It is easy to spend money...25 Oct 2018 13:05
and very difficult to make it.
88E have been on Alaska related exploration since late 2014, about 4 years now.
When will "crossover" point arrive?
- the day expenditure is not met by shareholder funds
- because we receive money from customer
The original plan, in the early days, was simple. Icewine 1, Icewine 2, then sell our leases for huge sum.
After 4 years the picture is:
- original unconventional has proven problematic and requires more time
- discovery of large conventional resource has moved to the forefront
Two projects outside the Central North Slopes have been added to our resources and to our expenditure.
Customer revenue for both could be Q2 2019
We are all aware of the main Conventional Project.
- Ongoing activity on 3D Seismic analysis, but substantial excellent results completed so far.
- Ongoing Farm Out contract negotiations to be completed during Dec 2018
- This could include up-front pre-contract costs payment $5m to $20m
- It could include some kind of monthly fee for IP work (we own the database)
- It will include option for Farm Out company to BUY full ownership likely Q2 2020
A professional and experienced negotiator company in Texas has been engaged to handle the Farm Out negotiations. A short list is ongoing until a final bidder is agreed.
It is unlikely that the negotiations will result in no final contract. Why would 30+ parties show interest, then reducing to 5, then final bidder, then No Contract. The process is such that only credible bidders will be able to continue in negotiations. Like buying a house, you have to prove ability to pay very early on in the process. Here, if top bidder did withdraw, the next bidder rises to the top, etc.
Final result is, a contract and terms that fairly match the resource being offered.
So, I am confident this conventional process will continue to completion. And completion in 2018.
What about RNS's between now and then?
They can only refer to progress on Projects that will not be producing revenue in 2018, but likely to produce in 2019.
Once the Conventional Farm Out is signed, the company will become more credible in the eyes of major investors.
SP should have significant rise, particularly if Tier 1 company is Farm Out operator.
4p to 8p depending on operator selected and terms of contract.
Until this contract is signed, and following RI, the SP will be sluggish IMHO. But possibly rise to 2p up until Farm Out RNS.
88E / BEX could surprise us with signed contract many weeks before end of 2018. In which case anyone not holding will miss out big time. This could be the "Cove Energy" moment. Ha ha.
Just some thoughts. All IMHO. etc.
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