Member Info for NoEasy

You're on fire with the CVN updates Evan, thanks.

They are certainly making light work of this drill, the Valaris crew are smashing it.

Very important to see the last paragraph that the geology is matching their expectations all the way down to 2700m. Really gives a high level of confidence that their pre-drill analysis will match up for the remaining, crucial, 800m.

In 2013 there were 242m shares in circulation here. Today we are at 832m which I don't think is too shabby at all, I've certainly seen a lot worse in a lot shorter time period. For example, in the last four years COPL, which is getting a bit of attention at the moment, went from 1.5b shares to over 15b shares (since been a consolidation in case anyone looks). Not a ramp on that one by the way, I'd treat it with a healthy dose of discretion, but it does highlight where we are compared to other companies that struggled to make progress over a period of time.

Thanks for that link KingSuarez. A really good insight into the field.

The fact that there are three attics was interesting to a degree. Carnarvon have to drill another well by May 2023 under the terms of the PSC. It may be something that we could get involved with in a success case for Buffalo-10.

Agreed SGF, at least on the parameter set out in the RISC report.
5% risk attached to the finding of sufficient oil at appraisal.
5% risk attached to the financing upon successful appraisal
5% risk attached to agreeing contracts with suppliers of an FPSO or MOPU/FSO.

(95%x95%x95% = 85.73%). 86% chance of going into production.

For me, what really are the chances of not agreeing terms for an FPSO, moreso if it's a MOPU/FSO given their availability, if you are sat upon hundreds of millions of recoverable oil?

Financing is never a given so I will stick with the exceptionally low 5% risk even though LP has stated when he signed the JV that he confirmed financing for production would be available upon success of this drill.

For me at the very least a 90.25% chance of going into production (95% (Oil) x 95% (Finance)). But I can see how finance may not be any issue at all given the payback period of less than 12 months.

Kevin, I'm probably not the one to ask for technical answers but I'm going to give this one a go based upon previous answers by EnergyGeo and my own research. The simple answer is that they will have the reservoir oil in place/ recoverable results after approximately 27 days of drilling and these results will come from both the wireline logging that will take place as the drilling is underway amalgamated with the data previously acquired from the seven historic drills plus the new state of the art seismic results. I'll let the oilies on the board do what they will with that answer!

This may help.

https://www.delekdrilling.com/geology/appraisal-and-development

I've got results pencilled in for week commencing 24th Jan.

Happy to have Malcy? talking about the company. I don't believe we have have really been on many radar's although the number of new names on here and the number of posts we are now seeing on a daily basis can only be good and is hopefully indicating a ramp up in interest/exposure. This is following my expectations, down after spud by circa 10% then a steady climb from here towards results.

As an aside this is already, with the securing of both Buffalo-10 and the funds that got them there, a well run company. Soon see if all that experience in the oil business has been worth following. Its 4-3 on penalties. Gripping, live action stuff on its way.

'$2m set aside by ADV alone for any additional drilling costs on Buffalo -10...'

From my recollection it was decommissioned at 4,000bopd.

On the issue of risk, it is always there. The key is using all the knowledge, experience and science gathered and shared. It isn't just about the over 130 odd years of experience accomplished by our team but includes their peers at CVN, the RISC team, the Valaris team and all those who went before them particularly at BHP & Nexen. Add in the tremendous wealth of data from the eight well penetrations previously conducted on this reservoir, the drilling already paid for with $2m set aside by ADV alone for any additional drilling and now drilling going to plan and the odds here start becoming apparent. Risks yes, but based upon what is known and despite natural nervousness this has to be about as easy as it gets.

See past the day-to-day.

I'll redo that first line of my last post:

'Thanks for taking the time to assist me and others here EnergyGeo.'

Honestly you didn't 'take your time' it was a fast response EG. I need to get a grip.

Thanks for taking your time to assist me and other hereEnergyGeo.

Regarding your mention of the trading houses for financing and the financial institutions in Singapore that would tie in as I believe both have previously been mentioned by LP and to paraphrase his comments in his last podcast they have a number of trading companies who are very keen to get hold of the oil so when it comes to raising funds to carry out the development they expect a lot of competition to allow access. Have you any idea on what split is likely to be entertained regarding debt/equity based upon previous deals? LP signalled they are looking for at leats 70% debt with any remainder being equity based.

On the MOPU v FPSO issue LP did have this to say, again paraphrased, that If they get 34million barrels almost certainly that's the way they go (FPSO) but the could consider a MOPU with an FSO in deeper water in the case of a lower result but that's not what they expect to happen.

Your in-depth answer to the independent resource assessment filled in a big knowledge hole.

Again thanks for the breadth and depth of the reply very much appreciated.

Links:
https://www.lse.co.uk/media/advance-energy-update-investors-at-the-november-london-south-east-natural-resources-event.html

I think there is every chance it will budge as we run up to the drill results. Always had as much as a 10% drop pencilled in as worse case scenario after spud so no surprises today (posted the same view a while back).

Looking forward to the countdown now and then the next step after that which could well be the securing of a further JV using the results at Buffalo as leverage.

Happy to play the odds here which makes a change from sweating the odds.

EnergyGeo. I echo the sentiment that it's good to have you here. I'm not an 'oilie' so always have to make do with what I am told by management weighed off against any independent expert analysis weighed off against my own research. Its a fairly unique position to have someone on the board with the obvious knowledge/understanding that is able to tackle questions that I people here would like to ask of management . Hope you don't mind me trying to take advantage of that.

I have a few queries mainly around risk that I hope you can help with. Not everyones choice of material for discussion I know but its key.

Firstly you mention the finance being tied to an updated CPR. We know that they will be doing standard logging here with no flow test. Is a flow test something that would normally be required when considering financing/CPR or would it simply be a case of drawing inferences from the wealth of historical data already available in respect of the Buffalo field?

In relation to your point concerning the availability of leased equipment I recently looked at the availability of FPSO's as this is specifically mentioned in the risk calculation (86% of going into production subject to FPSO availability etc) made by RISC. The following gave an indication there may well be no issues in sourcing an FPSO if that is indeed what is required after the appraisal, notwithstanding that any such vessel may have to be modified to suit CVN/ADV's needs. https://www.offshore-energy.biz/westwood-30-fpsos-to-become-available-by-end-of-2022/.

I may have misread it by confusing your use of the term 'equipment' with 'FPSO' but do you consider that sourcing an FPSO on agreeable commercial terms is not likely to be an issue if the appraisal lives up to expectations?

You mentioned feeling slightly uncomfortable with the extremely favourable risk assessment made by RISC. Its reassuring to see to see that it's only slightly but can you expand on any particular differential that you have from RISC.

Lastly being off by a leg on the seismic or the velocity model being slightly wrong could lead to what degree of oil in-place being sliced/added.

Appreciate I am asking all this of you when not all the data is available to you.

Cheers NE.

I posted some time ago that I expected it to dip on spud and then see a rise over the following three weeks (ish) leading up to the drill with a significant lift in the case of a successful appraisal drill.

Although there are still a few hours of trading left to go I'm pleasantly surprised at how little we have dropped.

How the independent report reached an 86% chance of this project going into production is perhaps worth looking at from the CPR:

- Development is expected to proceed after appraisal provided the appraisal outcome is not worse than 1C (~95%),
- Acceptable commercial arrangements can be secured with facility (FPSO, MOPU, FSO) owners (95%).
- The joint venture partners can secure development funding (95%).

RISC estimate the probability of development to be 86% (95%x95%x95%).

For anyone looking in this morning:

- Young company only started 19 months ago.
- Raise of £22m in March.
- £450k participation by management in the placing.
- Highly experienced management across multiple disciplines.
- Very small team - only six members keeping G&A low. All 6 on the BoD.
- Cash in the bank - £7m as of March with low G&A expenditure & drill already fully funded.
- Management own 5% of the company.
- Strategy targetting only discovered resources, no high risk exploration.
- Wants projects that can be brought online quickly with one other partner.
- They are not looking at small or difficult discoveries (Buffalo 20,000bopd net to ADV) and they want quick results to provide cashflow so they don't have to keep raising funds.

- Obtained 50% interest in Buffalo-10 in March 2021
- Amongst best PSC terms in SE Asia.
- Operating costs better than neighbouring Australia.
- Will not be an operator (leaves the drilling to the JV partner Carnarvon).
- Fully funded shallow water appraisal drill (not exploration).
- Replica drill of many done in the area by other operators so low risk.
- Targetting 34m barrels at 2C for 40,000bopd via 3 wells.
- 95% chance of geological success
- 86% chance of success of going into production with Buffalo-10
- Production capex shared 50/50 with CVN. Targetting 70% debt/30% equity.
- Capex $125m equating to less than $4 a barrel.
- ADV confirmed funding would be available to develop to production before they closed the Buffalo deal.
- Cumulative cashflow at $70 Brent circa $400m for first year.
- Economic project even at less than $35 oil price.
- ‘Champagne’ oil - 53 API (minimum $2 premium over Brent)

Has further projects under assessment.

Suggested reading/viewing:

https://www.advanceplc.com/media/1092/risc-cpr-buffalo-23mar2021b.pdf

https://www.lse.co.uk/media/ADV/advance-energy-update-investors-at-the-november-london-south-east-natural-resources-event.html

It's a good point made about spud in the past tense.

What we do know is that the company have been very good at letting us know of any deviation to any announcement they have put out, for example when the 'expected' rig release dates where not going to be met they let us know before the 'expected date was up. They informed us that the spud would happen within a week of the 22nd Dec release by CVN. They haven't informed us that there has been any deviation to that timeline. Seems more likely than not that the spud has happened within that week period.

Plenty of reading to be done here it seems.

The concept and strategy seem sound with two well chosen diverse countries and a backbone of hydro/geothermal baseload electricity already in existence. Looked at the initial Capex costs of $60--$70m and $100m for Iceland and Paraguay respectively and need to compare what the return is likely to look like for the 30MW and 50MW generation plus the proposed increase thereafter.

Additionally the management set up looks strong and clearly have one eye on what technologically advances may be forthcoming. One area I've had a quick look at that is mentioned and that is using ammonia as a fuel for shipping. As I say plenty of reading to do here to understand the potential. I'm impressed that Trafigura are in here at an early stage so they have an idea what that potential is.

I expect some initial profit taking here but first energy in 2024 is not far away.

Look forward to the live investor presentation to be scheduled in january

Cheers amin. An intraday announcement today has to be a possibility if they spud when our market is open.

My understanding is that it is a 24/7 operation on all drilling rigs and production platforms. There's big money to be made and labour costs are infinitesimally small compared.