Member Info for ps200306

It's the pedantic trolls that we shouldn't be taking too seriously. JH77 is right -- we've had far more than term sheets before, we've had an actual farmout that came to naught. In any case if we want to get all pedantic and demanding, then it's not Providence that has signed the binding term sheets with the consortium but SpotOn Energy.

Thanks for the slides link DelBoi. I checked my own estimate of the value of PVR against page 34 and it is remarkably similar. They give a figure of $8.6/bbl for 2C resources with NPV10% and IRR built in. They've suggest an 80x increase from a share price of 3.5p, or US $3.60. However, they don't seem to have allowed for only owning 80% of Barryroe. In my own estimate I reduce that to 40% assuming they will give away half in a farmout. Also, they are using the 845m shares currently on issue, whereas I'm assuming all existing warrants will be exercised resulting in 1,200m shares. That reduces their price to a hair over $1/share, very close to my own estimate.

The talk in the AGM slides is of a phased implementation, with the consortium members getting an agreed profit margin on services, plus some equity. I wonder is it possible that the phased approach -- where production revenue pays for later stages -- will allow PVR to retain a bigger slice of the pie?

I also see talk of various "green" initiatives including carbon sequestration in depleted gas wells. I'm hoping that Linn also sees the lucrative possibility of building the pipeline infrastructure and then using the CO2 for enhanced oil recovery a few years down the road. That could increase the recovery rate from the projected 35% to 60% -- a 70% increase in the oil value (though maybe more expensive to produce). And then there's the Jurassic prospect which I presume will be explored and appraised early on. Not to mention the other Celtic Sea shallow water prospects.

All in all, if the farmout gets completed on reasonable terms, I think $1/share (£0.8 / €0.9) will be a *very* conservative valuation.

Olderandwiser, PVR has no money worth speaking of. The arrangement will presumably be that they give away a share of their 80% of Barryroe in return for a carry on drilling costs.

1cagney, the other thing that everyone knows is that the SpotOn deal is make or break for Providence. That's why the share price is where it is. If it doesn't get over the next set of hurdles, PVR is going to the wall. I actually DON'T see how the government -- even with Ryan at the helm in DCCAE -- can reasonably delay the permitting, although the wheels grind slowly at the best of times. If SpotOn and the consortium comes through, and everything goes ok with the appraisals, then the share will fly, no doubt about it (with the caveat that oil prices have the potential to stay depressed for some time due to the Covid recession).

1cagney, the quirk is that counting the oil and gas in boe ("barrel of oil equivalent") is an ENERGY comparison. Gas sells for way cheaper than oil per unit energy. The UK spot price for the natural gas energy equivalent of a barrel of oil is typically under $20, though prices have been volatile the last few years. With the current collapse in gas prices a 'boe' is worth more like $10. Compare that to $43 per barrel of actual oil. That is why I say Barryroe is 97.5% oil by VALUE (not ENERGY).

Everybody knows that natural gas has a more environmentally friendly image than oil. Alan Linn is pushing this to the hilt. Our pal Manyana seems particularly prone to falling for this greenwashing. But as an investor you better hope that SpotOn + consortium has its eye on the real prize -- the oil.

Manyana, I fear Alzheimers has set in. I've explained the sums to you several times already. For someone so obsessed with checking my past posts, how come you're only interested in trivia? Go dig it out for yourself. Or look up the price of gas vs. oil. I'm sure you'll eventually work it out (and then promptly forget and write me another yawn-inducing rant).

Of course it's a problem. The leader of the Green Party has to sign off the development of one of the biggest oil fields in Europe! Mind you, he signed off the Corrib gas field last time he was in government. And in terms of honoring existing commitments, he has form in defending the tax rates on Corrib: "If we started shifting our tax rates all over the place, particularly on projects already signed and projects that have already been agreed, it would have a reputational damage for the State". Hopefully his attitude to honoring existing license commitments is the same. But this one is oil, not gas, and I think Green Party attitudes have hardened too. They're trying to reduce the speed limit on Irish motorways from 120 to 110 kph for god sake!

Permissions are needed every step of the way. The need permissions to do surveys, some approved already. They need permissions if they want to change the boat they said would be used for the already approved surveys. They will then need more permissions to drill appraisal wells. Then more for production wells. Meanwhile they have to fulfill all sorts of commitments at each phase of the license, such as assessing the Jurassic. Basically they can't twitch a muscle without ministerial approval.

If I may stretch the analogy 1cagney, I think Manyana is unravelling ;-)

Manyana, you've confused me with someone else. Probably reading through a red mist again.

Tut tut Manyana. I see you got out of the obnoxious ahole side of the bed this morning (again).
;-)

I see that Barryroe is now an "oil and gas field" and the Irish Times even went one further than the RNS and called it a "gas and oil field".

Indeep71: "3.3M shares at a cost of 300k in this, i would like it back before the wife finds out :)"

An average of 9p? Luxury! Try 4M at 16p. I'd like it back anytime before hell freezes over :)

If I was you, then, I'd scrape together every last cent you own and buy PVR stock. Don't let that inside trader corner all the action.

Everything now rests on successfully assembling the heralded Barryroe consortium. We were promised some news in and around now. The share price has been drifting higher on the expectation that further details might be announced at the AGM, or at least some solid time frame for further news. I hope these expectations are met. I think there is good will towards the current management, unlike the ToR era when shareholders held their nose and hoped for the best *in spite of* the management. But delivery is what ultimately counts.

... and of course, failing to consummate a deal with the SpotOn consortium could send it to zero.

With the warrants that were issued with the last raise there'll be a lot more shares when the dust settles. My utterly non-expert view is that with a good result the shares are worth US $1.05 apiece. This is based on the following assumptions which I believe to be conservative:
* 1.2 billion shares on issue after warrants
* PVR gives away half of its 80% holding in a farmout
* 355 mbbl recoverable
* Oil price of $50/bbl
* Value discounted at NPV10% over ten years
* 45% internal rate of return

Any number of things could completely skew that up or down. $70 oil could double it. Finding more in the Jurassic could double or triple it again.

The original results from Barryroe were audited, so no they weren't falsified. Furthermore, Providence's well was only one of six drilled in what is now Barryroe over the years. All but one of those struck oil, and the one that didn't was due to a technical failure, not because there was no oil. What's more, they hit oil on three different levels, with a further two still to be explored.

It's pretty clear the current board are enthusiastic about Barryroe and believe they can bring it to fruition. There's a lot resting on the SpotOn arrangement though.

testpack3: I noticed you've now referred to LNG several times as LPG. Call me a pedant (which would be entirely accurate) but they're not the same thing. LNG (liquefied natural gas) is compressed methane (CH4). LPG (liquefied petroleum gas) is compressed propane (C3H8), or a mixture of propane and butane (C4H10). These are the lighter hydrocarbons that come up along with oil, referred to as condensates. Methane may also be found associated with oil, or non-associated as in the TE-5 Horst. Apart from just pedantry, condensates are much easier to compress than natural gas, so much more of the energy (and therefore value) of natural gas goes into the compression to LNG. (Some of this can be recovered if regasification is done using waste heat from a generator).

Sharetrader, I get what you're saying. I'm in no position to lecture, but it sounds like you got caught in what they call a bull trap. If you're confident you might want to consider adding when nobody else wants to touch the share, not when there's a buying frenzy. I'm in totally over my head myself, but at least I have 2.5m at under 2.5p (which will probably never make up for another tranche I can't bring myself to mention).