Member Info for Newanda

Hmmmm.... need to revise down the Sak and Ugnu numbers I think.

http://www.petroleumnews.com/pntruncate/135537818.shtml

"Cold, heavy oil

West Sak oil isn’t just heavy oil, it is “cold, heavy oil, and that means it’s extremely viscous,” he said.
The reservoirs are shallow, from roughly 3,000 feet below the surface to some 4,500 feet and they lie under some 1,800 feet of permafrost, so the reservoir temperatures vary from about 40 degrees Fahrenheit to about 90 degrees F, “and that combination of these cold temperatures and the relatively low API means that we have extremely high viscosities,” Fox said.

Prudhoe Bay and Kuparuk oil have about the same viscosity — ability to flow — as water, he said. West Sak has about the same viscosity as olive oil and the shallower Ugnu has viscosity similar to maple syrup.

In terms of production this is a big whammy, Fox said: West Sak is about 100 times as viscous as water. The flow rate of oil is “indirectly proportional to viscosity, so if viscosity increases by a factor of 100, which is what we have here going from the Kuparuk to the West Sak, rates will decrease by a factor of 100.”

In addition, recovery rates are lower because West Sak oil is very difficult to move out of the pore spaces in the formation, “it’s very difficult to displace because of its viscosity,” he said.

And refineries pay less for lower API oil than for Prudhoe or Kuparuk oil."

I think the numbers are eye watering indeed. The flip side to the numbers is the Capex required to get the oil flowing into TAPS. We would need multiple wells drilling at $15m a pop and pipeline building to TAPS which looks to be about 10 miles away - a quick search online suggests average costs in US onshore were $6m per mile. So for a 4 well field with 10 miles of pipe we could be looking at $120m Capex outlay.

On, and if, success, clearly this Capex requirement is too rich for us. So I suspect we would look to get a major on board with a deal similar to the Repsol/Armstrong deal. Suspect will have elements of:
1) back costs for the GB expenditure to run seismics and exploration wells
2) Commitment to further exploration of the field and development to production field to the tune of $Xm by 2021/2022
3) Retain WI of 20-30% with free carry against the above

Also found a bit of info on West Sak and Ugnu from further North

http://doa.alaska.gov/ogc/poolstatistics/annual/current/OIL/Kuparuk_River,West_Sak_Oil/pool.html
http://doa.alaska.gov/ogc/poolstatistics/annual/current/OIL/Milne_Point,Ugnu_Undefine_Oil/Pool.html

And some of the issues with these zones...
http://www.alaskajournal.com/business-and-finance/2015-08-06/conocophillips-overcoming-viscous-oil-challenges#.XJScZy2cbRY

Evening GG,

I actually should have including 16% state tax in earlier figures. Included here for completeness.

Ugnu and West Sak clearly more speculative given known data, and I think I read somewhere they were a heavier oil so may not command the ANS West Coast premium, but have assumed so for now. Recoverable oil taken from slide 14 http://www.pantheonresources.com/investors/presentations/597-agm-presentation-2019/file

Zoi = 25m recoverable *75% = 18.75m net to PANR
@$3 per barrel in in the ground =18.75m * 3 = $56.3m or £42.8m
@ $68 ANS west coast - $40 all in costs = $28 * 18.75m * 84% (tax) = $441m or £337.3m
NPV10 over 10 years = £207.3m

West Sak = 134m recoverable * 75% = 101m net to PANR.
@$3 per barrel in in the ground = 101m * 3 = $303m or £231m
@ $68 ANS west coast - $40 all in costs = $28 * 101m * 84% (tax) = $2.376bn or £1.817bn
NPV10 over 10 years = £1.116bn

Ugnu = 390m recoverable * 75% = 293m net to PANR.
@$3 per barrel in in the ground = 293m * 3 = $878m or £672m
@ $68 ANS west coast - $40 all in costs = $28 * 293m * 84% (tax) = $6.891bn or £5.270bn
NPV10 over 10 years = £3.238bn

Some thoughts....

The $4bn I think is a revenue figure, based on $98 per tonne which has a Opex cost of $39 per tonne, so approx $60 margin or $2.4bn.

Now apply Australian corporation tax (30%) and the figure is $1.68bn.

Also, $335m Capex is required to finance the mine which hasn't yet been sorted. Assume this is taken as debt, now this needs to be paid back so the $1.68bn becomes $1.35bn over 10 years or £1.03bn.

Not sure why folk saying Macarthur will get Xxm pa - the way they will receive value is through Market Cap appreciation of Macarthur - which if the above £1.03bn was reflected in Macarthur MCap their stake would be worth £100m x whatever multiple the share attracts, and also from any dividends that get paid.

Figures taken from https://www.globenewswire.com/news-release/2019/03/21/1758423/0/en/Macarthur-Minerals-Signs-10-Year-Iron-Ore-Off-Take-Agreement-for-the-Lake-Giles-Iron-Project-in-Australia-With-Glencore-International-A-G.html

Black means price of transactionwas on the mid-price and therefore cannot be attributed to a buy or a sell.

Thanks GG,

Some additional thoughts:

Zoi net barrels to PANR if flows = 25m*75% = 18.75m

@$3 per barrel in ground (based on OSH deal) could sell for $56.25m or £42.8m

Assuming an all in cost of $40 per barrel to extract and get in TAPS, then against current ANS West Coast @ $68, then we're talking $28 net back to PANR = $525m 0r £399m. Assume a 10 year operation discounted at 10% WACC gives me £245m

So take the low end, if Zoi was already priced in then effectively half the market cap attributed to Zoi. Given the GB acquisition cost $49m, if Zoi was priced in then pretty much zero is being attributed to the rest of the GB acreage (assuming that the pre-acquisition of Cap of PANR is allocated to the Texan assets).

So my contrarian view to yours is that some of Zoi maybe priced in, but with a minimum valuation of £43m I don't think much is. And if we go on to deliver ZOI into TAPS then could be £245m which is certainly not priced in.

Delighted to be corrected.

Thanks

I agree with Nigoil.

I think they’re trying to give the share price the best chance re: volatility.

By stating they won’t announce until the end, they mitigate shareholders getting spooked from hearing no news and assuming the worst, and also protect from having to release news if not good. They now do not have to announce immediately that Zoi doesn’t flow which would create volatility (lesson learnt from the first Winx RNS) instead allowing them the chance to mitigate that bad news with the results from the other 2 zones if positive. Obviously if all 3 bad then it will be a stinker of an RNS :-(

But if it does flow, then there’s little reason to not announce. In fact it may well be more share price accretive to announce 3 sets of positive news than 1 big one. That would be 3 sets of interviews on proactive etc. and 3 sets of all the media attention that would be triggered. IMHO this would drive the most publicity and subsequent uplift in SP.

Particularly intersting comments on the analysis of the Hrz - building a 3D model to show how HC move in the reservoir. Dave states this will pretty much give a definitive answer as to the producibility of the reservoir (5 mins 45)

As the analysis is a few weeks from completing - I suspect they already have a pretty good idea of the answer and are in the process of finalising the work and writing it all up. As Dave states they will package it up for the unconventional farmout my inclination is that this is looking positive.

For me a positive RNS confirming that at least one company sees value in our conventional prospects and removing fear of receiving no bids. How much value is yet to be divulged as is whether the bidder is a super major or a small exploration company. But gives some reassurance to the analysis and data we have gathered and I also think DW would not progress with a nonsense company with a nonsense offer - so I suspect ours and their negotiating positions are not significantly apart. Also a few other reassuring nuggets:

1) We have a preferred bidder
2) FO deal negotiations are underway
3) no reported delay to Q1 target for deal
4) further 3rd party interest in HRZ received with FO scheduled for H2
5) interest from majors is migrating south near our acreage
6) working hypotheses on western blocks further exploration being evaluated

Patience, agreeing a deal can be complex especially with a large corporate where internal legal and commercial processes and bureaucracy can slow stuff down.

From Quarterly Report 25th Jan:

“The deadline for bids was extended by 88E due to demand with deal targeted in Q1 2019”

Suggests End of Q1 is not the deadline for bids, but to complete deal.

Good presentation from Otto who have WI in much of the GB acreage. Highlights some of the non-Alkaid prospects we have to go after with some geological reasoning.

http://www.ottoenergy.com/site/PDF/2055_0/AlaskaMovingtoDrill

SZ,

I suspect they ran out of cash, partially due to delays in payments of tax credits from SOA.

GG - re:tax credits - any idea the value outstanding? I can't find anything other than a statement from 2016:

"Total Gross Spend of Approximately $220 Million
o Approximately $140M has been or will be reimbursed by State of Alaska
§ Net Operating Loss Credits (25% -> 45% -> 35%) § 40% Exploration Incentive Credit for Seismic
§ 30% Exploration Incentive Credit for Wells"

I guess they would be included within their assets of $24.5m at time of acquisition? Seems very low considering 88e carry approx. $20m of tax credits on their books.

Thanks

Does anybody know if we also acquired the SOA tax credits with Great Bear? I assume we did?

I agree with that Phronist, time will tell:

"The reservoir performance in the Torok Channel Sequence was better than the Nanushuk in the Winx-1 well as evidenced by relatively faster influx of fluid during MDT sampling. On completion of the wireline logging program it is apparent that the oil saturations in the zone of interest are also low and not conducive to hydrocarbon flow. While the oil saturations are evidence of an active petroleum system and charge, further work is required to determine whether there is an effective trapping mechanism at this location.

The forward plan is to further evaluate and integrate the valuable data acquired at Winx and reprocess the Nanuq 3D seismic (2004) in order to evaluate the remaining prospectivity on the Western Leases, including the Nanushuk Fairway potential. Winx-1 will now be plugged and abandoned."

http://www.petroleumnews.com/pntruncate/74818552.shtml

Hi Tondy,

I think there is plenty in the pipeline....

1) any results from Baker Hughes analysis using "latest" techniques to assess prospects
2) Unconventional FO H2
3) Additional 3D Seismic over 75% not surveyed to identify further prospects H2
4) Forward plan for Yukon post upgrade (sell-up? prove up further? sell some and retain WI on free carry?)
5) Forward plan for Winx on success case (sell-up? prove up further? sell some and retain WI on free carry?)
6) Conventional prospect exploration wells in Q1 2020 for prospects we have already identified
7) Forward plan for Unconventional post FO - say horizontal wells(s) from IW2 vertical H1 next year

I’ve been giving some thought to 88 and how it is currently been valued. Here are some thoughts for debate.

From the annual report we know:
1. cash = GBP12m
2. Tax credits = GBP14.5m
3. Debt = GBP11.4m
4. Liabilities = GBP3.2m

We also know we have 40% of the Winx costs:
5. Winx costs = GBP4.6m

If we use RMP mcap (they have nothing else really) as a proxy for how the market is valuing Winx (roughly - I know we h e bigger percentage):
6. Winx = GBP32m (as of 6th March close).

And our market cap...
7. 88e Mcap = GBP80m

Then I believe approx. Only half our Mcap is attributed to Our non-Winx prospects.

Using numbers above:

(1+2+6) - (3+4+5) = GBP58.5 - GBP19.2 = GBP39.3m

GBP80m (our Mcap) - GBP39.3m (from above) = GBP40.7m = Mcap allocated to Yukon, IW conventional, IW unconventional.

Which would correspond to approx. 0.64p per share.

My conclusion, our non-Winx prospects are woefully underpriced, especially as we held an equivalent or greater Mcap of today pre getting involved in Winx.

Happy to debate, I’m sure someone will educate me as to why this is wrong :-)

I would say building ice roads in the Alaskan winter and then running a $15m drill on time and to budget with promising shows through 2/3 target zones does not equate to not knowing what they are doing. Quite the opposite in fact.

As an investor I’m happy with the decisions being made and the results we are seeing from Winx thus far. What more would you want at this stage that would be feasible? I mean this as a genuine question not being an Oil man myself.

I do wish the RNS on Friday could have been explicit that the “zone of interest” was neither N4 or N5 removing the need for people to try and decipher if this was the case or not. Clearly Dave has responded in this RNS to the comments / questions he was given and now it is much clearer.

Fingers crossed the early analysis follows through into something very positive for us all.

D45,

I saw that. 2 possible interpretations:

1) it relates to the logs associated with what they released on Friday, and Otto want to see the data

2) it means that the news on Friday did not contain logging from the primary target and N4 and N5.

I’m leaning towards the latter as the former is not worthy of the half yearly I’d say.