Member Info for ps200306

Hysteria abounds at COP26, not unexpectedly. UN Alarmist-General António "code red for humanity" Guterres said the planet was changing before our eyes:

"From the ocean depths to mountain tops, from melting glaciers to relentless extreme weather events, ecosystems and communities around the globe are being devastated. COP26 must be a turning point for people and planet".

I guess you got them for around €0.04 north.atlantic. Nice price. What's your average?

Nope, not done. CV is on site and surveying again. Must be night owls like meself ;-)

CV heading back to port. Only a day and a half on the survey site all told, but I guess we could be all done.

US lawmakers grappling with the same issue as our own gubmint over domestic production. What's the point in shutting down less polluting local supply and then depending on other producers to open the spigots? From House of Reps today:

https://www.youtube.com/watch?v=VbLOTxVuKRY

Graham Lyon: "We cannot put the infrastructure in place when we have the tax problem on us."

So is Graham talking through his ass *now*, or was he talking through his ass when he said the tax claim wasn't holding things up? Also, he is playing a dangerous game, especially by emotionalising the issue about "how we are being treated". There has to be at least some chance that the tax demand will be upheld. What's he going to be saying then? That it's game over for SOU in Morocco?

CV underway again. Weather and wave heights look ok through the end of the week.

LONGWAIT, I fear you are becoming obsessed.

No move from Celtic Voyager this morning. As suspected, Thursday is a write-off too. Good thing the day rate is very cheap compared to Gardline's Kommandor.

Weird article. It suggests that SOU switched to the LNG plan in order to grow the market demand for gas in advance of more exploration. That's obviously a bit of historical revisionism -- the reason was to save the company from imploding. But it raises some other concerns. Who knew that SOU aren't allowed to export any gas via the Maghreb-Europe pipeline unless they "come across huge deposits like those in Qatar"? ... and that there are uncertainties about the existence of a domestic market for gas? It prompts one to look again at the ONEE GSA. The MOU signed in 2019 commits ONEE to take 0.5 bcm per annum (48.4 MMscf/d). That is half of Morocco's total gas consumption (which has actually being falling since 2012). It suggests one more TE-5 horst-sized discovery would actually max out Morocco's ability to absorb the supply. Would SOU then be allowed to export the gas?

I don't see how North African politics is going to send the SP north until there's a clear prospect of pipeline gas flowing. But just my opinion, which could be wrong.

Manyana: "How do you know what amount of gas is there because the Transocean equipment failed during the 2012 drill. That is why they had a court case that went on until 2015."

Nobody knows what amount of gas is there. What we have are estimates based on modelling. There are two official ones -- an audit by RPS energy, and a CP report by Netherland Sewell & Associates. There is a third revised estimate by PVR themselves from 2016, but it covers OPL/1 (the option that PVR relinquished) as well as SEL 1/11. None of this has anything to do with the Transocean failure. That well was sidetracked and drilled to the original target depth regardless of the initial failure. The flow rates that you yourself reported in your previous post came from that drill.

Manyana: "You strike me as somebody who wants Barryroe "to fail", probably because you have no shares and would like some, have no money to buy them ... etc."

I hold several million shares in Providence. Once again, I invite you to keep things civil.

Manyana, you are doing yourself no favours with your catty remarks. It's just a cover for your gaffs about turning oil into hydrogen, discovering oil with a sonar survey, and all the other old wives tales you have spun about potential funders and takeovers. I invite you to stick to a civil discussion.

Manyana: "So how does that square with "flowed 7 million standard cubic feet of gas a day from a second, 17-foot thick gas bearing section in the upper part of the Wealden sandstone"."

It squares very easily. Like I said, the upper sands are more gas rich. 7 Mmcf is the equivalent of just over a thousand Boe. The EDS scheme is looking for 15,000 bbl/day. The gas is a small fraction. It's not MY story -- it's from PVR's own audited analysis. Processing the gas is going to be a pain for PVR (and an expensive one) which is why they have variously discussed reinjecting it or burning it to power field operations. Of course they will discuss other options that are more palatable to Green sensibilities, despite the gas being less than 3% of the field value. Such as:

""Produced oil and gas is planned to be transported onshore either through a subsea pipeline, or floating storage units and shuttle tankers."

And whatever happened to the reuse of that Kinsale pipeline? Does it even exist anymore or is it being dismantled as we speak. Linn himself said he didn't want it.

Manyana: "Barryroe was never envisaged as a "gas" producer but on the basis that the oil is mixed with gas, the gas was seen as a by-product."

Manyana, previously: " gas is a far cleaner commodity than coal or oil ... it puts Providence in a far better position of strength when it comes to develop Barryroe."

The Greens may be stupid, but unless they are complete morons they will realise that a field that contains only 10% gas as a byproduct is not part of a cleaner greener transition story. Linn himself speculated that the gas might be just reinjected to maintain oil well pressures. Solution gas has traditionally been a mere annoyance, and was generally just flared off before that practice was prohibited. Why do you think Linn was talking about reinjection? ... the alternative is a lot of expensive infrastructure for what is less than 3% of the field value.

Manyana: "But even the current amount equates to one fifth of Corrib and when they drill lower the chances are they will find even more than in Corrib and possibly as much as was in Kinsale where the gas lasted 45 years."

Did the magic sonar tell you that? Always the one for ridiculous unbridled speculation. The previous drills on Barryroe found that the upper sands were more gas rich than the lower. But even assuming the same 10% ratio of solution gas across the whole field including the Jurassic, there would have to be six billion barrels of oil in place for it to contain as much gas as Kinsale. Pull the other one.

Manyana: "Furthermore, if you had read the Providence documentation you would know that one of the uses for the Barryroe oil was to produce hydrogen. So, clever clogs, is hydrogen a gas and, if so, why did you not add it to your simple calculation."

And if you had UNDERSTOOD the Providence documentation, you'd know that they were talking about so-called blue hydrogen from natural gas. Nobody's talking about turning oil into hydrogen. You probably also don't know about the paper from two months ago by Cornell and Stanford scientists (Howarth and Jacobson "How Green is Blue Hydrogen" https://onlinelibrary.wiley.com/doi/full/10.1002/ese3.956 ) who did a hatchet job on blue hydrogen. Under a veneer of science they cherrypicked methane leakage stats to paint blue hydrogen as a sinister plot by the Big Oil bogeyman. Total nonsense, but that's what does the rounds in Green circles.

Greens are evil and Barryroe should be developed, but your fairy stories aren't going to convince anyone but yourself.

"The question I’m asking myself is why someone like yourself would put in so much time and effort and write a novel trying to tell us our investment is a waste surely they would just find a share with a rosier future. "

I *have* moved on to other investments, but I still have a significant chunk here. I'm *not* saying your investment is a waste, I am merely defusing the hype from people who are saying the share is going to fly anytime soon, since there is no possible near term source of transformative news flow. The news about Phase 1 contracts will merely confirm that SOU is on track to be worth zero instead of a lot less than that.

If all goes extremely well, SOU may get back to where it was five years ago -- ahead of the TE-8 drill -- in about five years time. It will have lost a decade, but will at least have a sustainable footing for exploration funded from revenue going forward. It would be nice if people spewing hype about nearer term price hikes would give some basis for their speculations. My fact-based "essays" tell you why they're wrong.

I'm also increasingly leery of the unofficial "news" being put about by Graham. Last year he told us Covid wasn't slowing him down, but he missed all his deadlines. This year he told us that the tax bill wasn't slowing him down, and yet we now read:

'Lyon said the company would look closely in moving forward with a final investment decision on the bigger development project "while the tax dispute is hanging over us and this is the way we're going to be treated."'

First of all it sounds needlessly petulant. Second it gives the lie to his previous statements about the tax bill not slowing him down. And third, it implies that Phase 2 FID is imminent as soon as the tax demand is dropped. Pull the other one Graham. You have $200m to raise first and you're not even on the starting blocks. It's starting to have the air of James "I could lift the phone and sell this company anytime" Parsons.

I credit Graham with steering the good ship SOU off the rocks. But he needs to close the Phase 1 contracts just to repair the gaping hole below the waterline. Only then can he even begin the perilous voyage to a New World.

Yeah, all those potential farm-in partners in the data room must have died in there. They've been there since before August of last year according to Graham in the below video. Remember to stop up your ears where he says (twice) that Phase 1 FID would be in H2 2020, that the ONEE GSA would be signed "by the end of the year if not before", that Covid slowed things down but they are "now back on track", and that the ONEE agreement depends on "proving up the financing" (which is the exact polar opposite of what he is now saying). But he also says that "putting the financing together on [the pipeline] is being done" (which it clearly wasn't, as more than a year later he now says the GSA is needed before they can even start).

https://www.youtube.com/watch?v=Xjn1kx-sepo

It seems to me that all the people proclaiming "in Graham we trust" haven't been carefully following his litany of changing narratives and missed deadlines. But no doubt the data room is packed to the rafters. The question you need to ask yourself is why would anyone farm in to exploration with SOU when there is plenty of other Moroccan acreage available, SOU is a financial basket case that would need a 100% carry, and their wonderful Tendrara basin model led them to drill three back-to-back dusters. What exactly would SOU be bringing to the party in return for their share of the exploration upside?

90% of the energy and (at normal prices) 97% of the value of Barryroe is oil, not gas.

There are three times as many shares now as when the SP hit £1. To get back there would be the equivalent of £3 back in the day. Even the £1 was based on ludicrous hype that nobody is going to fall for again. We were misled about the value of a Tcf to SOU. We were misled about the value of the already discovered assets in the ground. Remember when the SP was underpinned at 54p just based on the TE-5 horst? Turns out it was half that, and you can now divide by three because of the subsequent dilution. Then knock some more off because the LNG -- while getting to revenue sooner -- is less efficient.

That pretty much gets you to the SP Angel valuation -- a target price of 8.2p. And even that's contingent on closing the Phase 1 deals AND raising the pipeline financing. For the time being SOU is no longer an exploration company, so I don't know where people are imagining that any transformative news flow is going to come from. It's hard to see where the money for next year's Annoual well commitment is coming from, and the SP Angel outlook shows no other exploration drilling before 2025. It's going to take Herculean efforts and a lot of good luck just to get to the 8.2p target price. Crazy notions of £1 are for the birds.

I don't want to rain on anyone's parade, but the SP Angel valuation is there for all to see. (Oh, and bear in mind that their valuation is a MARKETING COMMUNICATION with SOU as a client, not independent research, so it's unlikely to be unduly pessimistic). I wouldn't be betting on "a bigger fool" to come along and pay over the odds, let alone a major taking out SOU at some crazy valuation. In some ways, having a plan mapped out makes a hype-driven increase in SP much less likely. We KNOW what the most optimistic future looks like, and it likely doesn't involve any exploration bonanza inside the next four or five years.

Celtic Voyager berthed in Cork again. Looks to me like they managed a complete pass over the survey site yesterday. Weather/wave heights look gack through Wednesday and possibly Thursday. Might not see much action until after that.

LUCAN: "1. He didn't choose to leave, he was pushed
2. He did not believe the SP would go significantly over 4p in the foreseeable."

Almost certainly the former I would think. He was brought in to do a particular job. He not only blew it but he wasted YET ANOTHER year and a half with a bunch of chancers in a copycat sequel to TO'R + APEC. What convinces me he got the push is the turnaround in messaging between April and June. Initially he was just going to finish the SpotOn plan without SpotOn, all to be completed by September and with an offer from Pageant to underwrite a capital raise to tide them over. Just two months later it transmogrified into a strategic review by the end of the year, and no Pageant money. Clearly the wheels had come off the trolley. There were also three new director hires in rapid succession, with Menton replacing longtimer Plunkett as chair, and a raft of new share options for all three plus MacKay. The latter already owned 1.7% of PVR which he bought in May of last year. So, four new directors, all highly incentivised to get the job done and likely deciding -- with support from the big shareholders -- that Linn wasn't the man to take it forward. They might have given him a grace period to see if he could still pull a rabbit out of the hat by September, which would explain the timing of his departure.