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CGC is a private company, drills 40 wells a year and has production of 40,000 boe/d; so the EGM today is not about TA. The only reason that Echo may have issued an RNS this morning would have been as a cleansing statement in case CGC was planning to field questions on TA. It would now appear they are not.
Rek is correct. Buy at 2.1p/Sell at 2.03 and difficult to buy any stock in volume.
With CGC shareholder meeting monday, Echo will have to make a RNS
Good summary valuation and likelihood of success on different targets as we get going with the drilling and testing.
Ref SNMBIM on hotcopper:
https://hotcopper.com.au/threads/charlie-1-well-valuation.5214502/
At this juncture anyone who has sold will want the price to stay low. All those who have not sold will want it higher. All those sold will predict low prices going forward, until they buy back in, then they will expect much higher prices. All very normal. Currently oil is weak and so oil stocks are weak; it wont last long, as soon as the virus is under control oil will head back up and so will oil stocks. Best thing to do until the virus is under control and the panic is over.....stay away from the keyboard.
"On track to deliver Perseverance #1 exploration well results in Q2 2020" - but its not actually financed yet. This sort of well needs funds with contingency of $25-$30 million. Assuming all waivers are obtained by 9 March 2020 in relation to the £10.25m conditional convertible loan note, BPC still need a major fund raise or a farm-out. The extensive farm-out efforts have so far yielded nothing. Anyone on this Board got some insights here?
This is a very understated RNS - in the new style from Echo. The Springhill is a prolific and very well understood reservoir in this part of Argentina. A 19m interval 58m above the regional water contact is a really good result. The log results are not being released but the operator must be very confident as the Springhill is often fracced; so to plan on perforating this interval without a planned frac is a good sign. A nice nod to higher volumes being released post test as well.
As expected with cased hole logs in low/uncertain porosity lower Cruse, results are inconclusive as to oil/water ratio. Interesting that there is still no reporting of the upper zones despite open and cased hole logs.
"...cased hole sigma log response suggests the presence of hydrocarbons within those sands. The logs are not definitive as to the water/oil ratio within those sands and the Company believes that flow testing, rather than any further logging, is the best way of evaluating the geological and economic potential of the Lower Cruse."
From Hot Copper
from todays AFR Street Talk
Jan 22, 2020 — 10.54am
ASX-listed oil and gas explorer 88 Energy has gone cap in hand in front of investors on Wednesday morning as it hunts for fresh equity to strengthen its balance sheet.
The $179 million company was seeking $3 million via a placement priced at 2.1¢ a share, a 16.1 per cent discount to its 10-day VWAP, according to terms sent to funds.
Hartley's is sole lead manager and bookrunner on the offer and bids were being called for by 4pm on Wednesday.
The company retained the right to accept over subscriptions in the offer to the tune of $1 million.
Funds were told the equity would be used to fund the ongoing evaluation of the prospectivity of the company's existing assets, which are mainly located in Alaska, and strengthen its balance sheet.
The equity would also be used to cover any potential costs for its Charlie-1 well in Alaska, which is due to spud - the process of beginning to drill a well - in February.
Stifel has put out some research on the O&G sector this morning. They cover RBD (buy with TP 1.6p), but interestingly show no news on WN until Q2-Q3. This may have become obvious to some UJO shareholders, but it does increasingly seem that we're being played long on WN. I reported in a previous post that SP Angel also let it slip that "they will go straight from the EWT into the drilling". The EWT was supposed to be Q4 2019 and no new timeline has put made public, but brokers well connected to the WN JV appear to have one...
ASX trading was flat until multiple single share trades triggered a drop at the end of the day:
https://hotcopper.com.au/threads/asx-today.2829592/page-12548?post_id=42402344
and took London down this morning.
Bamps21: re logging tools, there's no big difference other than hole size so wouldn't read anything into this. The Quad was run in 8.5" and the Platform Express in 12.25". Both had sonic included. The lost in hole charges would be similar.
I think we'll have to wait until the test results to draw any firm conclusions from this well. The mechanical instability (ie hole enlargement) in the lower section of the well will have been significant for logs to not have been possible. Given this and the sands being of modest porosity (from offset wells), cased hole logging will give only uncertain results for porosity and oil saturation. The main uncertainty of the Cruse was the producability, so I think we can assume it will now be tested no matter what the logs show.
88E is the only fully funded company with a potentially transformational drill definitely being drilled this year in Q1. Thereafter there is only UJO in Q2 (or Q3?) and a raft of companies that may or may not get funding.
This will get a lot more investor attention in the next leg up and run-up to the spud in Feb.
Have been accumulating here for a while and looks like the persistent seller may now have cleared. Currently, it's still trading below the last placing price. CLNR say they're making significant progress on the licences which Shell farmed into last year, and they're now working towards a firm well commitment on Selene and Pensacola. Shells' business plan for 2020 will now be final and funding here contingent on the review of the most recent re-processing - which should be imminent and the subject of the next updates from the company this quarter. Their farm out process on the Dewar prospect has generated significant interest and announcement of the completion of this could act as a catalyst also.
Greypanther: you may be right in that the gas was from the lower zone rather than preferentially produced from a higher gas zone. It still comes down to the same uncertainty that no oil (despite gas filled tubing) was reported to have been produced into the well bore and produced or circulated out.
dkok/fairview. Only left out words to keep within posting size. I thought it was obvious any test will go through a test unit; my point was that oil is planned to be burnt rather than trucked. Trucking would be normal for an "Extended" well test (EWT). hope clarifies. I am a LTH and continue to hold. My purpose in providing commentary is that it is only through these forums that shareholders can attempt to fill in the blanks when experience tells me that key information is being withheld.
ericnat17 does make a valid challenge. Given the Sound story investors cant ignore this.
I only recently invested in Echo and did so with the full knowledge of the JP/MF reputation. My reasons for doing so are as follows:
- Sound has been a disaster and JP/MF will need to rebuild their reputation to continue to make money.
- The issue with shareholders who have got in cheap or will control placings for future funds becomes a consideration when the S/P is high or the company needs funds. Neither are true with Echo. The SP is close to the low - under the last placing price - and Echo doesnt need funds.
- At this stage, all shareholders have completely aligned interests - to see the SP materially increase and reflect the underlying value of assets once the drill bit/testing has proven these upsides.
- The question of possible future placings and the JP/MF group selling shares only becomes an issue once the SP is materially higher. As to future funding, Echo has an advantage over Sound or Coro in that success case drilling & development is low cost and can largely be phased and funded from future cashflows. Or the business more readily sold, which is perhaps more likely.
- Obviously for an investor that came in at 20p, the above has been a major concern. However, on a look forward basis at 2p I dont see any reason why all existing shareholders will not be aligned in seeing a material re-rate to reflect actual results next year.
- Martin Hull is the CEO and JP and MF are non-execs. This is important as JP was the CEO at Sound.
An unusual RNS from UJO and I've held off from forming a view until now on the expectation that UJO or RBD would be doing some of the usual PR/interviews that might provide clarity. But none have followed.
My conclusion is that we are either not going to see any A2 testing until the immediate run up to the drilling, which is likely 6 months away (a 2 well program with testing needs 6 months prep), or if there is an earlier test on A2 it will be only a "proof of oil" test that brings oil to surface and wont be enough to produce a CPR that can report on oil reserves (as opposed to volumes of oil in place). In other words, UJO is playing the market long and news may be limited until the drilling results in Q3 '20. OK for LTHs but not what we're expecting.
Here's the key points:
1. Firstly, SP Angels' Sam Wahib (UJO is a house stock) let the cat out of the bag in the 12th Dec interview. See link ref minute 6-7. "...they will go straight from the A2 testing into the drilling next year..." https://www.proactiveinvestors.co.uk/companies/news/909122/sp-angel-s-sam-wahab-discusses-hurricane-energy-eco-atlantic-tullow-and-union-jack-oil-909122.html
2. Sam makes a wrong statement in saying "...the 3 partners in WN are fully funded". Humber has 16.6675% is not funded beyond the approved 2019 budget for the A2 EWT. Humber has a sales process ongoing for their interest but had intended the EWT to have completed first to at least prove the presence of oil. They do not have funds for the drilling in 2020 and so at this point can not approve the WN budget for 2020. They may well feel aggrieved that the approved test was suspended to allow UJO/RBD to fund raise. Its possible that a proof of oil test will be done and this facilitates a funding of Humber's equity. It also seems unlikely that RBD/UJO will rely on the JOA default provisions as they would find it hard to go back and raise funds again for the same program. Until this is resolved, the budget for 2020 cant be approved and long lead items purchased. This means delay.
3. The RNS says very little about the A2 testing plan or timing: "...The well will be pumped to recover load fluid, directing all recovery through ...the incinerator". This wording implies it is not an EWT, but a short test to bring oil to surface. There is nothing on timing (notwithstanding planning). It is out of character for UJO to not provide detail and expected timing and so we must conclude it is deliberately vague.
4. A concern for the WN joint venture will be that the oil zone has been perforated together with the gas zone and yet the initial test was only reported to have produced some gas. Anyone who knows about well testing will know you always start testing from the bottom of the well and work up. Any new test will need to isolate the gas interval and try and clean up the oil zone where previously it did not flow to surface. This is possible with a pump but is uncertain.
I'm a LTH and invested around the last 3 placings
Good RNS. Nothing not to like here: low risk, up dip of a discovery, an "effective carry" on costs by Phoenix, and the Springhill is a very well know reservoir in the area with material volumes to Echo in the success case.
This stock is still very much below the radar because of its past but on a forward looking basis has got very material upside and limited downside. Success here on on top of the recent encouraging log results on TA should get the company back on the radar.
In my opinion, a takeover is the cleanest way that the administrators can "achieve the best outcome...in a reasonable timeframe" and I think that will be what they're trying for.
I have nothing to back this up other than analysis of the SH register, LOG position and administrator's pronouncements.
In order to start a swabbing operation they would have had the necessary equipment and tankage to carry out a test on site ie hourly measurements of oil and water with flaring of gas.