the Field BEFORE adjustment for Heritage and royalties.

I made that adjustment in the £15-£20 potential valuation figure.

Have run the numbers again and the potential cash flow generation is almost beyond belief with OPEX of $0.02 to $0.03 mcf:

Using the following assumptions I get on a PER WELL basis:

Average Nat Gas Production rate per well: 35 MMcfd production / 12.77 Bcf/year

Average Liquids Production rate per well: 750 bopd

Field Reserves: 1 Tcf

Nat Gas Contract Operating margin $2.40/Mcf (I conservatively used $1.50 Mcf in my previous calculations)

Cash flow per day:

Nat Gas - 35 MMcf x $2.40/Mcf = $84.0k

Liquids - 750 bopd x $50 = $37.5k

Total cash flow per day: 121.5k.....this is equivalent to $44.35m/year per WELL!
(For a well which costs circa $3.5-4.0m to drill and test and a max $5.0m to bring into production)

1 Tcf reserves divided by annual production per well of 12.77 Bcf/year = 78 years of production.

78 years x $44.35m cash flow per well per year = $3.5bn cash flow per 1 Tcf of reserves.

With 2 Tcf of reserves and 10 wells the annual cash flow could be $435m with a field life of 15.7 years.

DB - some might suggest if Cacsa Deep Deep and Royston come in and take the reserves to circa 2 Tcf - it may well support a valuation in the £15-20/share range.

AIMHO/DYOR

Marine Fuel Oil continues to strengthen against Global Benchmark Crude Oil pricing:
change compared to pricing on 9th December in brackets.

$80 / (+5) - MGO - APAC Average
$66 / (+4) - VLSFO - APAC Average
$61 / (+3) - Jadestone / STAG - ($9.2 (18% Premium to Brent)
$56 / (+3) - Jadestone / Montara - ($4.0 (8% Premium to Brent)
$54 / (+5) - HSFO - APAC Average
$52 / (+3) - Brent
$49 / (+3) - WTI

$5 - VLSFO/STAG Spread
$14 - VLSFO/Brent Spread
$12 - VLSFO/HSFO Spread

Jadestone should currently be generating circa $36/bbl cash flow on production of circa 11,500 bopd.

Situation at the end of H1/2020 - change compared to today in brackets.

$74 (+6) - MGO
$58 (+8) - VLSFO
$52 (+9) - STAG (+11 to Brent)
$47 (+9) - Montara (+6 to Brent)
$41 (+11) - Brent
$40 (+14) - HSFO
$38 (+8) - WTI

$6 - VLSFO/STAG Spread
$17 - VLSFO/Brent Spread
$18 - VLSFO/HSFO Spread

Jadestone then was likely generating circa $27/bbl cash flow on production of circa 11,500 bopd before adjustment for the Montara 4,500 bbl/day hedge - increasing to $35/bbl after adjustment for the Montara hedge.

As suggested back in June, post expiry of the Montara hedge at the end of September, should the price of Brent go on to reach $51/bbl, with the IMO 2020 premium the realised cash flow per barrel should then be greater than when Brent was at $41/bbl after adjustment for the IMO 2020 premiums and the circa $72/bbl Montara hedge.

AIMHO/DYOR

Paul's contract guidance data is almost certainly for an initial daily production figure comprising a combination of the two wells drilled to date on Cascadura, and one each on Chinook and Coho.

However, Paul has already said it's the management's intention to have up to 5 production wells on Cascadura and three on Chinook.

At an average of 35 MMcfd, eight wells on Casca/Chinook would dramatically increase the "wall of cash" that the fields could potentially throw off annually.

By way of example: Four wells on Cascadura and 2 on Chinook @ an average of 35 MMcfd could potentially produce 210 MMcfd.

With 210 MMcfd of nat gas production, and a NGC contract revenue of a mid range $1.9bn, at an average price of $2.50 Mcf the annual 'wall of cash" calculation would be:

Revenue of: 210 MMcfd x $2.50 Mcf = $525,000/day / $191m/year

Expected Annual production = 210 MMcfd x 365 = 76 Bcf/year

Expected Field Life = $1.9bn divided by $191m/year = 10.0 years

Expected Production during life of the contact = 10.0 years x 76 Bcf/year = 761 Bcf

Therefore, the management assumes for a contract revenue range of $1.6bn up to $2.2bn, the 2P reserves of Coho, Cascadura and Chinook combined will likely be, subject to successful further testing, in the range of 641 Bcf to 881 Bcf.

PLUS: circa 750 bbs/d of liquids per well x 6 wells = 4,500 bbls/d / 1.64m bbls/year

This could generate revenue of 1.64 million @ $50/bbl = $82m /year

So, potential nat gas and liquids combined annual revenue of $191m + $82m = $273m/ year for 10 years - $218m a year net to Touchstone.

The Blue Sky Calculation

Assumptions:

Further success at Cascadura Deep Deep and Royston taking the total 2P reserves to 2 Tcf;

4 wells on Cas, 4 on Royston, 3 on Chinook.

At an average of 35 MMcfd this could see production at 385 MMcfd

With 385 MMcfd of nat gas production, and 2 Tcf of reserves, at an average price of $2.50 Mcf the annual 'wall of cash" calculation would be:

Revenue of: 385 MMcfd x $2.50 Mcf = $963,000/day / $352m/year

Expected Annual production = 385 MMcfd x 365 = 140 Bcf/year

Expected Field Life = 2 Tcf divided by 140 Bcf/year = 14.3 years

Plus lets say circa 750 bbs/d of liquids per well x 11 wells = 8,250 bbls/d / 3.01m/year

Would generate revenue of 3.01 million @ $50/bbl = $150m /year

So, potential nat gas and liquids combined annual revenue of $502m/ year for 14.3 years - $7.17bn over the life of the 2 Tcf of 2P reserves . $401.6m/year and $5.73bn net to Touchstone .

AIMHO/DYOR

Maari Acquisition - Purchase Price $50 million

Some thoughts:

From the effective acquisition date of 1/1/2019 Brent has averaged $53.50/bbl

Maari crude attracts a circa $2/bbl IMO 2020 Low Sulphur Premium to Brent

Maari Gross Production averaged 6,723 bopd in 2019 and 4,759 bopd in first 9 months of 2020.

Lets assume Q4 2020 production averages the same as 2020 to date.

Then, by calculation, since 1/1/2019 Average Maari Production would be 5,741 bopd, which is 4.19 million bbls. Net to Jadestone: 3,961 bopd / 2.89 million bbls

Average OPEX has been circa $25/bbl since 1/1/2019.

Average Cash Flow/bbl since 1/1/2019 would be $55.50 - $25.00 = $30.50/bbl

Operating Cash flow net to Jadestone(69%) over the period would be 2.89m bbls x $30.50 = $88.15 million

Suggests Jadestone could well pick up the Maari asset on completion during Q1/2021 for free along with a decent cheque that may well cover most if not all of the $12 million Lemang PSC acquisition cost!

AIMHO/DYOR

Data Source: Maari Field Shareholder - Cue Energy

Montara Acquisition Agreement - contained $160m of Contingent Liabilities

Considerations (A) through to (I) totalling $80m all fell away between 2018 and 2020 without triggering any payment.

The two outstanding considerations:

(J) - $20m - First Commercial Gas

(K) - $60m A FID to proceed with the development of Montara assets with 2P reserves greater than 15.0 MMbbls

are very unlikely, if ever, to trigger any payments for at least a decade.

If you're an O&G sector investor looking for a management with a proven track record of success building multi $billion companies as a specialist second phase O&G field operator, through the implementation of production optimisation and development, and OPEX reductions from improved operating efficiencies, at very selectively acquired, high quality, mature, but modestly performing producing assets with excellent reinvestment potential, to produce a lowly leveraged business with very strong cash flow at low oil prices then a company like Jadestone Energy should be on your investment research list.

The best presentation Q&A comment from CEO Paul Blakeley that sums up his and Jadestone's specialist second phase operator approach was probably his description of the take-over of the ageing Beatrice and Buchan Oilfield from BP when he ran Talisman Energy.

BP had decided to sell the asset as they believed the field had just 12 months remaining commercial life - a view that was reflected in the acquisition price.

Specialist second phase operator Talisman, through a combination of production optimisation and development re-investment, and cost receptions from operational efficiencies, were still profitably running the field some 20 years later.

With the Oil Majors increasingly taking a knee to political and investor pressure to pivot to renewables, National Oil Companies and high quality Independents are likely to be the short/medium term winners once the dust settles and smoke clears from this Covid-19 pandemic - as the Major's $70bn O&G disinvestment programme is likely to throw up plenty of serious bargains over the next few years - particularly in the long in the tooth SE Asian and Australasian O&G basins where the competition for buyers of mature producing assets is very thin and prices attractive by North Sea standards.
AIMHO/DYOR

The per capita growth in oil consumption among the 4.5 billion population of SE Asia, China and India is still in its infancy compared to the West .

Global Oil Consumption Data (bopd)
2019
98.2m / The World
* 32.8m - China/SE Asia/India
* 20.4m - USA
* 19.1m - Europe

2000
76.4m - The World
* 20.5m - USA
* 19.9m - Europe
* 12.7m - China/SE Asia/India

Oil consumption in China/SE Asia and India has increased by 158% over the last 19 years while it has fallen by 0.48% in the USA and 4.02% in Europe.

Some 20.1m bopd (92.2%) of the 21.8m bopd of global growth of oil consumption annually since 2000 - equal to the current combined production of the 5 top ten global producers: Saudi Arabia, China, UAE, Kuwait, Iran plus the UK - has come from China, SE Asia and India.

Yet, in 2019, oil consumption per capita in China, SE Asia and India is still only circa one eighth, one tenth and one fifteenth respectively compared to that of the West.

Data Source: CEIC/BP

Some comments from PB during the Proactive Presentation

Ortoire - " There are not many places in the world where you get 1500ft to 2,000ft of Turbidite section - we are right in the middle of the main fairway"

Ortoire - 2020/21 Drilling Programme

* Casca Deep - "Casca Deep is a very, very large structure sitting under Cascadura"

"It's a 40 day drill - hopefully we'll have a Christmas present for everybody by the middle of December" ( Uncharacteristically upbeat comment from PB)

* Cascadura - "3 to 4 development wells - even if Casca Deep does not work"

* Chinook - "multiple development wells, subject to successful testing, the discovery is bigger than what we were expecting" In answer to a question: "Yes. I would call Chinook 'World Class' "

* Royston Deep Drill - " has always been from day one the largest prospect on the bloc - it will offset an existing 1965 Shell well"

" We think Chinook has significantly derisked the Royston well - and has
very large potential reserves"

Beyond that - "We have 24 different Ortoire prospects. Casca Deep and Royston will be drills 4 and 5. Following that we've identified all these other inclines and sand bodies in the heart of the fairway (page 16 on the latest presentation) - with different horizons and sands which is setting up a very long exploration runway for us - 10 years"

The Chinook Drill and a potential connection between Casca Deep and Chinook
"The team made a call on Chinook when at the Terminal Depth to continue drilling as they had started to see hydrocarbons again.....so it looks like this - drilling the much larger deeper sheets - is going to be a really interesting opportunity for us"

"The Chinook drill is the first time that hydrocarbons have been found in the very, very lower sheet"

"There are two significances to this:

1 - "Its the first time a well has been drilled (On Ortoire) that deep (to over 10,000ft)"

2 - "We think that potentially the deep prospect at Casca and the deep zone at Chinook could be connected - this would give a prospect with a much greater aerial extent than what we see in the upper sheets, and really sets up a very big opportunity for us and for the country, if these lower sheets are also hydrocarbon bearing."

"Stand by on the Casca Deep drill its going to be very exciting"

Unquestionably, 2020 has been a completely transformational year for Touchstone Exploration( and many of its shareholders), yet incredibly, with each drill result, the potential of TXP's Ortoire Bloc's turbidite fairway sweet spot acreage suggests 2021 and beyond could prove even better.

AIMHO/DYOR

If the average H2/2020 Brent price to date of circa $43.0 continues to year end, Jadestone Energy is likely to achieve operating cash flow of circa $30.93m in Q4/2020.
Assumptions:
Average production of 9,500 bopd and 3,000 bopd respectively for Montara and Stag.
Average IMO 2020 premiums to Brent of $4 and $8 respectively for Montara and Stag
$17.50 - Montara OPEX/bbl
$27.50 - Stag OPEX/bbl

Looking ahead for 2021
Assumptions:
Average production of 10,500 bopd, 3,000 bopd and 4,500 bopd respectively for Montara, Stag and Maari.

Two Infill wells on Montara

Average IMO 2020 premiums to Brent of $4, $8 and $2 respectively for Montara, Stag and Maari,

OPEX/bbl - 2021
$17.50 - Montara
$27.50 - Stag
$25.00 - Maari

I calculate this would generate estimated 2021 operating cash flows of:

@ $40 Brent
$152.1 million / Montara - $101.5m + Stag - $22.7m + Maari -$27.9m

@ $45 Brent
$184.6 million / Montara - $120.7m + Stag - $27.9m + Maari - $36.0m

@ $50 Brent
$217.5 million / Montara - $139.8m + Stag - $33.4m + Maari - $44.3m

@ $55 Brent
$250.4 million / Montara - $159.0m + Stag - $38.9m + Maari - $52.5m

@ $60 Brent
$283.1 million / Montara - $178.2m + Stag - $44.3m + Maari - $60.6m

According to research published by Lloyds List, demand for VLSFO is expected to grow by circa 30% (1.0 million bopd) during this decade in line with the forecast growth of the global shipping fleet - which has averaged 2.5% annual growth(in tonnage terms) since 2000.

The management running Jadestone Energy, the Asia Pacific oil and gas play has a very impressive industry track record. In particular chief executive Paul Blakeley who, at Canadian outfit Talisman Energy, built a business which became the UK North Sea’s second largest operator with upwards of 160,000 barrels of oil equivalent per day production.

He then moved to Asia and delivered a business - Talisman SE Asia - on a similar scale for Talisman before the group was bought by Spain’s Repsol in an $8.3bn deal in 2015.

In both cases Blakeley’s strategy involved hoovering up unwanted assets from major oil and gas companies. Jadestone Energy is pursuing a similar approach in SE Asia and the Pacific Rim, the worlds largest, fastest growing and highest priced energy market.

In 2021 the Jadestone management could be in a position to look at acquisition opportunities even greater than Montara if they were able to secure them at the right price, that would generate a further step change increase in growth.

With Montara's $120m debt portion finance now close to being repaid, you would think they could comfortably access that or more again for a high quality mid/late life asset with excellent reinvestment potential, that might add 10-15k bopd and still be in a very comfortable position to pay the debt down in a relatively short period at circa $45-$50 Brent.

AIMHO/DYOR

If you're going to criticise, the least you could do is to make your posts read like English is not your second or third language!

The current copper spot price is circa 30% above the average copper price in H1/2020 when the Kounrad copper mine produced a 73% operating margin and, 8.9% above that of Q3/2020.

Would expect CAML to be emptying their copper storage warehouse big time into this pricing!

Kounrad

'Copper sales during Q3 2020 were 3,988 tonnes, bringing the total for the first nine months of the year to 10,588 tonnes.'

3,412 tonnes in Q4 will deliver 14,000 tonnes for the year, and 7,400t for H2/2020.

38% of Copper sales year to date were made in Q3 with Copper averaging circa $2.96/lb - during H1/2020 copper averaged circa $2.47.

7,400t at a $0.49c premium to the H1/2020 average copper price will generate an additional $8m of operating revenue for Kounrad in H2 over H1, and likely increase the operating margin from 73% up to close to 80% for H2.

Your making a complete fool of yourself ! Do some research for god's sake !

Most ports reach break even at circa 75% of their designed cargo throughput capacity, which generally takes around 2-3 years for ports with huge demand for their services!

There is more chance of Dianne Abbot winning the Grand National riding side saddle on Shetland pony than this small part developed low quality terminal at the end of a small tidal creek serviced via a 3 mile approach channel that has just 2-3m of water in it at chart datum, ever generating sufficient revenue to service the interest on the bank loan, never mind paying off any of the loan capital !

Typo....should have read Specsavers!