RE: OEL Farm-in27 Mar 2019 04:47
Really interesting timing....
Otto have a WI in PANR GB acreage of ~10% that they acquired for $20m and excluded Alkaid that they had an option to acquire an 8% WI in for a further $25m. So we know they like Alaska.
Whilst I do not consider OEL to be a tier 1 company, I do think this timing is suspicious given our Farm Out plan.
With Otto having $10.3m in cash and a CR underway due to a “new farm in transaction”, I wonder if this is our new partner? We have been speculating about a transaction that would give away 70-80% of our acreage in return for completion of seismics and drilling 2-3 exploration wells and a free carry to production...
What if we take a different approach, what if we took a similar transaction to GB and OEL for our conventional, a less rich transaction without the free carry for us to production but a load of cash to push forwards exploration, firm up our resources and a much lower % WI given away?
What if we farm out 10-20% of acreage in return for $20-40m?
The last 3D seismic was approx. $6m for 25% of acreage. So we need another $18m to complete, and @$15m per well, another $30m for the 2 drills we have permitted for next season. Could we see a deal for $50m?
I’m in 2 minds about OEL as a farmee in this type of deal. I like getting a load of cash, and I like retaining much bigger %. I think partnering with the brand will be less positive in the short term for our share price, possibly even negative, although may well be better in the long term given the control we retain. Will also create interesting challenges getting to scaled production given they are not cash rich like the big boys.
All highly subjective and speculative...and IMHO.
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