Member Info for ps200306

As predicted, WTI not just in the 40s, but all the way down in the mid 40s. Brent is barely keeping its head above 50. This all bodes very badly for PVR as there were already unfavourable headwinds. An Irish government that could be left wing or Green, Russia breaking ties with OPEC on production quotas, and now a black swan event that has hit industrial output and is crippling transport and tourism.

The breakeven oil price for Barryroe was said to be $46 some years back. There isn't a snowball's chance in hell of anybody farming in under these conditions. The oil industry is renowned for taking a short view, bearing in mind it has to pay for new development out of current revenue. It's why the oil price is cyclical, with low prices leading to shortages a few years later and high prices leading to gluts. This time could be terminal for PVR.

Tony Seba's been pushing that line for a long time. I saw the exact same presentation a few years ago except that EVs were taking over by 2025, not 2030. And here he is twelve years ago saying that the EV transition would happen between 2016 and 2020, the last petrol car built by 2028, and oil obsolete by 2030... www.youtube.com/watch?v=MAFoqo3Jbro

Barryroe has been on the cusp of a glorious farmout more times than you could shake a stick at. I feel a repeat of 2014 coming on. All the stars aligning ... and then the oil price crashes. I think a hit on oil prices due to coronavirus is already baked into this year no matter what happens from here on. But it definitely has the potential to get much worse. The oil price tends to move with the general economic outlook even without the specific hit on transport and tourism that we are likely to see. Batten down the hatches ... I can see WTI in the 40s by the end of this week.

Quick drive by ....

JH77 >>> "Mr.P20. You're a guy who obviously knows his stuff."

No, don't mistake me for that. I have a completely layperson's interest. There are people knocking around some of these boards with actual oil industry experience. I just took an interest in oil back around 2000 when the Peak Oil people were doom mongering and people were loading up on beans and shotgun cartridges because of imminent civilisational collapse. Ended up reading enough about oil extraction that I at least have an idea what to Google when a question comes up... or to realise when it's way above my pay grade.

LW >>> "Are these the two deeper levels?"

There's a useful schematic knocking about somewhere of the different levels that have been hit by previous drills and how it all hangs together. I'll see if I can remember where to find it.

LW >>> "If all of that were produced, the income would be huge."

As I've said before, there's a reason why the share price was eight quid back in the day. The potential value of Barryroe is frackin' monumental and then some! Unfortunately that's no guarantee they'll ever get it out of the ground. And even if they do, it could be after current shareholders are decimated/diluted out of existence. After eight years the optimism is wearing thin.

What a refreshing and pleasant surprise to see a morning of technical and informative posts. Thanks Exploration, ducati, daveyboy et al. I wish you a troll-free afternoon.

Again, people are imagining the naive drinking straw model. If you want to get oil out of the ground it has to be pressurised which can occur either naturally or artificially. In addition to hydrostatic pressure there may be a water drive from below, a gas cap drive from above, or artificial injection. A gas cap will form in an updip if the oil pressure is lower than the bubble point pressure. This gas cap represents FREE ENERGY for well pressurisation. There is also gas in solution in the oil which will separate out when the oil is extracted. You have to do something with this, which is often to inject it back down into the gas cap to maintain pressure. Remember, the oil is worth four times as much as the gas and artificial well pressurisation is going to cost you money eventually. Why, then, would you get rid of the gas cap that nature has provided? The quantity of the gas, the market for it, and the possibly free Kinsale infrastructure MIGHT make a difference ... and then again it might not. It's not something that armchair oil experts are going to figure out. And I suspect the Providence bosses don't know in advance either as they haven't told us about any detailed reanalysis.

DarkEnergy, I would still stand by the filter list except it is hard to understand the negative sentiment that abounds here without glancing at the numerous derampers and trolls every so often.

LW, there are many ways to skin that cat. It's just a range that encompasses several of my own estimates. I am neither an experienced investor nor very financially literate. However, I'm pretty hot on back-of-envelope calculations. For instance, the cash flows on 60 mmcf/day over 17 years ( = 377 bcf) discounted by 10% give an NPV of roughly $1.35 bn. Take SOU's 47% (or 23% or 14%) and you get 63c (or 31c or 19c) per share. Divide by 1.3 and you get 15p/share at the bottom of the range. It's highly unsophisticated and liable to be horribly wrong. As I said, it's back of envelope stuff.

I don't think it could be done any other way, LW, as the prices of oil and gas do not move in sync. The reason for international benchmarks for oil is that it is relatively easily transportable for a small fraction of the energy value of the oil, and it is therefore considered a "fungible" commodity. Gas markets are more regional and infrastructure-dependent. LNG is changing that to some extent, as countries like Qatar and Australia have more gas than they know what to do with. But LNG tankers are specialised double-hulled vessels and so far they are outnumbered by crude oil tankers by well over ten to one. LNG imports are typically double the price of domestic gas carried by pipeline. Nevertheless they are growing and work well in markets like the UK where North Sea production is waning, or China which is trying to avoid dirtier coal.

Agree, Boderisimus. The share price isn't a penny ha'penny because of anything the BoD has done. The deal that is still in the offing is worth 15-25p per share. No, the share price reflects shareholder revulsion, and that is the result of sentiment. If you want to gauge sentiment, just read a couple of months worth of posts on here, including toxic little wastrels like JezTheSwizz cheering vindictively for the SP to go to zero.

Correct, LW. "Barrel of oil equivalent" refers to energy content. The conversion to natural gas is 1 boe = 5.8 mcf (thousand cubic feet). Currently the US spot price for gas is $1.90 per mcf. Over the last five years it has averaged around $2.50. That means a boe of natural gas is worth $10-12, less than a quarter of the price of oil. It reflects the abundance of gas resources, and the difficulty of transporting gas in the same way as oil. Gas prices are higher in Europe, but so are oil prices. It's impossible to be completely scientific, but the 10% of Barryroe energy that might come in the form of natural gas is worth 2.5% of the total resource value.

And to follow on, trellis, do you have some motivation for casting doubts on the assessed TE-5 volumes, or for suggesting that SOU can't generate enough revenue from LNG to even keep the lights on?

trellis >>> "Some are still talking about £3 billion of gas at the Horst alone- does anyone really believe if there was that much gas there and a pipeline agreement possible that we would only have a "broke" private company bidding for us and that a micro LNG plant is the best way forward?"

It was dollars, i.e. $3 bn. It's a rather trivial calculation. The MOU in October worked out at a price of $7.94 per mcf (albeit for only for the first half of the projected extraction rate). Multiply by the 377 bcf mid case and you get $2.993 bn. SOU's share is 47%.

trellis >>> "Exploration (who is positive on the LNG plan) took some figures quoted by others and suggests the Micro LNG plant could raise( on those figures) $1.15 million a year;"

Exploration did the calculation he was asked for, based on 4,000 LNG gals/day. The documents that Audible provided were to prove that LNG could be a cost-effective solution to stranded gas even at low volumes. They point out that bigger equipment uses different, more efficient processes. Regardless, 4000 gals/day is the equivalent of 0.33 mmscf/day, or half a percent of the expected flow rate for TE-5. Nobody has suggested that Sound would gasify such a paltry amount.

LW, I can't read Manyana's posts anymore, but I'm guessing from your reference that he's as bad at his arithmetic as he is at reading. Just in case it's related, remember that gas is worth a quarter the value of oil.

manyana >>> "I am delighted I am getting under your skin. The more you whine and moan the more certain I am winning."

Should've taken Bronx's advice and done it a long time ago, but you're filtered. You're not capable of normal conversation with adults. Someone else will have to call you out on your clueless inanities from now on.

Manyana >>> "Here is a question. Why did Providence sign a deal with blah blah blah"

How boringly predictable. What does Manyana do when called out on the stupidity of his idea to use existing wells (unsuitable for oil) to access Barryroe's potential which is 97.5% oil? He resorts to personal insults, demands answers to unrelated questions, and generally throws the toys out of the pram. What a thoroughly nasty piece of work.

Yes Manyana, let's just poke around in the existing Seven Heads wells, drill a bit deeper and take whatever comes up. Such commendable optimism. I guess you're old enough to have been around for the heyday of Peale's Power of Positive Thinking. Maybe as well as the miracle of transmutation of a big chunk of the oil to gas, you could arrange for the waxiness to go away too. You know ... so we don't need that special liner to stop the oil from solidifying on the way up.

Manyana >>> So the new team at Providence are telling us "porkies" according to you when they say "proposed appraisal programme is expected to confirm the presence of either a large oil field with a gas cap or a large gas field surrounded by an oil rim."

Here's Barryroe: https://www.lansdowneoilandgas.com/wp-content/uploads/2018/11/Image4-1030x707.png
Do you see any gas discovery there? (That big orange blob in the middle of it is the overlying Seven Heads field). Logic dictates that the gas migrated up from below. Is there remaining gas in Barryroe? Of course there is. Is it "a large oil field with a gas cap or a large gas field surrounded by an oil rim"? Well, duh, yeah. One or the other. You can't really be telling porkies when you enumerate the two most likely possibilities. But the local village idiot could work out which one you're going after when the oil is worth forty times more.

JezTheSwizz >>> "I bet you lot are secretly impressed with my soothsaying skills but can't bring yourselves to commend me in any way whatsoever. "

Every such comment by you garners exactly one "recommend" ... from the fake account of your imaginary brother. Every comment that begs you to have a shred of dignity and integrity, and leave this board as you promised, gets upward of a dozen recommends. I think we can safely conclude that nobody is impressed with anything about you.

If the Seven Heads gas came from the same source rocks as the Barryroe oil then by definition there are less light hydrocarbons in Barryroe. That would tie in with the waxy oil in Barryroe consisting of higher alkanes. This is all completely moot. We have the estimates already provided, and no further appraisal has been done. The Wealden sands in Barryroe have 2C resources of 345 boe mid-case. 10% of that is gas. Since gas prices are about a quarter of oil prices per unit energy, the oil in Barryroe contains 97.5% of the value. Of course gas is going to flow with the Barryroe oil but at such a comparatively low value it's more of an annoyance to be dealt with ... apart from its potentially great value in greenwashing the project, which is exactly what we're seeing.

PVR needs a partner to drill appraisal wells in the better understood upper sands, with a view to planning for near-term production. The project already has its own known challenges, such as maintaining the waxy oil at sufficient temperature to keep it flowing. Gas separation is another known challenge. That doesn't make Barryroe a gas field.