Member Info for ps200306

Thanks Fernan. I guess I was expecting them to simultaneously update on how the farm-out process is going. However, they're only two months into it so it's early days.

Strange that the RNS didn't at least contain a sideways glance to progress on farmout activities. Sounds to me like we are being teed up to lose the Sidi license and portions of Grand Tendrara. I presume another chunk is lost if a second extension is needed two years from now? SOU is not going to have money to fund exploration from its own revenue inside two years. Phase 1 revenue only keeps SOU treading water on debt and operations costs for the first while. Phase 2 depends on timing but, based on Phase 1 FID having been a year later than planned and no sign yet of the initial funding milestones, it could drag on. It hadn't occurred to be that by the time SOU has serious revenue from Phase 2 the rest of the licenses may have been relinquished. On the other hand, I've thought for some time that one shouldn't bank on SOU ever exceeding the 7p target valuation based on existing assets (and even that depends on no unforeseen dilution events).

The exclusivity term with Attijariwafa lasts until end of February. However, the 120 day period is for negotiating binding terms, with presumably some considerable time then required to actually secure the finance. I doubt we could run the whole eight months without agreeing terms as the wheels would clearly have come off the trolley long before that.

The timeline for financing was supposed to be 120 days from entry into the agreement outlined in the June 23rd RNS. That would give a date of October 21st. I always take the view (based on experience, especially with SOU) that the closer you get to a deadline the more likely it is that the target will be missed. Therefore I would expect an RNS by end of next week to tell us that efforts are continuing and giving some extended date. We are still well within the period of 8 months of exclusivity.

BEY.LON still there as far as I can see. Also see BEY.L on Yahoo Finance.

https://www.londonstockexchange.com/news-article/BEY/half-year-report/15652534

"But it seems Ireland thought it was going to get about €2billion from the levy on oil companies..."

Under the EU's marginal pricing scheme for electricity, the price paid to wind energy providers is the highest bid at any given time and is set by the price of gas. They're the ones that should be paying a windfall tax. Will we see Ryan scapegoat them as much as the fossil fuel companies?

STD123: "This tax issue is a blow however it's not cast in stone yet. There is still an appeals process where it may be reduced or go away but worse case is it will have to be paid. Will the company have to do a raise?"

'Tis but a scratch! You do realise the tax bill is equal to SOU's entire market cap? Quite uncanny how you pop up out of nowhere with such bromides literally every time the SOU boat is rocked. You haven't commented on SOU since July 13th, when you said:

STD123: "Fishysaurus you enquired how the tax bill has shrunk to 2mill. That's an easy answer it's just like buying a carpet in Morocco. You go in the shop and he is asking 13 mill for it and then you barter him down to 2 mill."

WL: "If I was in charge of that major/farm in partner I'd be thinking a large contribution to Sound's bill could get the deal done and would be small change in the grand scheme of things once Tendrara's billions are unlocked."

I'd be thinking a large contribution to SOU's bill would net me some of those billions for myself. As of today the tax bill is bigger than SOU's entire market cap. Hopefully they won't have to pay it until revenue starts flowing. If they have to be bailed out, whoever does it will drive the hardest bargain they can.

Btw, I presume the tax bill is in Moroccan dirhams (MAD). Graham calculates it's about 10% less in dollars due to exchange rate fluctuations. That doesn't help SOU, though, because GBP has fallen about the same amount as MAD vs. USD. On the up side, iirc, the gas is priced in USD so a net benefit to SOU should rates stay similar.

Ditto mebo2. That's what I've been wondering about for a long time.

ktf: "Morocco needs the gas, they're not going to shoot the golden goose."

The gas *IS* the golden goose. SOU is just its current minder. The ruling seems pretty grotesque but it is what it is. It seems a whole lot less likely now that SOU can wangle their way out of it. It's basically the worst case scenario.
Obviously it's completely manageable if SOU can spread the payments out AND defer the first one to 2025. That's the first year that SOU's net income turns positive according to the SP Angel valuation, assuming all other things go according to plan.

Not sure what Curran can do other than commence legal proceedings against the government. Ryan is being dragged kicking and screaming toward allowing limited gas storage under the government's tight control, but no LNG imports. The chances of him voluntarily signing off on licences for Inishkea or Barryroe are less than zero, as he is implacably opposed to them. He will just state that they are incompatible with Ireland's climate change targets (like he did for the LNG terminal).

I'd be happy to see a *legal* approach. Explorers are entitled to progress existing licenses. Ryan can't run DECC as his personal fiefdom, deciding what to grant at his personal ideological whim. Somebody needs to remind him of that, and quick.

Don't buy on my account! I'm just a know-nothing internet randomer and I'm still pretty negative. Based on the 0.1p SP downgrade due to the recent tax announcement, you could be looking at another 1p if the full tax bill gets upheld. Wouldn't be holding my breath on the near-term exploration either. I do hope they drill SBK-1 first. It's a small accumulation but looks like the best shot at adding some value and they could do with some good news rather than another duster. Only 0.3p unrisked value per share value on the current research note, though. If you see 7.5p total per share in the next 24-30 months I think it would be a good result.

Yeah Fr.Q, I also thought the Boldy love-fest in the Phoenix was something of an enigma.

Interesting valuation update. Value of the core assets has been downgraded due to the tax bill and depreciation of GBP vs USD, but upgraded due to a higher forecast Brent price, leaving the value pretty much the same. Also interesting to see them forecast that SOU can give away 25% equity in TE-5 in return for the remaining Phase 2 funding requirement, and still keep the same valuation due to lower risk. That's somewhat reassuring for those looking out for further dilution.

Also interesting to see new valuations for the exploration element, premised on a 30% farm down of interest in return for 100% carry on three wells. I would call these pretty speculative (as indeed does SP Angel) based on the recent drilling track record. Only SBK-1 with its smaller accumulations looks like a solid bet having previously flowed gas, while TE-4 looks like a much longer shot (having previously failed) and Anoual is a wildcat and Sidi also a relative unknown. Nevertheless it's still interesting to have these, and if you let your imagination run wild on the *unrisked* numbers ... well it's enough to drive this board back to the ramptastic speculations of former years ;-)

I will spell it out for you one last time. There will be no further response to your childishness.

Providence have applied for a Lease Undertaking on Barryroe. The find is classified as 2C resources according to Providence's own commissioned assessment. Both of those things tell you that the find is not yet declared commercial.

Lease undertaking issued under Section 10 (1) of the 1960 Act. (https://assets.gov.ie/77790/49e9b28a-60a8-4556-af30-f91699e3b2f2.pdf):
"When a discovery is made in a licensed area and the licensee is NOT in a position to declare the discovery COMMERCIAL during the period of the licence, but expects to be able to do so in the foreseeable future, the licensee may apply for a Lease Undertaking. This is an undertaking by the Minister, subject to certain conditions, to grant a Petroleum Lease at a stated future date. The holder of a Lease Undertaking is required to hold a Petroleum Prospecting Licence which will govern activities under the Lease Undertaking."

"A lease undertaking is a ministerial commitment to grant a petroleum lease at a future date on an oil or gas discovery that has NOT yet been declared as a COMMERCIAL find". (https://www.irishtimes.com/business/energy-and-resources/providence-presses-government-on-urgency-of-key-barryroe-lease-1.4793995)

Definition of 2C (i.e. Contingent) resources from the Petroleum Resources Classification Framework of the internationally adopted SPE/WPC/AAPG/SPEE Petroleum Resources Management System (PRMS) (http://info.specommunications.org/rs/833-LLT-087/images/PRMgmtSystem_V1.01%20Nov%2027.pdf).
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, by the application of development project(s) NOT currently considered to be COMMERCIAL owing to one or more contingencies.

"Please quote from the item exactly what Providence said that I misinterpreted."

It's the first sentence. Then go back and read my post of Monday 14:31 where I explained it to you. You're welcome.

Manyana, I don't engage with your childish outbursts which are very unbecoming for an 80 year old. I do, however, like to correct your regular gaffs and factual errors lest you actually lead people astray. Now, I can tell you had difficulty getting past the BIG LETTERS at the top of that article. Those are the headline, which wasn't written by Providence. You should try to get as far as the first sentence where it tells you what Providence actually said.

Providence said that the well drilled on Barryroe had a *commercial flow rate*. That just means that if you developed the field and got those sorts of flow rates per well (extrapolated for horizontal producer wells) that it would be commercial. It's different from declaring the field commercial, which requires demonstrating that there *are* connected volumes of hydrocarbons that can be exploited using available technologies at a profit. It's more than a semantic distinction, as the important industry definitions of contingent and proven resources depends on it.