Member Info for Phrontist

What's wrong with £1 / share idiots?

I guess you are 1p / share genius?

P

Brom you are wonderful person.

May your shares have a happy ending.

And just pass the rubbish posts by, I don't even read them.

Phrontist

AIM4

True, quite amazing. No gain FTSE100 from 1999 to 2018, virtually 20 years.

I was just looking at the period overlapping 88Energy lifetime.

Fact is, we have not done so bad, and we have not done so well in the eyes of general market investors.

This could be underlying reason for absence of Big Investors, so far.

But we do own some real and massive value. Conventional and unconventional.

No debts other than work in progress and scheduled loan to cover Alaska delays in payments. DYOR.

Icewine 2 was first attempt to demonstrate value. It will happen next summer IMHO with lateral upgrade.

Now we have Farm Out to demonstrate value in a different way. 12 working days …..

Phrontist

happy_hatter

Experience suggests to me that if an offer of 5p/share for all 6 billion or so shares, the SP would rise to a number over 5p making the offer useless.

Why would this happen? Our asset base would be recognised in a more positive way.

Meaning? We are undervalued at moment because we are blatantly underfunded for the tasks that lie ahead.

I am not blaming BoD or anyone, this is the way things are.

Sure, if Icewine 2 had lateral pipes pumping two years ago we would all be in a different world where SP = 10p+

A cash rich company owning our assets would be investing way over $100 million in first year, possibly $500 million in second year, etc.

That is why we are Farming Out.....

Phrontist

Look on the bright side...)))

In fact, just noticing....

FTSE 100 is about the same to day as 5 years ago.

On that basis, 88E is doing OK, since we have not yet had Good news that is expected following over 4 years of determined work.

We have even had two items of significantly bad news....

All in all, I think money invested here is as good as any place, on average, over last 5 years.

With 4 key items of good news expected over coming 6 months.

Phrontist

In August it peaked at 7,800

This is indication of general drop in share investment.

Perhaps fear of Brexit Damage....

Anyway, a 15% drop in 3.5 months on FTSE 100 could easily translate into 30% or so drop on AIM where shareholders are far more flighty.

Don't worry, SP 88E will rise 5 to 10 times quite soon, drowning out these other little adverse trends.

Phrontist

Sorry, corrected from 20:24:

Just a reminder:

In AIM, if an Asset is sold by the company for cash, then (typically) 90% of the cash is paid to shareholders as Capital Refund. 10% is retained to continue the business.

Suppose final sale value (in 2020 due to 88E) is $12b.

Number of shares in issue is 6b

Capital refund/share = (90% x $12b) / 6b shares = $1.8 /share

So, the £1 Party is not a joke....ha ha ha.

Phrontist

Just a reminder:

In AIM, if an Asset is sold by the company for cash, then (typically) 90% of the cash is paid to shareholders as Capital Refund. !0% is retained to continue the business.

Suppose final sale value (in 2020) is $12b.

Number of shares in issue is 6b

Capital refund/share = $12b/6b shares = $2/share

So, the £1 Party is not a joke....ha ha ha.

Phrontist

Farmee / Owner / Production company gets:

$70/barrel x (less 16% tax) x (less $30/barrel production cost)
= $28.8/barrel Gross Profit (before Corp tax)

Gross Profit over 30 years (suck it dry) = 5 bbo x $28.8/barrel = $144 billion

OK, I am no expert. Ha ha. Just tried to apply common sense.

If this figure ($144 billion gross profit) is true you can see why Farm Out Contract is a tough one to draw up and agree.

88E / BEX suggest such earnings for Farmee.

Farmee says you are kidding, 5 bbo too high, $30/b cost too low, etc.

Infrastructure costs - trucks, roads, pipelines, hotels for the workers, etc.

At 7.5% to 88E and 2.5% to BEX, of this gross margin figure:

88E gets : 0.075 x $144 billion = $10.8 billion

A lower figure than the previous $5/barrel method

But we are in this region $10b to $25b

Still excluding unconventional.....

I would love to be fly on the wall of Farm Out Negotiator meeting room.

Phrontist

Simple answer is:

$5/barrel x 5 bbo = US$ 25 billion

Any reasons why not???

Phrontist

Suppose Farmee spends $100 million over 18 months from 1 Jan 2019.

3D Seismic across whole site is successful, makes 2.2bbo up to 5 bbo.

They have drilled 4 wells with average flow rate of 1500 barrels/day in H1 2020.

At $70/barrel during 2020, this is:
4 x 1500 x 70 = $420,000/day revenue.

If half the revenue went to Farmee, then it takes:
$100 million / $210,000/day = 480 days to cover costs.

Actually it will be more days due to tax and a few hidden costs.
And people accept there are 200 productive working days / year
So this is 2.5 years, maybe 3 years to break even. (pay back $100m costs). Yuk.

Clearly Farmee would wish to convert Farm Out terms to Purchase Agreement by mid-2020.

Then Farmee can retain all the oil revenue, not split with 88E/BEX.

Farmee/now owner can sink 8 more wells 2020/21 sometime.
Who knows how many more wells in 2021/22.

And get oil revenue moving apace in 2021/22:
$420,000/day x 3 = $1,260,000/day gross revenue (18,000 barrels/day).

= 3.6 million barrels /year at 200 day/year

Per billion barrels resource:
1 billion barrels / 3.6 million barrels/year = 277 years.

This indicates a 10 fold increase in wells and/or Flow Rate to bring 277 down to 28-ish years.
Then 10 years/1 billion barrels produced.

This Central North Slopes has plenty of long-term oil production.
With 5 billion barrels resource over time, more wells and higher flow rate…..

IF this were how business could develop for Farmee,

How much do YOU think Farmee is prepared to pay for our Site?

A little more than 1p/share worth….

Phrontist (apologise for any errors and omissions)

Suppose Farmee spends $100 million over 18 months from 1 Jan 2019.3D Seismic across whole site is successful, makes 2.2bbo up to 5 bbo.They have drilled 4 wells with average flow rate of 1500 barrels/day in H1 2020.At $70/barrel during 2020 this is:4 x 1500 x 70 = $420,000/day revenue.If half the revenue went to Farmee, then it takes:$100 million / $210,000/day = 480 days to cover costs.Actually it will be more days due to tax and a few hidden costs.And people accept there are 200 productive working days / yearSo this is 2.5 years, maybe 3 years to break even. (pay back $100m costs). Yuk.Clearly Farmee would wish to convert Farm Out terms to Purchase Agreement by mid-2020.Then Farmee can retain all the oil revenue, not split with 88E/BEX.Farmee/now owner can sink 8 more wells 2020/21 sometime.Who knows how many more wells in 2021/22.And get oil revenue moving apace in 2021/22:$420,000/day x 3 = $1,260,000/day gross revenue (18,000 barrels/day).= 3.6 million barrels /year at 200 day/yearPer billion barrels resource:1 billion barrels / 3.6 million barrels/year = 277 years.This indicates a 10 fold increase in wells and/or Flow Rate to bring 277 down to 28-ish years.Then 10 years/1 billion barrels.This Central North Slopes has plenty of long term oil production.With 5 billion barrels resource over time, more wells and higher flow rate…..IF this were how business could develop for Farmee,How much do YOU think Farmee is prepared to pay for our Site?A little more than 1p/share worth….Phrontist (apologise for any errors and omissions)

RNS's indicate that by end 2018 is the target date to sign and this should be met. (Except one "possible" word months ago).

Could delay occur due to Farmee wanting more time?

If the reason is due to Farmee circumstances not being ready (to pay or act in some way) then other bidders are within their rights to make formal complaint. All bidders should be offered extra time etc, this does not happen.

If the delay is requested by 88E/BEX, then WHY? Surely we will have nothing substantial and new from December to January?

What if Frontrunner drops out? Well, a professional negotiator is there to manage such possibilities and avoid them. If a Tier 1 company dropped out subsequent publicity could be quite damaging.

Next bidder in line could re-engage, this would warrant extension of contract signing date.

I should mention, it is highly unethical and unlikely that a substantial business should make offers during negotiations that subsequently they cannot back-up with readies. etc.

Farmee cannot suggest USA and general oil industry, political changes, global economies, etc have substantially worsened in a way that adversely affects an oil field bid in Alaska planned for 30 years of working.

Conclusion so far: The contract will be signed in December 2018.

It is rare such work to agree and sign will occur between 24th and 31st December.

So, there are 12 working days left to sign FO Contract.

If this does not happen, I would suggest BoD should given credible explanation, or....you know what.

PS This may have an element of anti 88E / BEX but that is not intended. I am just trying to emphasise that 88E made a reasonable commitment to complete FO deal in H2 2018. This commitment underpins the recent Cash Grab. It underpins an already damaged SP.

And I believe our Team will complete the deal.

Phrontist

Waussie, I understand your sentiments entirely.

We all hope for a big break through based on PB's ingenuity and determination.

Did the company diversify too soon?

Should original Ice 2 rig have stayed as vertical with horizontal upgrade?

Fact is, we know few actual facts and details about management decision making process.

We have to follow our leaders and hope for best.

Farm Out on conventional is long coming, but we are still within planned timescale.

Phrontist.

Chaps.....

I am an LTH 88E and avid supporter of the company.

Does that mean I am a ramper?

Garym is an oil field rig worker, definitely knowledgeable in areas most of us are not. He said that he would be away and out of contact for quite a while. Who knows where - Russia, Kazakhstan, Arab states, etc. He may need to be respectful of the country he is in.

And who are you suggesting pays rampers?

This is your imagination going wild.

I think the BoD are wary of premature releases following the weekly missifs on Icewine 2.

It is tough, but patience will help.

DW has made a strong commitment to signing FO agreement but 88E cannot guarantee this. It is business.

Just be confident that 88E / BEX do own a highly valued oil resource in Alaska and they are competent to secure an excellent deal.

Phrontist

And 128K, there is no need to worry for me.

My three sons should all be up there. Being young and having busy lives, they don't sit on computer all day every day getting pangs in the heart.

And waiting 2 years is no big deal for them.

Myself? I cannot predict my own actions.

But I feel sure FO will be a whopper. Does a month or two here or there really matter??

Followed by a massive gain about 18 months from now when FO becomes Sale following trial drilling rig successes.

Phrontist

128K, this is small size memory for these modern times.

We are here to discuss, analyse, speculate, pool information, research past companies, etc etc.

128K, you will be happier in afternoon session of local Montessori School...

Phrontist

Yes cat, there could be a few Aussie cents.

Exploration takes time, needs patience.

Planning and Cash Flow management.

Less Icewine 2 screw ups - old carpentry saying:

Measure once, cut twice
Measure twice, cut once

Our directors are still learning how to measure.

But assets will not disappear, hungry Tier 1 companies will always be sniffing around.

Phrontist

Of course, it is not going to happen. )))

Particularly having met so many interested parties during the FO operation.

The £1 Party will not happen, but 50p Party in 2020 is likely.

So, if you are genuine LTH and can afford to wait:

1p now for 50p in less than 2 years....ha ha ha.

Phrontist