Member Info for pauldrayton

I’m guessing that was his 550k trade that appeared yesterday. He hasn’t done particularly well with his holding!

Nothing new in the interims but the more I look at Oswig the more I think this is the company maker. It’s interesting how they’ve had the confidence to say that volumes are higher than pre-drill analysis from just one well. I think they are actually underplaying this for now - with all the coring and logging they will know exactly how the reservoir will perform. The DST is just the icing on the cake to prove it and help with either a development plan or a sale of the asset.

This was one of the largest gas prospects being drilled in Norway this year, there is follow-on potential in the license and the Oseberg infrastructure is literally next door. It could be put into production fairly quickly and I think that’s what this DST is about. Ocean Mermaid’s recent surveys may also be linked to a development plan (pure speculation but could be seabed surveys).

I don’t like to get carried away or ramp and I might be speaking a bit soon but I don’t see how Oswig East alone isn’t worth at least £1/share to Longboat. Possibly (probably) much more.

The biggest risk for me now is operational - can they get a sidetrack and DST done without formation problems?

I think this could be a turning point for Longboat and thank goodness they did those extra farm-ins with OMV. It’s been a long and frustrating wait but I think they have finally hit something that will give them huge collateral.

Whilst we wait, it sounds like progress has been a bit slow on Egyptian Vulture but it would be good to get an appraisal well confirmed. They mention another 3-5 well programme next year - I wonder if they might swap Kveikje.

Sorry Joe but you couldn’t be more wrong. And I speak as both an LBE and I3E shareholder.

LBE hold 20% of the Oswig license - OMV are operator. OMV applied for a permit which included a potential sidetrack in case they had formation difficulties. At no point did Longboat inform their shareholders of the sidetrack being part of the permit application, and it wasn’t mentioned until after the well had been drilled.

I would also question the statement that the Longboat well “failed to meet their objective”. It absolutely met their objective in that it was an exploration well that made a significant discovery. It’s true that they couldn’t get the dynamic data that they need for a development plan, and that’s why they are sidetracking, but they did not communicate the potential for this situation to shareholders even though it was included in the operator’s permit application (also visible to everyone).

The Longboat sidetrack is not comparable. That’s being done because it’s an HPHT well that has been cored and they’ve therefore had formation issues when trying to get reservoir pressure data. They’re sidetracking to perform a DST.

The i3 sidetrack (if it happens) would be for further appraisal in either a success or failure case. I’d see even 10ft of oil charged sands at this location as a success of sorts - it wouldn’t be anywhere near as big as they hoped but still commercial. Failure is not finding any oil at all at this location.

Embarrassing listening to him talk about their wonderful new seismic for Liberator given what followed.

Yes but on the flip side it took them ages to get a farm out deal and in the end it was a minnow.

Obviously I hope i3 are right but as you say it’s not a gimme - if the OWC is a lot shallower than they anticipate then Serenity is much much smaller than they suggest.

All to play for and that’s why we need the appraisal.

Don’t worry I’ve found it now. Explanation below and I guess we have to hope that i3’s interpretation is the correct one:

geophysical investigation of well ties, tuning effects and amplitude analysis was undertaken to establish whether an amplitude response seen at Top Rødby is indicative of an oil-filled Captain Sandstone. Based on modelling, TRACS conclude that amplitudes cannot be reliably used as an unequivocal indicator of either fluid fill or net sand thickness. The seismic response is interpreted to be compromised by a ‘tuning’ effect, which is caused by interference of reflectors and is consistent with stratigraphic thinning at the northern edge of the basin. In the western part of the structure, where stratigraphic closure is required, TRACS consider the possibility of an alternative channel fairway edge with a more easterly position compared to i3. This is based on a change in observed seismic character in the western part of Serenity.
As a result, TRACS’ Mid and Low Case STOIIP assumes more limited lateral extent and continuity to the west (channel polygon) and uses net sand thickness assumptions that are guided more by the Serenity well result and seismic character than the Magnolia well data nearly 9km away from the Serenity well. Nevertheless, TRACS consider that other interpretations are credible and adopt the full i3 amplitude polygon and more optimistic net thickness assumptions for high case STOIIP inputs.
TRACS agree that an OWC as deep as 5270 ft tvdss is feasible but that a shallower OWC at 5130 ft tvdss is also possible given the pressure data available and associated uncertainty. TRACS consider a low to high case OWC range from 5130-5270 ft with a mid-point at 5200ft.

The TRACS STOIIP estimates are lower than the i3 Energy volumes and this can be attributed to:

1. smaller net sand thickness used by TRACS – driven by seismic character and observations in the Serenity and Tain wells
2. use of more limited sand polygon in the TRACS Low and Mid case – driven by seismic character

3. use of shallower contact in TRACS’ Low and Mid case; all 3 cases generated by i3 Energy use an OWC of -5270 ft tvdss

Tony do you have a link to the CPR?

I did read it a while ago but can’t remember why they were so different from I3E’s figures.

Got a feeling it was the possibility of a different oil/water contact.

You’re probably thinking of Tony Durrant who was CEO not Chairman/

He’s now Non Exec Director at Ashtead Technology.

Probably best to drop the cryptic stuff though - if you’ve got something to share then share it. If not then don’t post nudges and winks - better to post nothing than nonsense.

Roy Franklin - a massive improvement on his predecessor.

Whilst we must be aware that there is still a great deal of work to be done at Oswig and that although volumes were higher than pre-drill estimates there has been no production test, hence the need for a side-track and DST.

Having said that I am very confident having had a long call with Helge Hammer this morning that the technical data is very optimistic. The reservoir correlates with the one at Tune and the condensate is richer and in a high pressure over-balanced well a side-track will be cleaner, provide a better hole to conclude a production test and give a recovery factor.

It is worth noting the costs of the extra work, some £8.5m for the side-track and £5.6m for the test which are understandable given that there is still 6-8 weeks work but given the Norwegian tax regime those numbers net out at £2.4 and £1.6m respectively.

Having said all that I am delighted that the team at Longboat have likely brought in Oswig which will hopefully be confirmed before Christmas. If confirmed it will give the company renewed flexibility in its portfolio which as always given the management’s history will be highly proactive.

There has also been a massive market sell off!

Not the best day to release news but Rockhopper held up quite well considering.

The pieces are falling into place at last.

I don’t know why Auctus have given this well a 50% CoS. Surely it’s already a success:

Trap: 100%
Seal: 100%
Charge: 100%
Reservoir: 100%

It’s already proven. Ok they need to get the dynamic data of the reservoir but they will already have a pretty good idea from the “extensive” coring and logging that’s already been carried out. They already state that it’s analogous to Tune and it’s the same sands. I accept there is still some question marks over reservoir quality but there is no way this is a 50% CoS well anymore.

It’s not unusual for coring to damage the formation, and with it being HPHT that will also play a part. They won’t core the sidetrack so hopefully it won’t be quite as challenging, and as Mozza points out a DST will provide a very useful bit of data if they want to monetise this discovery.

All in all it’s a bit frustrating that we have to wait another 6 weeks and the associated costs involved but they wouldn’t do it if they didn’t think it was well worth it.

Sea Lion “alone”.

Let’s not forget that it’s not “alone”. Far from it.

Come on Liz/Kwasi, let’s get this show on the road.

The shackles are off and the shekels are in.

I’m just a bit cautious about Auctus’ wording. Did they mean “best estimate” or “best case”. “Best case” would be huge. As you say Whirlaw best case was double the mean, so 180mmboe+. That would be worth over £2/share net to Longboat whichever way you cut it (and possibly a lot more).

A company maker for sure, but as I said I’m just a bit cautious as to what Auctus mean there. I suppose we will find out in 6 weeks or so.

I know what you mean Ash but surely an outright sale of the asset would do the job?

It’s a bad day in general but I really don’t think the market understands what they’ve found here.

Thanks icemax,

This is very interesting:

“the overall in-place volume encountered by the well is higher than the pre-drill best case expectation”.

If it’s 5% higher I make it worth £1.38/share to Longboat even using a conservative $4/bbl.

The Tarbert formation also has potential for lucrative resources at Oswig West & Oswig North so this license looks quite exciting now.

Disappointing share price reaction given the size of the potential discovery but that’s the market for you and until the sidetrack is complete and the result is definitive then it won’t get priced in.

Lots to play for here if they can get this sidetrack done successfully.

With regards to resources, the Tarbert formation was the main target with circa 80% of the potential recoverabls. The target as a whole was 93mmboe, so 80% of that is 74.4mmboe even if Ness is a dud. They state that the Tarbert in-place volumes are higher than pre-drill expectations. If they are 5% higher that’s circa 78mmboe, of which Longboat own 20% = 15.6mmboe.

At $4/bbl (must be v conservative now given where gas prices are), that’s a value of $62.5m (circa £56m at today’s exchange rate) or roughly £1/share.

A huge potential prize if they have success with the sidetrack and DST. Let’s hope they don’t have any more problems downhole.

The deeper Ness formation inconclusive at this well location, but Tarbert looking very promising:

“preliminary gas in-place volumes (GIIP) in the Tarbert formation higher than the overall pre-drill expectations”.

Bit longer to wait for full results.