Member Info for ps200306

Policy Statement on Petroleum Exploration and Production in Ireland:

https://www.gov.ie/en/publication/3bcaf-policy-statement-on-petroleum-exploration-and-production-in-ireland/

No change for existing authorisations, except to make the government look increasingly hostile to any new activities. Petroleum Infrastructure Programme being wound down.

Sorry for being the perennial pessimist but I wasn't especially impressed with this. It's going to be all about the dilution. In the previous RNS SOU were pursuing "potential vendor financing, secondary subordinated debt and partial asset disposal options" for the remainder of the financing. Now it's down to one option -- a farm out. It's good that they claim to have parties interested in both the Phase 2 residual financing and the appraisal/exploration plays. But since SOU has no money they will need a 100% carry so could end up giving 25% of their holding away (25% of 75%, since the amount to be raised is approx. 25% of the Phase 2 costs). Also, like JoeCreed, being in a farm out process at this late stage of proceedings doesn't feel particularly comfortable. Nevertheless, it's all progress.

It's a slightly weird article, saying the pipeline "will transport up to 5,400 billion cubic meters of gas to Morocco annually, representing almost half of Morocco’s gas imports in 2017."

5,400 bcm is 200 tcf, which is nearly twice global annual consumption. That's clearly wrong, so maybe the comma in 5,400 means 5.400 which is common in Europe. That means we're talking about 200 bcf, but that's still five times Morocco's annual imports. But then again, why would anyone build the longest pipeline in the world to transport just half of Morocco's 40 bcf needs. That would be the equivalent of just TE-5's Phase 2 output.

Hard hitting article in the IT today about Ryan's head-in-the-sand attitude to LNG, Barryroe, and Europa:

https://www.irishtimes.com/business/2022/08/05/caveat-hydrocarbons-may-eventually-kill-us-but-the-economy-could-die-first/

"The Minister for the Environment doesn’t want to say yes to fresh permits or leases that might allow existing licensees to make progress on their exploration blocs – if they start pumping oil or gas out of the ground it would embarrass the Green Party leader politically. But he is loath to say no, lest it causes a big scene and the companies turn to a third party, such as a judge, to make their case. Instead, Ryan simply ignores them, dragging out their requests in an extravagant show of can-kicking, deep into the road ahead."

"Providence Resources, which is soon to change its name to Barryroe and whose largest shareholder is Larry Goodman, has been waiting for 16 months for a lease from the Government for an appraisal well that is essential if it is to bring the estimated 300 million barrels of oil at its Barryroe prospect to the surface of the Celtic Sea bed."

"Meanwhile, Europa Oil & Gas last week received a patronising brush-off from the State, as it waits impatiently for an extension to the first phase of a 15-year exploration licence for an area adjacent to the Corrib gasfield off Ireland’ west coast."
...
"Ryan may flinch at the political discomfort of being seen to facilitate pumping oil from the Celtic Sea or gas from off the west coast. But that is vanity. Producing hydrocarbons at home is infinitely better than buying them from the imperialist Vladimir Putin or the regime of Mohammed bin Salman in Saudi Arabia ... How can that acknowledgment of reality be squared with Ryan’s indulgent foot-dragging on Providence and Europa? His approach helps to leave Ireland vulnerable to external price shocks and security of supply issues."

Keep an eye on the auction price of offshore wind when it happens. Ryan is scalping us. The second round of auctions for *onshore* wind happened in May and the average strike price was an eye-watering EUR 97/MWh. That's the same price as the Hinckley Point nuke, despite Green claims that nuclear is far too expensive and wind is the cheapest power available. It's 32% higher than the previous auction two years ago, twice the average wholesale cost of electricity two years ago, and twice the cost of UK *offshore* wind five years ago. The story is that Eirgrid dropped the ball on providing grid connections when they were supposed to, and now that Ryan is polishing his green halo the wind farms getting licensed are in suboptimal locations. Oh yeah, and the support period over which the strike price is paid lasts until 2040. The only question in my mind is how much havoc the Greens will have wreaked on the economy by the time they get booted out on their ar$e$.

Farmers don't vote for Greens anyway, so that's hardly much of a threat. Eight of their eleven seats are in the leafy suburbs of Dublin.

I suspect the 90 days was plucked from his behind. Even if there was nothing sinister going on at DCCAE, can PVR survive this glacial rate of the permitting progress? 13 months to approve a simple seabed survey, now 15 months and counting on the lease undertaking, the appraisal drilling would be another permit required, field development probably several more. The level of bureaucracy is unmanageable, even if one didn't suspect Ryan was intentionally out to clobber it. And you can bet that Friends of the Irish Environment and other loony toons will be all over it like a rash at every stage, with vexatious litigation.

"Sound is Registered in England and Operates under the 2006 Company's Act......."

SEMS who are facing the major tax claim are registered in Rabat. SEMS is "Sound Energy Morocco SARL AU". The acronym stands for a particular type of Moroccan legal entity -- Société à Responsabilité Limitée Associé Unique -- a single-shareholder limited liability company.

Here's the article for you, just on the off chance you have something more substantial than childish insults to add:

https://www.businesspost.ie/news/providence-hopes-to-obtain-barryroe-licence-in-next-90-days/

This is all entirely revisionist. Menton said he expected the lease undertaking would be granted within 90 days ... not that we would find out about the Rockhopper case by then, not that he would be able to sue the government for compensation. Ninety days later there is no lease undertaking. Menton was wrong. And not just slightly wrong -- we know from media reports that Ryan has refused to discuss or even meet with anyone about the possibility of offshore hydrocarbon extraction. The most optimistic spin that can be put on it is that the civil servants at DCCAE told Menton that they would complete the bureacracy by now and that it would then be up to Ryan to sign off. The alternative is that Menton was just blustering and plucked the 90 day number out of thin air. Either way, he's still wrong and Barryroe is still in limbo with no indication of any progress.

Mamms, agree with you about the lack of realism about what Ryan must or most not do. He is utterly, implacably opposed to offshore drilling. Even were he to grant the lease undertaking the government would be immediately sued by groups like Friends of the Irish Environment, who have litigated successfully in the past. And even though Ryan would be the minister getting sued he is in cahoots with these groups -- he applauded their previous win against him back in August 2020. Essentially we have a militant climate activist in government who doesn't give a damn about the economic stability of the country and will use other groups as proxies whenever he can't hold the line on his own. Stock up on rechargeable flashlights and a hand-cranked dynamo -- you're going to be needing them. The chances of PVR getting their lease are negligible as we are seeing with Menton's "90 days" expiring right now.

"Hopefully, the LTC will decide that the majority of the SARL claim is invalid as they did with the SEME one"

I don't think it can be invalid for the same reason as the SEME one. That one was dropped after the LTC agreed that it was double taxation because of the amount already levied against SEMS. Summarised in the RNS of Aug 6th 2021:

https://www.soundenergyplc.com/investors/regulatory-news-rns/rns-announcement/?rid=3941945

Let's just say ktf for a long time has preferred an echo chamber of only those posts he wants to hear. (I can say this with impunity since he has to pretend he's blocking me ;-)

On the other hand, how would it look if Ryan played hardball on lots of sectoral targets and then granted the lease on Barryroe? There would be even more uproar. That's why there's no possibility he is going to sign it off. He needs to be either pushed out or sued for Barryroe to have a chance.

The existing government guidance for oil exploration (from some years back) says the government has a very supportive stance. Existing legislation allows current licenses to be progressed. Ryan cannot square that circle. He has forgotten the "supportive" part. His tactic is to bury his head in the sand. He has also strongly suggested (e.g. to the Seanad) that no oil discoveries even EXIST. Hopefully Menton is getting ready to sue, but even at that it's a long shot.

Menton said "within 90 days" back in April. He was quoted in the Business Post of April 24th, and 90 days since then is up next week. However, it would be silly to see that as a deadline as I don't see how Menton or anyone else can possibly know. Nor did he tell us how he can possibly know. So I'm inclined to treat it as blowing smoke up our a$$es. The only intriguing fact is that he picked this month to appoint an interim CEO, having decided it was not worth paying one for the past ten months. That, along with the fundraise, might be viewed as part of a demonstration that PVR is a going concern before the LU can be granted. But while it might be a necessary prerequisite we have nothing so far to suggest that it is a *sufficient* one. It's quite possible the LU will *never* be granted.

ericnat, I hope you are right. There's no doubt in my mind that if Morocco makes the tax charge "stick" that Sound Energy Plc will be liable for it -- they can't evade it just because SEMS is a dormant subsidiary. SOU's case, of course, is that there wasn't a transfer of ANY assets, not even intangible ones. The license relinquished by SEMS was a different one to the one obtained by SEME (Tendrara Lakhbir exploration permits vs. Greater Tendrara exploration permits). To my limited understanding, that always looked like a reasonable case. And even were it not, surely a company gets taxed on its *profits*. SOU made no sort of capital gain on these transactions and has had no production revenue. The best summary is probably still the RNS from June of last year:

https://markets.ft.com/data/announce/full?dockey=1323-14998057-7A0VEIVDU4UKCU6KCA011A5JRH

If the tax is legitimately due you have to wonder what sort of advice SOU were getting, and indeed why they needed to monkey around with the corporate structure. I noticed that SEMS is registered in Rabat while SEME is registered in London. Did the Moroccans get antsy because of a perception that SOU was trying to move assets to a different jurisdiction? I've no idea, just wondering out loud.

Let's face it, even if Ryan is told to get off his high horse it will be to permit the Shannon LNG terminal. It would take the same amount of time to build as Barryroe would take to get to production, but gas is probably a higher priority as oil can already be shipped in by tanker. Of course, if we had any strategic sense we'd develop not only Barryroe but the adjacent OPL/1 license area which potentially holds lots of gas. But it's not going to happen.

The Dáil goes on summer recess from tomorrow lunch time. Menton's 90 days expires at the end of next week. AGM would normally be the following week but no date was mentioned in the annual report. The appointment of a new CEO could mean something is astir ... but definitely not holding my breath.

Orbilune, the original well was a simple vertical well, not suitable for production. In any case they can't go back to it or anywhere else without the lease undertaking they are looking for, and additional permits besides.