Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Hi Keith,
I too thank you for the significant contribution you make to this board.
With regards to your speculation about a small capital raise after the flow test results, to fund drilling deeper into the triassic. I wonder if that may not be necessary as the company may have already agreed a prepayment facility in its Heads of Terms with Afriquia Gaz.
Reabold Resources, a tiny UK O&G company last week announced such a deal with Gunver.
"....The HoA also provides for a potential prepayment by Gunvor for a portion of the first five years of deliveries, with such amounts subject to prepayment being a total of approximately 66,000 tonnes of LNG, or 999,000 MWh. The average forward Italian PSV gas price for the years 2025-2030 is currently approximately €30 / MWh. The prepayment is conditional on agreeing definitive transaction documentation and LNEnergy obtaining the required permits to construct and operate the LNG production facility."
Time will tell. AIMHO
PRD are closer to delivery of gas and have a significantly greater resource.
I like DH a lot. He is just what PANR need. A focussed businessman with a great knowledge of the oil industry. The investment story IMO just gets better and better. The size of the oil resource is already world class and the reason I am heavily invested. But the likelihood that significant gas assets could also be exploited materially enhances the story. I first invested in PANR in 2014 and have added significantly over time. Of course there are still risks ahead and no doubt there will be some blips along the way. But the size of the potential prize is enormous and for me, the risk is one i'm prepared to take.
Look at page 8 of the Corporate presentation of May 23
https://wp-predatoroilandgas-2020.s3.eu-west-2.amazonaws.com/media/2023/05/Proactive-Presentation-18-May-2023-FINAL.pdf
This gives the location of the Morocco Licence and its terms. It confirms that PRD has a licence extended to 9 years being Mar-2028.
At the bottom of page 8, it references the extension to the first extension period (petroleum agreement number 2) and states that PRD: "satisfies drilling equipment 1st Extension period" and there is No increase in the $1.5m bank guarantee that rolls over.
At the start of the Second extension period the bank guarantee increases to $4.5m unless it is negotiated down.
The company states that it has met all its obligations of the licence so far so I don't believe the licence is at risk. The reason as far as I can see is that if they get another extension to the first extension period and declare commerciality within this, they delay the additional bank guarantee, currently $4.5m, that they need to provide when entering the second extension period. The company successfully reduced the bank guarantee required for the first extension period so there is no reason to say that the $4.5m could not be reduced if and when it falls due. Further if commerciality is proved (or CM generates revenue) then this should be covered if indeed it is required. ONHYM have to date been nothing but supportive of exploration companies operating in their country. Sound Energy (in my view) lost a lot of credibility with their proclamation of a giant gas find and golden tickets for shareholders, only to nearly go bust a year or so later , when its claims were seen to be over exaggerated. Further, Sound had tax payment disputes with the tax authority. ONHYM and the Moroccan government have stuck with Sound and have allowed it time to sort out its mess. So IMV I think the worries about the PRD licence extension and ONHYM "doing the dirty" are unfounded.
OAW.
In the RNS of yesterday, PG said:
"We are very confident that we can design the Sandjet testing parameters to extend beyond the zone of formation damage."
IMV the company always wanted to use the Sand jet technology but because of delays (mostly outside of their control) they were forced to use conventional methods instead. We now discover that they were forced to accept smaller perforating guns as these were the only ones available. As others have said, they likely carried out the minimum flow tests to meet and satify the 5th February deadline requirements.
In the May-23 Corporate presentation the CPR (SLR) gave the High case figure for the Moulaya fan (to be tested by MOU 3 and 4) as 708 bcf and the Middle Sands to be tested by MOU 3 as 659 bcf = 1.367 TCF in total. Given the results of MOU 3 and MOU 4 have exceeded all expectations, I would suspect that the 1.367 TCF number has been comfortably exceeded.
Or maybe ADNOC and BP will pull out of their deal to buy NewMed and take out PRD instead!!
Hi Keith,
Thanks for your contributions to this board. They are greatly appreciated and remind me if ever in doubt of the compelling reason to hold this share.
With regards your recent post valuing each TCF of the giant Leviathan field at $175m (x 23 TCF)= $4bn based on 50% of NewMed being purchased for $2bn. Isn't the actual figure greater than this, as NewMed only owns 45% of the Leviathan licence and not 100%?
$175m / 0.45 = $388m per TCF = 69p per PRD share. What multiple do you multiply this to account for On-shore versus Off- Shore, the location to a major pipeline to supply Europe, and the better tax and sales regime?
Also how many TCF's are estimated in the Guercif licence that we have drilled to date?
I would have thought that must be around 3TCF which takes you to £2 per share just assuming we get the same deal as NewMED???
Cove Energy's main asset in 2012 was an 8.5% stake in a giant gas field (Rovuma basin) off shore Mozambique. At the time this basis was estimated to have in excess of 30tn cfg..
Cove Energy was eventually sold (to PTT) for £1.22bn with its main asset being its 8.5% stake in this field (Approx 2.55tn cfg)
That deal equates to approximately £478m per 1 tn cfg which equates roughly £1 per PRD share.
2012 was a much more buoyant time for oil and gas and shares in oil exploration were more highly rated then, but this deal was for a an OFF Shore field in an undeveloped area as far as I can see.
So how much is PRD worth in the current climate? £1 per tcf (as for Cove energy) but On shore, close to infrastructure and a market in desperate need of gas.
With the success of Mou-1, 3 and 4, it is not beyond the realms of possibility that we exceed 3 TCF which based on Cove Energy's deal, would exceed £3 per share.
This time next year Rodder's, we'll be millionaires!!
TL
I didn't ask IG that question so I don't know. But IG should hedge their position with the spread bet by buying SAVE shares in the market. As they can't sell SAVE shares they can't unwind their hedge so what benefit or risk reduction would they get?
I don't know. More likely I think they would suspend any further dealing in Spread bets with that client until he made good the margin amount and maybe charge them a punitive interest rate charge on the margin owed. Just my speculation though.
I have a spread bet position with IG along with shares in my dealing account. They contacted me to give advance warning. I do not think it is anything sinister about SAVE per se. I believe after a set period of a company being suspended, they automatically increase the margin required to 100%. I suspect that most companies whose shares are suspended for this length of time usually don't come back. I can't imagine that they would sell SAVE shares in the event that you cannot cover the margin as there is not a recognised price. More likely they would ask you to find additional cash or close out other spread bet positions so the margin allocated to these could be used to cover your increased margin position in SAVE
Even better??
"Post period end, the Company entered into a settlement agreement with Morocco tax authority on a phased payment schedule back ended over 6 years of approximately US$2.5 million as a full and final settlement against a claim of approximately US$23.95 million."
If i'm interpreting this correctly it is a tremendous outcome. I suspect this has been "buried" in the notes of the final year end accounts without fanfare because the company didn't want to upset the Moroccan authorities
My online broker is IG and I struggled to get a quote multiple times last Friday with a "No quote available" message. This happened with the default "Fixed price" Quote. i.e You select the number of shares you wish to buy or sell and get an immediate price to then accept or lapse. However when I selected a "Limit Order" quote where you input the maximum price you are prepared to buy or sell, the deals went through without a problem at the offer price.
If Savannah still have control of the Cameroon pipeline can we increase the tariff significantly for the nationalised oil whilst keeping the tariff unchanged for all other customers??
Let's hope that an agreement is reached but I fear bridge the Chad Junta will ignore any international ruling and this will lead eventually to other international companies exiting the country. Such a shame.
I use IG for spread betting PRD. The positives are that any future capital gain is free of tax as it is a bet. So if you strongly believe the share price will sky rocket then this might be a tax efficient route. The negatives are that if you make a loss when you close out your position, this amount cannot offset any capital gain made elsewhere. If you take a position using a daily funded bet (instead a futures contract which expires in up to 9 months time) then you can hold that position for up to 8 years without trading. However you will incur interest on the notional size of the bet you hold. This is currently around 2.7% p.a (I think!)
When a client of IG takes a long position in PRD via a spread bet, IG should simultaneously buy PRD shares in the market to match their spread bet. This would mean that IG are completely indifferent to the direction of PRD whilst the spread bet is in place. A gain/loss for the client holding the spread bet would be matched by IG who hold the share. When the trade is closed IG would profit from the spread on the trade plus interest earned from the client holding the bet. If some clients sell PRD while others have bought, then IG would just cover the net exposure.
As a warning, something like 67% of spread bet clients lose money from their bets. That's why some more "shady" spread bet firms allegedly don't cover fully their exposure 100% as they believe the positions overall will be loss making.
Also remember that if you take out a spread bet you may only need to put forward 25% of the notional amount in margin but if the share crashes to zero - which has painfully happened to me - you will be called for the extra 75% and that typically happens at the worst possible time!
I saw a recent stockbroker report (Dec-20) on UJO that valued its Risked NPV for West Newton at £119m based on 148m bo and 211 BCF Gas. UJO hold 16.7% of West Newton whilst RBD holds 56%. Using the same metrics, then RBD's stake in WN would be valued at £400m or 4.7p per share. This is based on an estimate of reserves that could well be materially increased and using an oil price of $46 at the time of the report. Just assuming an increased oil price to the current $66 would surpass Dan's calculation of 6p. Would a bidder be prepared the risked NAV for WN? Who knows, but the success of the WN drills seems to have opened up many more opportunities within the licence area which could add significant additional value over time.
I saw the recent Arden note of UJO recommending a buy and forecast share price of 0.45p vs 0.19p a potential rise of 137%. In that note they attributed a Gross value for West Newton of around $450m. Thus RBD's holding of 56% would be valued at $252m or £187m or 2.62p per share. So if we put a zero value on the rest of RBD's assets and using the same metrics as in the Arden note we should see a share price price from 0.6p to 2.62p or 336%. The price rise for UJO includes the valuation of all their other assets. You could argue that RBD is the more risky share because it is effectively a play on West Newton only, but the price discrepancy in my mind is perverse - I suspect UJO has a larger retail shareholding that is attracted by its very low share price and greater publicity, but for me it has to be RBD as the share to buy. IMO, DYOR.
I just looked at the new CPR report RNS'd on the 25th April 19.
SLR were retained to carry out a third party prospective resource audit (CPR)of the potential in place hydrocarbons initially in the first tier Moulouya prospect and the Triassic prospect in the Miocene Tortonian and Triassic TAGI reservoirs respectively.
In summary SLR state that the total combined net best estimate prospective resource for the first tier prospects only, are rounded down to 474 BCF (943 BCF Hight estimate), representing an unrisked NPV for the best estimate net to PRD gas resources of $831.7m . That equates to £2.50 per share!
Clearly a lot has to happen to get to this position but it highlights that the rewards could be massive even after shareholder dilution if it is as successful as hoped.
https://polaris.brighterir.com/public/predator_oil_and_gas/news/rns/story/xq4397w
I wanted to look at the historic RNS's since PRD listed to find out when they acquired the Guercif Licence. To finance this acquisition they launched the (expensive) convertible bond issue of £1.5m which was subsequently paid back. However the listing document reveals fascinating details of the exploration history of the Guercif and the rationale behind the purchase.
You can find the document in the Predator Oil & Gas website RNS dated 15th Feb 19 - "Issue of £1.5m Loan Note " if the link doesn't work below:
https://polaris.brighterir.com/public/predator_oil_and_gas/news/rns/story/wvq98px/export
Key takeaways for me were:
* Exploration history very limited with only 4 wells drilled and each chasing different targets (depths) to that which PRD intend to go for. The Guercif has never been explored for these more recent target opportunities
* The Moulouya prospect covers at least 40 square kms and is supported by multiple seismic amplitude anomalies
* A 1972 drill (GRF-1) had dry gas shows less than 1.5 kms away from a seismic amplitude anomaly, with up to 128 ft of untested gas pay at the base of GF-1
*Two micro seepage surveys carried out in 2006/7 identified dry gas around the GRF-1 well is soil samples
* Directors believe (Moulouya) prospect represents a low risk proven gas play that is potentially play opening.
* Significantly, the potential for a very large accumulation exists due to the lack of compartmentalisation of the mapped seismic anomaly - unlike the Rharb basin where the structures are small but with a very high success rate for finding gas.
* A CPR in 2012 gave an unrisked best estimate EMV of $276m for the gross recoverable gas resource. PRD's ownership (75%) equates to £152m or 18x market cap.
* A new CPR based on new technical information generated since 2017 is to be commissioned. An uplift in volumetrics is anticipated together with a revision of the model based oh higher gas prices, lower capex and higher well productivities.
There is lots more information in this document but it is well worth a read, and is a great reminder why the Directors were so keen to do the deal, even at the expensive cost of the loan note.
Interestingly, warrants were granted to the loan note provider and the company broker arranging the deal. The exercise price was 12p per share and they expire on or around 15th February 2021 (2 year maturity). I wonder if they will be exercised!!
New $8bn mandate.
From the most recent Edison report, the average management fee for dynamic hedging is 0.16% p.a. If we reduce the management fee to 0.125% to reflect reducing fees for higher sizes of mandate we get to a total management fee of $10m or £7.8m p.a when fully invested. This amount will largely fall straight down to the bottom line.
The year end 2021 and 2022 profit forecast (by Edison) are £5.7m and £5.6m respectively. So this new mandate has the potential to more that double the companies profit by 2022. The shares rose by around 25% yesterday but in my view there is still more to come. AIMO
There was an ex- CVR date which around the middle of September 2019 from memory. If you owned AMYT shares prior to this date your account would be credited with these CVR's. They are completely separate from AMYT now. This means that if you bought shares in AMYT after mid September 2019 you would not be entitled to any payout from the CVR. I have three share dealing accounts. In 2 of them , the CVR is listed as a separate item. In the third (IG dealing) they are not so I will have to contact them to make sure they know I am due a payout if the conditions are met.