Member Info for ps200306

Trellis -- I didn't mean to imply that the funding requirements are subjective, but that an investor's assessment of the risk of them not being met is subjective. Sharetrader123 is a case in point -- his assessment is that success is a relative no-brainer. He "just can’t see this failing now".

I should probably add that the decision to raise money only for exploration and not field development when the SP *was* favourable turned out to be catastrophic. With no change in underlying assets, even shareholders in the happy position of being able to average down now run the risk of being diluted out of existence or seeing the company going under altogether. But I guess that's water under the bridge. The new management wants to rebuild trust. That will take more than just words.

Sharetrader, not much has changed regarding the TE-5 Horst in the last several years. SOU have demonstrated that -- with stimulation -- it can flow commercial quantities of gas, and RPS have certified the reserves. In the mean time, the share price has been above £1.00 and below £0.01. Neither can be said to reflect the TE-5 potential. So how can the SP be this low? Clearly it's because wary investors very much *can* see this failing. The gas potential is far from being the only ingredient for success. The finances need sorting and having a CEO who says he thinks he can do it does not equate to actually getting it done. Trellis is absolutely right to sound that note of caution. However, the hapless LTH can do little other than wait and see what transpires.

As for a higher SP making it easier to raise finance, this is a Catch-22 situation. Raising the finance is probably the main thing that would instill confidence in investors.

trellis: "Small steps being made but NOTHING signed except for HOTs ( which are not binding) and, despite what people write on here, no agreement on Bond or financing for Micro LNG. plus ca change."

Sharetrader123: "Once the gas flows things rapidly transform and surely the only threat to arriving at that point is the bond issue or not securing the correct funding ?"

You are both saying the same thing, apart from the subjective assessment of risk which each investor must do for themselves. Sharetrader is right to be enthusiastic given the potential. Trellis is right to be cautious given the history.

"in a hitch" = "without a hitch" :-(

I also believe that a share price in the thirties is possible. We have a valuation of 8.5p per share if SOU retains 50% of Tendrara and gas extraction gets underway in a hitch. We could be at 17p if by some miracle SOU gets debt financing and retains its 47%. So to get to the low thirties -- twice the value of the current asset -- all we need is for a bunch of idiots who don't know how to value the company to get into a buying frenzy. I'll be happy to make a packet, just as someone else did when I was that idiot.

Or we could discover a lot of oil. But I don't see that happening until the middle part of the decade.

RoI is *in* the UK-wide customs area, which also happens to be EU-wide. Unfortunately it ends in less than 6 months when Britain becomes an economic as well as geographical island.

ericnat17: "So an awful lot in the next 2 years and plenty of opportunity for the SP to follow the story".

SoundasaPound1: "I am hoping to trigger a relatively early exit strategy here".

I'm intrigued how people seem unable to join the dots here. A large number of people holding SOU are in the same position as described by SoundasaPound1. They have more stock than they wanted and are desperate to exit at the first chance to recoup their substantial losses. With all this revulsion for the share, who do you think is going to buy it? It seems to me we all hoping for a greater pack of fools than the current shareholders.

In that scenario the only thing that is going to increase the share price is an increase in the company's underlying assets. What will *not* increase it is miscellaneous "news flow". That only worked in the era of rank speculation and irrational exuberance. The majority of people buying now are those mercilessly trading the rises and dips. Yet, almost incomprehensibly, we've even seen some LTHs increase their holding while the price was going *up* in the recent rally. The share that revulsed them somehow seemed more valuable because others were trading the sheeeiittt out of it. Those people have increased their losses!

I don't expect any sustained improvement in this share until there is gas coming out of the ground.

Yeah, it's based on the value retained by SOU under the abortive farmdown from last year. As such, it's just a finger in the air, and would be nice if it was too pessimistic based on SOU bootstrapping itself via mLNG.

ShareTrader123: "Remember that the Te5 Horst will soon start producing and that according to Malcy every trillion cubic foot of gas has the ability to add 1 pound to the share price."

... which confirms the broker note with less complicated sums. TE-5 = 0.377 Tcf recoverable x 23.3% SOU share x £1 = 8.8p. Using the broker's own figures for horst value at NPV10% and 47% IRR, I got 8.5p. I believe they included some tax and debt considerations to arrive at 7.5p. If SOU retains a greater share or further appraisal indicates the mid-case is too pessimistic, that number goes up.

ericnat17: "Also the research note is based on sound have 22% of the Horst, so you can double the 7.5. It also clear the the does not include any exploration upside at eastern Morocco and does not add any value to sidi."

Correct. It is quite conservative. It assumes SOU will retain only 23.3% of Tendrara, and not receive any financial compensation in return. The LNG project (imho) provides the potential to part fund the pipeline and/or further exploration, without SOU getting excessively diluted. However, that's a trade off of more value retained vs. pushing the realisation of that value further into the future.

Pontcanna: "You actually believe broker notes ?"

No, I actually READ them. And understand them. Did you do either? And if so, what part of it did you disagree with?

Did anyone actually read the broker note? Under their modelling, SOU's share of TE-5 gas production is worth 7.5p / share. I checked the numbers and it looks about right. Could work out better if the modelling assumptions are too pessimistic. But anyone wishing for 15p / share or more has to hope that either there is additional successful exploration, or a mad rush on the share by speculators who are equally uninterested as themselves in the cold hard facts. Given the focus is on monetising the existing assets, any new exploration must be at least two or three years away.

That is not being negative, them is the facts. It's the people waffling about 20p by Christmas (for no reason other than it sounds good) who are blowing hot air.

I don't believe in those Soros conspiracies, however the brainwashing by the likes of Extinction Rebellion is nothing short of scandalous. One in five kids in the UK suffer from anxiety as a result. For anyone interested, Michael Shellenberger's new book "Apocalypse Never" puts things in perspective from a sane environmentalist's point of view. The IMF's own report from last year says that climate change will reduce global GDP by 7% or so by 2100. (According to the XR nutcases the human race will be extinct 50 years before that). Even with below par growth, world GDP will expand by 300-400% by 2100, leaving climate change impact as negligible under the most likely scenarios. Climate impact is completely manageable except for the world's poorest -- our duty to them is to foster the same economic growth that has lifted two billion out of poverty since 1990. Which means preventing the Greens from crashing the economy and foisting their environmental imperialism on the developing world.

Yes chef, there's a certain amount of greenwashing going on with the gas idea. The overwhelming majority of Barryroe's value will always be in oil. I don't mind what the company does from a PR point of view. I think the Greens will be vehemently opposed anyway, even if it WAS all gas. Those hoping that the Greens will be kindly disposed toward better security of gas supply are in for a rude awakening. Greens are ideologically opposed to all hydrocarbons regardless of negative impact on the economy and human wellbeing. While I have a keen interest in green (small 'g') issues, I have reluctantly come to the conclusion that Green politics are evil.

Not sure what you mean by viable, chef. If it's associated gas an FPSO would be needed, pipeline or not. The gas would have to be separated and I doubt it would be allowed to be flared even if you wanted to. At the peak anticipated production rate for B'roe of 100 kbb/day you would produce 60 million standard cubic foot/day of gas. That's a little over a sixth of Corrib's peak gas processing capacity, for comparison.

"the Base Wealden reservoir potentially contains between 0.5TCF and 1.2TCF"

Those are P50 and P10 numbers. Providence's own assessment was that the Basal Wealden was unlikely to have any primary gas cap. That means it's mostly associated gas, i.e. it comes up along with the oil. The P50 and P10 numbers for Basal Wealden oil were between 760 and 900+ MMBO. 0.5 Tcf of gas would be about 80 MMBOE. So that would make the Basal Wealden about 90% oil, whichever way you look at it. That's 90% by energy content, but about 97% by value. Same as the Middle Wealden which will be the main target of any upcoming appraisal.

OlderAndWiser, Providence have exploration licenses that must be honoured. As long as they keep up their own commitments (which includes certain appraisals within certain timeframes) the government would have no grounds for refusing them. That's not to say that an uncooperative government department couldn't put up roadblocks and red tape. That is my fear. It is going to be a PR battle in which Providence will likely emphasise the potential for natural gas (greener fuel, a bridge to a low-carbon future etc. etc.) and carbon sequestration in depleted wells. The fact is that the majority of the value in Barryroe is in the form of a particularly viscous oil. How this will play out is anybody's guess. There is also the uncertain economy with consequences for the near to medium term price of oil. And there is the uncertain future of Providence itself, being dependent on finding a funder with deep pockets, which is certainly not yet a done deal in the current arrangement with Spot On.

If everything comes together, it will be very lucrative. But there are many serious hurdles to overcome. The voices on this BB saying that this is going to the moon and we will all get to retire are either willfully delusional or willfully lying to push their own agenda.

"how you retired 20 years ago"

Not what I wrote.

Where is the Phoenix getting its estimate of 1 Tcf of gas? The only estimate I've seen is less than 0.2 Tcf. And the estimate of $70 oil seems pretty fanciful. Even before Covid we had a years long glut so I doubt we are getting back to $70 this side of 2025, if even.