Member Info for ps200306

Yes, though more correctly it is the value of the future cash flows. That means proven technically and economically recoverable assets, which is the definition of 1P reserves. The cash flows from LNG will take a bit more than ten years to pay off ItalFluid, the bondholders, and Afriquia Gaz. That's why an NPV10 calculation gives a slightly negative value (though it might be slightly positive after the Silk Road acquisition, can't remember). To make more of the assets economically recoverable, SOU will need to get Phase 2 funding in place. That's when it will actually be worth something (though the effect on SP will depend on how forward-looking the market is willing to be).

Uh, what?? Afriquia Gaz own 9.8% of the company, being the equity issued to them in June. If the recent loan represented equity in the company, then AG and the bondholders between them would own 120% of the company (not to mention other liabilities to ItalFluid and others) which is clearly nonsense. Though it does explain why SOU is worth LESS THAN ZERO, since its debts are greater than its market cap.

Small time traders? Nearly 30 million shares traded yesterday, one of the highest volumes in a month since people started buying in anticipation of news. We've had the news and people are taking their profits. This share has been a short term traders' plaything for the past couple of years. Anyone expecting it to rise from here is betting that the market will price in Phase 2 well ahead of time.

CrystalBallBroke: "have to admit i was expecting an immediate step up clearing 3p on the release of that RNS, it's everything we were expecting, surely it can't have been figured in already, movement seems sluggish"

If you check the SP Angel valuation, the share price is already well ahead of the value on completion of Phase 1 (which is zero). The completion of the AG loan facility is good news, but it's been in the pipeline (no pun intended) for a year and a half. With the recent history of SOU you have to expect the share price will be driven more by intrinsic value (which as I said, is currently zero) than by the sentiment of a bunch of investors with more money than sense.

Wind turbulence can have consequences for grid stability over short time scales and across entire wind farms:

https://phys.org/news/2013-04-turbines-great-turbulence-consequences-grid.html

Interesting ...

Plasma Pulse: A Clean Fracking Alternative That Requires No Water Or Chemicals

http://www.rrapier.com/2021/12/plasma-pulse-a-clean-fracking-alternative-that-requires-no-water-or-chemicals/

"I note from the latest request by KEL to GSRO that they want to retain the pipes and umbillicals and cover them with material instead of removing them."

Yes, but it's purely a cost thing -- they've already flooded them with seawater to weight them down. I note that for the main 24” export pipeline and the 18” Seven Heads pipeline this was "inhibited seawater". That generally means something with an added oxygen scavenger and a biocide to prevent corrosion -- a bit like what you would put in the central heating plumbing in your house. Not sure how long that would keep them in working order, certainly not forever.

"With Phase 1 across the line and IMO I'm thinking the SP will remain underpinned at 3p."

And what is underpinning it? Genuinely interested, not a trick question.

I don't know how anyone thinks Sinn Fein could be good for PVR, or business in general. They combine the worst aspects of green and socialist utopianism. It may not matter because, if Barryroe development is really five years away, most existing shareholder value could be diluted away just keeping the lights on and doing appraisal drilling at the current low market cap.

Manyana, you are correct -- the Kinsale decommissioning is not completed *yet*, but there's no doubt it will be. It was already flagged several years ago (both by KEL themselves, and acknowledged by the government) that Barryroe developments were unlikely to take place in a timeframe that would allow reuse of the Kinsale infrastructure. The Stena Spey semi-sub was on site plugging wells at Seven Heads even while PVR's K site survey was taking place a couple of kilometres to the east. The current phase of decommissioning includes disconnecting and degassing all process plant and pipelines, plugging and abandoning all platform and subsea wells, complete removal of all platform topsides and subsea structures. Kinsale's third and final decommissioning consent application was made in September this year, noting that:

"Consent Application no. 1 was approved on 26 April 2019. For Kinsale Head only, a subsequent application (Consent Application no. 2) was submitted on 8th August 2019 to cover the removal of the Kinsale Alpha and Bravo jackets. Consent Application no. 2 was approved on 26 February 2020. At the time of the previous consent applications, there were ongoing studies by others which could potentially have resulted in future re-use of one or more of the subsea pipelines. No future re-use potential has been identified within the timeframe of the KADP. Therefore, this application (“Kinsale Head Consent Application no. 3” and “Seven Heads Application no. 2”) is being made in relation to the decommissioning of the pipelines and associated umbilicals."

Since KEL are obliged by law to do the decommissioning it seems unlikely that anyone's hanging around till 2026 to see if PVR need any of their bits and pieces.

Regarding OPL 1, I don't know what the legal situation is. It's not currently part of PVR's licensed acreage. Would a subsequent grant be consider a "new exploration license" prohibited under the 2021 legislation? Or would it just be a transfer of an existing license and therefore allowed? While it seems nuts that an extension of the same C sand interval that PVR are entitled to drill would be prohibited just because it's in an adjacent block, I wouldn't be the least surprised by that sort of decision from Ryan's DCCAE because he actually *is* nuts.

Also from the Lansdowne RNS:

"In addition to the oil resources in Barryroe, there are also substantial gas resources. Previous Competent Person Reports have indicated some 207 BCF of potential 2C resources. In addition to this the Basal Wealden C sand, that was gas bearing in the 48/24-10z well, has been estimated to hold c. 400 BCF GIIP. It is therefore a realistic expectation that Barryroe could yield more than 500 BCF of natural gas, equivalent to around half the reserves of the Corrib Gas Field."

Apart from the implied optimistic recovery factor of 75% from the 400 BCF GIIP, I've been wondering where that 400 number comes from. It's from a 2016 estimate that included the "eastern portion of SEL 1/11 & southern portion of OPL 1". If you remember, OPL 1 was Kinsale Energy's license area on which they granted Providence a three-year option in return for a small percentage of revenue from any exploration successes. At the time, TO'R issued one of his long list of "nothing burgers" regarding "discussions commenced and technical evaluations ongoing regarding potential development synergies with owners of existing gas production infrastructure".

Well, the OPL 1 option lapsed at the end of 2018 without being exercised, and the existing gas production infrastructure has been dismantled. So I don't see how Providence can get at the 400 BCF unless they "do a Saddam" and go slant drilling from the K site under the OPL 1 option area.

Now that made me laugh, sundance. You have a hilarious turn of phrase.

Mamms: "let's say they had £4.5m [after 2021 warrants], running costs and that seabed appraisal etc. will have put a serious hole in that."

I actually think they've been running a reasonably tight ship. The CEO was the biggest personnel expense and they don't have to worry about that for now. The seabed survey was definitely done on the cheap -- the Celtic Voyager vessel from the Marine Institute had a day rate of around €8,000 -- much lower than the MV Kommandor used previously. One of the bigger costs will be the annual fee they have to pay on their licensed acreage. (I guess that's why it made sense to relinquish the parts they were unlikely to develop ... or maybe I should say *particularly* unlikely, as nothing's looking very likely right now).

LUCAN: "As I remember, the problem initially was that the oil was thick and did not flow freely. Hence the inability to declare a flow rate. There were suggestions that heating the pipes or injecting steam might resolve the problem, but so far as I know this was never demonstrated. Also it's a little too like fracking. If this is still the problem , why not say so?"

I don't think any of these are problems (though I must say up front I have no relevant qualifications whatsoever, I just like reading about this stuff). The oil is a particularly light crude, it just happens to have a significant wax content. It's actually lighter than the Texan WTI and Brent standards. For real problem oil, look at the heavy gunge they produce in Venezuela with low API, high sulfur content and metals like Vanadium. It has to be diluted with naphtha before it can even be refined. Barryroe oil has low sulfur, acidity and metals. Yes, the wax content needs handling but there is decades of experience with this. Before the US shale fracking revolution (which was low wax oil) about 25% of global crude was waxy.

Also, the process required is nothing like fracking (not that there's anything wrong with fracking imho). Hydraulic fracturing uses fluids to force open cracks in tight shales so that the hydrocarbons can flow. Shales can have permeabilities much lower than solid cement. The Barryroe sandstone permeability is thousands of times higher than your typical shale.

Flow rates *were* measured at Providence's Barryroe well and they were very good. The confusion about flow rates was that a second test of an upper gas-rich interval in the Basal Wealdon had to be choked down because -- according to the company -- the surface equipment was optimised for measuring oil flow. Lansdowne has been talking up the gas potential in their own RNS today, though the implied recovery factor sounds a little on the high side.

If there was ever going to be a potential problem it was faulting, which would prevent access to connected volumes of hydrocarbons and render the development too expensive. But my understanding was that the company had satisfied itself as to the low risk of this through reprocessed seismic.

So I'm perplexed as to what the technical problems are that PVR hinted at in the RNS today. I'm hoping it's just the special handling required for the waxy oil, which is definitely manageable. I think the rest of PVR's problems are all above ground ... in the funding department and with government bureaucracy.

The problem is that the Greens don't have to do anything at all while they wait for Providence to get their act together. They can just let them stew. The new PVR "plan" (if you could call it that) means they have to raise several tens of millions of dollars for a new appraisal well with no cast iron guarantee that it will lead to successful development. Who's going to risk that kind of wonga on a company with PVR's track record? It's certainly not going to be the fabled consortium members.

It's ten years since PVR drilled the 48/24-10z well and Barryroe has been a bitter pill ever since. Two days ago was the the tenth anniversary of the first blow-out preventer problems with Transocean's crappy 30-year-old rig which came back to bite us. The rest is a story of inertia and wild goose chases in the Atlantic. Now there isn't even a CEO. I wish to god they'd stop rabbiting on about strategic whatevers and address the only thing that makes the slightest bit of difference: is there a ghost of a chance of raising the requisite funding? The problems don't end there, but it's certainly the "sine qua non" for any progress. Everything else is just noise.

For that to happen, Phase 2 funding would have to come through and the market would have to price in its full value two years ahead of when any revenue starts to flow. Unlikely.

Must be just me then, who thought the RNS was a total nothing burger. It took 3,000 very awkward words to say what could have been said in a couple of sentences. Where it revealed anything at all, it was bad news. Summary:

1) There are unspecified technical concerns about the Barryroe field that we didn't mention over the last ten years.

2) As a result, plans for combined appraisal drilling and early field development were always pie-in-the-sky and could never get funded. Apologies (not really) for the past seven years.

3) Remember that drilling in 2019 that turned into late 2022? Yeah, well, we meant 2026... *if* we can keep the lights on for that long and fund an appraisal well in the interim. Financing is still the gorilla in the room and we haven't done anything about it. But don't worry about ongoing costs -- the only thing going on in-house at PVR has been a fortnightly directors' Zoom call. And we paid an external team a pittance to decide that the best place to drill Barryroe just happens to be the same place we picked several years ago. And the next steps are what everyone already knew they were, except it needs to be in baby steps and will take several years longer.

4) If we don't manage to shoot our own feet off, government bureaucracy has been intentionally set up to strangle us.

Did I miss anything?

Typical euro winter gas price is €20 per MWh. It's been climbing steadily since Spring of this year to hit a record of seven times the normal price this week.

https://tradingeconomics.com/commodity/eu-natural-gas

"EU natural gas prices slipped to €125 per megawatt-hour on Friday, from a record €142.76 reached last session, amid reports that gas flows requests in the Yamal-Europe pipeline dropped 15% in the early hours of this morning. Earlier this week, prices rallied to unprecedented levels amid news of delays in the Nord Stream 2 pipeline, supply-cut threats from Belarus’ President, and jitters about harsh economic sanctions being slapped on Russia’s energy sector amid growing tensions in eastern Ukraine. Germany’s federal network agency said Thursday that gas flows to Europe via the newly built pipeline won’t be made before July 2022. With imports running low, investors are now fearing that the ongoing natural gas crunch could be extended into next winter."

Meanwhile we've been having one of those common continental high pressure systems giving cool temperatures and slack easterly breezes, forecast to continue into next week. Our bounteous wind generators are giving us the equivalent of one decent gas turbine's worth of power.

Only 4,000 shares traded at that higher price. If it's someone in the know, they only risked 200 lids.

... continued ...

So in short, wind power may supply lots of our electricity in future, but the energy markets recognise that it's b u g g e r-all use for actually guaranteeing that the lights stay on. For that we're going to have to manage the demand side better (or risk going without). You can see why the data centres are a problem. They can't exactly turn off the air conditioning when the wind decides not to blow.