Member Info for Phrontist

The SP is depressed because we cannot handle Cash Flow needs of running TWO projects.
88E was set up in Alaska to carry out agreed Field Work for BEX.
This field work was drill Icewine-1 exploratory, first samples of HRZ Layer.
Then drill Icewine-2 as limited Production Well, gaining first Oil Flow.
This Oil Flow to be achieved using Horizontal Drill following Vertical Drill.
It adds a mile or two reach into the HRZ Layer, plus
Horizontal reaches 'more length per go' for a Frack.
Vertical can only reach one drop and the height of the layer, say 150ft to 250 ft.
Icewine-2 'got stuck' when asked to Vertical Oil Flow Test.
Reason is said to be bitumen. But this did not show on Icewine-1 Lab Results.
Icewine-2 drill was about 50m from Icewine-1 borehole.
Horizontal would have added 100's meters extra reach, even a thousand meters.

The Lab Results are due in 4 weeks for Charlie-1 HRZ.
Will this agree with Icewine-1 evaluation - better than expected, no mention of bitumen?
Will Lab have achieved a 'test frack' on the Charlie-1 samples?
(I do not know how practical this is given pressure at 2 miles down.)

Anyway, to continue. Us 2015 Investors were attracted by Paul Basinski's previous years of research.
To find a 250 ft (approx) high HRZ layer over hundreds of thousands of acres.
But, DW decided (it seems) in early 2016, to diversify into a hunt for conventional.

So, two cost centres - conventional and unconventional.
Both sucking up shareholder money.
Both failing at last hurdle with Commercial Oil Flow.

If all the US$120 million of capital Raising had been spent on only conventional OR unconventional, then IMHO we would have succeeded. Then SP will be higher based on confirmation of commercial oil find.
FO for Procuction seems practical.
And a CR to raise cash for other oil type following success of first oil type would only be a few % of shares.

Phrontist.

06:06
https://audioboom.com/posts/7581998-totally-dev-clever-holdings-88-energy-and-chris-bailey
This contains the podcast of DW on 16 Feb 2016.
He says first, Icewine 1 is a success beyond prior hopes.
Icewine 2H will follow in Q1 2017. Note H for Horizontal.
AND, he says 88E will conduct Seismic 3D on Franklin Bluffs land (for conventional).

He did not say, start of work on conventional was happening as a new Cost Centre for 88E.
He did not say how this would be funded.
BUT, subsequent to this, the Horizontal of Icewine-2 was dropped by 88E to save money.

IMHO, if Icewine-2 had fullfilled the Vertical with Horizontal (facing North?), we would have Flowed Oil.

Since then, we have had a reduction of priority on unconventional.
And 4 years of chasing dreams with conventional. At shareholder expense.
Extra land, Yukon, Winx, now XCD.

Yet on 16 Feb 2016, DW says that Lab Results of Icewine-1 could not have been better.

Charlie-1 is the door to recovery from running two Cost Centres when 88E could only fund one such.

Phrontist

The ANN is Company Procedures relating to the takeover of XCD by appropriate shareholder approval.
88E will be writing to XCD shareholders by 7pm tomorrow.
It is for XCD shareholders to ensure they receive a subsequent notification.
Not directly relating to 88E shareholders.
XCD is only registered for shareholders in Australia on ASX, not in UK.
Phrontist

And 88E has risen to 0.3p
Is oil rise doing us a favour?
Phrontist

The term 'commercial oil' means an oil find can be put into production profitably within the terms of reference of your business.
In summary, oil or gas can be produced by 88E and we make a profit acceptable to us.
But the same oil find may not be profitable for PMO within their business structures. They may only work with larger resource size, cleaner oil (light crude), higher expected production oil flow rate, etc.
The same resource could be commercial for us and not commercial for PMO.
No one is lying.
Phrontist

My impression is that everything DW knows about Charlie-1 would have been provided to him by 88E staff. Those staff would be working with sub-contractors to receive samples, lab tests, field instrumentation tests etc.
Reports would be produced with analysis and assessments etc.
DW is responsible for releasing a summary of the relevant parts. And saying what our next step options are having discussed it at length with 88E staff and Dr SS.
I feel he will put forward the summary in a prepared and honest way.
With Winx there were three companies issuing their own interpretations, not a great method.
Please do not condemn him at least until after you have read the RNS.
Phrontist

I have never understood why bitumin was not realised as a potential problem from the Lab Inspections of Icewine-1 extensive samples.
If that had been realised in advance for Icewine-2, then surely either Icewine-2 location should have been moved, or proppant and chemicals could have been devised to reduce / eliminate the problem that ultimately caused 88E and BEX unending grief.
And, where are the Icewine-1 rock samples now?
Phrontist

SeeVee, I just don't agree.
When things go well, directors are praised. When things go badly, directors are lambasted.
Sometimes correctly, sometimes through emotion, not facts.
All drill programs under DW's management have proceeded according to plan.
It is the results that are the problem.

DW did not choose the location of:
Icewine-1 (PB)
Icewine-2 (PB)
Winx-1 (I do not know...)
Charlie-1 DW probably did not choose the exact location but he would have been an important member of discussions when deciding the best location.
We have not had the Charlie-1 Lab Results yet, or computer results from Test Instruments on-site, etc.
This information is significant in defining resources, scale of commercial use, etc.
BoD interpretation of the Report Findings is significant.
BoD suggested forward plans are significant.
This is DW's first chance of managing the whole process.
Preliminary report on conventional is imminent.
Fuller report on conventional 4 weeks or so later.
Report on unconventional also in 4 weeks or so.
THEN, it is fair to judge DW.

Certainly, the Charlie-1 FO negotiation was outstanding work IMHO with DW as key player.
As person responsible for future FO's, he is likely to be very good indeed. IMHO.

Phrontist

I think at the back of many people's minds is DW behaviour.
He has been on (allegedly) high earnings through a period of 'failures'.
What did he do with this enormous monthly salary?
He and Michael Evans (88E non-exec director) bought XCD (or its previous forms) shares!
This was not declared at the time. I do not know the regulations regarding this.
But as an 88E shareholder, I am miffed that money I am paying to 88E directors is being spent to boost a nearby 'competitor'. How does that make 88E share value look (at the time) when it is preferable to buy another 'like company's shares'?
If you look at the SP history of XCD it is a consistent downward curve from A$ 10c in 2015 down to A$ 1.0c now. (ignoring a spike.) A downside reduction of 90%.
So, poor DW and ME have lost on XCD very much the same as 88E SP drop over a similar period.
It is not as though they have made shed loads of money and are now using 88E to cash it in.
With two directors committed to reasonable size share holdings in 88E, we can be sure they will work for success in 88E SP, no question.
In the end, I feel the merger is a good result forming a BEX 88E XCD business.
Phrontist.

Stuleo
A share swap deal is proposed and seems to be on the way to completion in June or July.
The actual vale gain / loss for XCD shareholders and for 88E shareholders is not know yet.
We have to opportunity to up our game with 'results' from Charlie-1 Drill Programme.

One benefit for XCD shareholders is that 88E is ASX/AIM listed, whereas XCD is only ASX listed.
On successes, the AIM listing can bring in much more liquidity.

Some ask (me, anyway), why did this merger idea suddenly appear with no pre-amble discussion?
We only knew about it from the Bid Document issued by 88E to XCD a few weeks ago.
And it presents a tight timescale for completion. What is the hurry?
I suggested (nastily) that if we waited 6 months then XCD would be on its knees, hence low cost to 'buy'.
DW would already have a preliminary idea of the Lab Results work.
Is Charlie-1 looking GOOD or BAD? Meaning, is there future commercial opportunity there?
How would this result affect our Bid for XCD now?
Would our position have changed if we Bid in two months?

There are too many balls in the air. We just have no idea.
But this could work out very well for all parties - both company's shareholders and directors.

Phrontist

People are talking about share consolidation 100:1
In theory this is a small 'paper exercise'.
In practice, for some reason, it actually costs a lot of money.

I would like to see 88E listed in the USA.
That process could include share consolidation at same time.
USA investors are highly focused on USA companies.

Key thing is though, US investors like REVENUE.
88E would have to achieve oil flow in several wells as minimum.
En route to revenue streams with FO partners funding Follow On production.
As was hoped for with PMO.

I am sure that DW has a Business Model for 88E, and this is it.
He has always been fond of the FO method.
When successful, we get a percentage % of the Oil Sales Revenue.

Everyone should note, 88E has never borrowed money.
(Except reducing Bank loan to cover Alaska Government failure to pay us $16m or so.)
We have (I am sure) substantial Tax Exemptions against future profits, from accumulated annual losses to date.
We have a complex, expensive and extremely valuable 'knowledge base' of our regions geology including our own inputs from 5 years of activity. Historic 2D, other drills (Magaluk etc), our 3D Seismics, our drills (Icewine 1 & 2, Western Blocks, soon Charlie-1, they find 'stuff' from many sources). This was started by Paul Basinski, he was a workaholic on geophysical modelling.
Among some professions in the USA, such as oil exploration geology, BEX / 88E are building some respectable reputation.
Then within 88E, BEX and now XCD, they must have an enviable list of good contacts within the wider industry. Such contacts exchange useful information that helps us to become a respected business in Alaska.
Etc. There is more to 'it' than meets the eye.
Phrontist
These facts puts 88E in a strong position until the Oil Flow Tests start to FLOW.
In

Stuleo, I think DW's holding in XCD is a little over 4%.
NOT 14%...P

17:03
PMO have many challenges to resolve.
They have four or so regions of successful oil flow and sales of it.
But during this period crude oil has been selling for zilch.
The business seems to be operating well, but at a price of $2b of loans.
They have a complex business to operate with many pressures.
Charlie-1 was hoped to find commercial grade oil resource to meet their style of production.
The well did not meet the required specification. It was clear to them that Winter 2021 would not be installing production grade wells. So, best to leave and tackle bigger problems than stay, fiddle around, lose more money, then still leave.
88E / BEX are left with option to continue Charlie-1 work.
Having drilled and raised samples, the second stage is Lab Examination and Testing.
We know there are hydrocarbon resources down there. The first stage of Lab Results are due any day.
88E could decide there is still nothing of a commercial level to follow up.
OR, they could find that there is commercial value in one or more of the layers.
Phrontist.

Look at our ‘conventional purchases’:
Yukon Gold – consuming money, no imminent ‘deal’ expected.
Western Blocks – Winx drill was a failure, cost and lost money.
In negotiation – XCD with plenty of well placed land but no drill history past or planned.

In years past I was a computer systems salesman and we used to joke about something.
If a man is a great salesman, he will be hopeless buyer.
If a man is an excellent buyer, he will never succeed as salesman.
Salesmen spend all their time chasing buyers; buyers spend all their time choosing which salesman.

The skill sets are different.
A buyer rarely leaves his office. A salesman is always out.
The emotional aspect is different. Desire to be Winner, or desire to be Protector. It is in nature of a person.
One is a goal scorer, the other is a defender.

DW was neither when he joined Tangier about 6 years ago.
He must have developed substantially in his role as 88E MD.
AIM Shareholders should be aware of this.

But is DW a Salesman or a Buyer?
Answer is, he is a Salesman.
PMO FO negotiation is a staggering success.
I hope the Lab Results produce good upside on both Conventional and Unconventional.

Which is why he is a poor buyer, IMHO.
He buys with scant consideration for risk, cash flow, timing in any respect.
One weekend he suddenly thinks, ‘oh, we should buy XCD’.
When they are cutting costs, no forward works planned, closing office.
To wait for coronavirus, Russia-Saudi oil fight to pass, for plenty of aeroplanes to fly.

The best CEO’s are either Salesmen or Accountants.
Never a Buyer.
Maybe XCD have someone who can take over running of 88E ‘subsidiaries and field operations'.
Giving DW the BIG OPPORTUNITY to pull in FO Contracts 100% of his time.

Phrontist

13:44 guzz
In the early days, the 88E exploration image and objectives were Texas USA, not Perth, WA.
PB, founder of BEX, was the original inspiration, the geologist with the motivation and skills to open a new area of Alaska.
88E became BEX's 'Field Operator', based on finance raised from 88E shareholders.
The stated mission was HRZ Unconventional with massive Sweet Spot resource.

But even before PB's death, DW had started to expand the scope of 88E's North Slopes business.
The thoughts of conventional under our Central North Slopes region must have been tempting.

It is known, many ASX/AIM companies fail due to a simple BoD weakness:
They fail to focus on achieving the original mission. Hence, to strengthen the SP.
They should not have diverted shareholder funds and BoD costs into further activities because this weakens the chance of succeeding on both the original mission and the 'new opportunities'.
In this respect only, 88E have made a long-term classic blunder IMHO.

The company is open to share dealers who skilfully drive SP up, drive SP down, endlessly.
Companies in this position can rarely hold onto and support LTH investors.
A business that has achieved a strong asset base is not prone to aimless rises and falls.

In 2014, Tangiers should have appointed a new CEO that has BoD level experience on ASX and AIM companies.
Then we would have nailed Unconventional before our CR muscle ran out.
And as it happens, whilst the oil price was high.

The new 2014 directors cannot answer here. In fairness to DW and colleagues:
There may have knowledge we are not aware of. Geological or financial knowledge.

In summary, 88E was not set up as a classic Perth Pump and Dump explorer.
It was set up as an Unconventional Oil Explorer in Alaska, USA.

Over 5 years the company changed strategy without identifying this as added risk to shareholders.
Shareholder money was no longer focused on a single Risk Stream from 2014.
It was split into two Risk Streams from 2016.

It is understandable to suggest that conventional was second arrow to the bow.
But this small previously failing ASX/AIM company does not have the financial muscle to carry this off.

On the 'pro' side, the Charlie-1 was a massive success IMHO.
I am not referring to the obvious lack of conventional Oil Flow.
Seismic technology is wonderful, but cannot guarantee a commercial oil find.

I am referring to first: zero cost to 88E, and second: HRZ unconventional could be back in the game.
Clearly DW has a big skill in 'FO business'. This skill could save us and make our future.

Finally, I think the ‘appearance of BoD Pump and Dump’ relates to Arctic weather.
Field Exploration Work is 'annual' with tight time limited windows for carrying out drilling ops.
If the HRZ samples look good, hopefully another FO will be on the way.

Phrontist

Kiddy, non-invite to last presentation? Interesting.
I promptly replied to my invite followed by two reminders.
Never received a Confirmation and 'ticket' on email.
I assumed this was short on competence.
But you think DW filters out selected shareholders?
Difficult to believe. Except others did receive replies.
Including my sons.
Phrontist

APOW
These are minimum word comments, not writing a detailed book.
The P&A is H&S precaution since the company did not have definite schedule of return to site dates.
Phrontist

Buzz, was not Ireland the first country to pass laws banning smoking in public places?
So, it seems sensible to study their 5 tier coronavirus recovery plan for returning to work.
'we', as in UK 88E shareholders, are fortunate that 88E's work schedules and business have not been adversely affected by global coronavirus issues.
88E are immensely fortunate that:
No direct affect from oil price collapse
No adverse affects from coronavirus
The HRZ recovery plan is proceeding well
Positive SP response to XCD merger proposal
Lab Testing results of Charlie-1 samples next week
Could be FO Contract's in place during 2020 for both conventional and unconventional

Also remember that BP started business and operations with 7 successive dusters before striking BIG.

Smile, be happy, we will get there in the end.

Phrontist

WAussie, we are there because of Paul Basinski, no question. Times have been hard in oil, international trade, and Icewine-2. PB is not the magic wand for solutions to all problems. But his experience to handle Icewine-2 moving forward 2016 on, would have been key.
I still think we diversified into conventional before the company was ready. And bought too much land.
The key target of a new business is, get the first mission going before expansion and diversification.
DW's focus on North Slopes conventional, Yukon Gold conventional, Western Blocks conventional have all cost time and money. And all failed. Now XCD...?
If we had focused on Unconventional from the start, we would had implemented several vertical Wells with horizontal lines.
IMHO good Oil Flow Rate would have been achieved a year ago. And SP could support conventional opportunities if felt appropriate.
Phrontist

Pipster, the same thoughts as many of us.
A positive is, the full assessment of the Charlie-1 Lab Results.
With our BoD's interpretation and forward planning.
Are there conventional assets to sell on or attract a second FO drill in Area B?
Will the HRZ samples deliver a strong indication of Commercial Unconventional, strong enough to attract an FO on this potential multi-billion barrel resource?
We should know during May and June.

If the HRZ proves positive, we are back on track with 88E's original Mission Statement.
Crude Oil Price assessors are predicting mid-$50's and higher during 2021.
Phrontist