RE: Bonkers SP1 Apr 2023 11:46
Some thoughts, forgive resuscitating the now infamous creaming the curve, but it is real and quite relevant to todays situation
A creaming curve is a diagram used to present the relationship between aggregated or cumulative resource growth from discoveries and wells drilled. It was first coined by Shell International.
https://www.linkedin.com/pulse/creaming-curves-oil-gas-explortion-p-v-v-s-murthy#:~:text=A%20creaming%20curve%20is%20a,early%20in%20the%20exploration%20history.
In my interpretation, it is about, defining the point of exit for an explorer, at which the greatest risk reward ratio has been achieved.
PANR/ Great Bear have from memory spent over $300m to get to this point.
Where 23b barrels of oil in place has been discovered
To maximize returns.
That number needs to firm up and incorporate the new data aquired from Alkaid 2 (greater porosity, permeability and net pay) and the new lease acquisitions at Theta West and Alkaid
The objective is to capture as much as possible in, the for sale display bucket
SLB and Nederland Sewell are engaged on this task as an independent opinion, but PANR will also be forming their own numbers.
Recovery factor has loosely been given at 10%, giving the 2.3b recoverable. There is huge value to be gained by getting an accurate number on this, 1% gains 230m barrels.
Currently a large amount of capital has been risked, at any point before discovery that could have become a zero. It has not, we know the oil is there, it has flowed ( Eseis, SLB, Baker Hughes)
As an investor, I would prefer that the above steps are completed as a 100% owned entity, before a farm out is done, as if the value is further proven with investor capital, it would be a multiplier adding greater value than moving the risk onto a partner at this stage.
The capital risk is minor $10-20m, verses the $300m already spent. Even at this low share price the dilution is relatively minor, in comparison to the deal a farminee would want. Say worst case 25c/share for $20m is 80m shares, around 10% dilution.
The return on that 10% dilution or 10% of additional shares purchased to maintain my % of the company is exponential. Eg should the share price double on success at Alkaid 2 SMD vertical flow test.
I do realize the benefits of a partner, in validation to the wider market, cash input, expertise and capacity. All of which will accelerate the timeline, but weigh that against patience, and a bigger slice of the pie.
In my perfect scenario the offering is made or concluded post, firmed up resource numbers, firmed up recovery factors, SMD vertical flow test
PANR are fortunate to have separate units, Alkaid, Talitha and Theta West, and a fund raising option, so can slice and dice to their best advantage. The backs to the wall picture being promoted, is not a fair representation of current reality IMO
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