Member Info for ps200306

Hydrocarbon stocks have been up all over today. Chinese report (probably fake) about a new coronavirus treatment. So probably a temporary blip.

Hey Jez, I just made 16 grand sitting in a recliner picking my nose.

I'd like to think they would. Barryroe isn't remotely in the same category as wildcat exploration on the continental margin. Near shore, shallow water, six previous drills , all of which found oil bearing intervals. Flow rates of 3,500 bopd demonstrated from just one well. Multiple stacked prospects all waiting to be appraised. Just thinking about it makes me amazed that someone could be so incompetent as to not get development started in nearly ten years.

It's clearly one of those rubbish pro forma articles written by drones, if not actually computer generated. Not worth the bandwidth it was downloaded on.

I *wouldn't* like to see PVR go it alone. I'd like to see them give away 90% of the asset for a guarantee of speedy development. I believe time is of the essence.

£900 million to develop Barryroe??? No way. APEC were going to drill five appraisal wells and get us to production for $250m. However, that's still ten times PVR's market cap. No way they can raise the money on their own. Also, as I said, coronavirus is going to hit oil demand and now it's official. BP predict that this year's projected 1.2 mbpd demand growth will be reduced by 0.5 mbpd because of the outbreak. I would rate the chances of Barryroe ever getting developed as worse than 50/50, however that's pure personal speculation. They have to get an appraisal well drilled by mid-2021 to keep the license. While the government has been willing to extend the date so far, I can see it being a convenient excuse to make Barryroe go away by a government anxious to bolster their green credentials.

Oil price may be about to hit the 40s. Not a good time to be looking for a fresh farmout.

>>> "naughty boy PS. Wonder who complained."

LOL. I never got to see the result, but didn't have to. ;-)

Tell you what Jez, let's try a little experiment...

Jez you lying toerag, your non-existent brother didn't make any cash back at EUA. You're losing track of the lies you have spun. You admitted the other day that you made £7,500 from EUA shares that you had bought and kept for years without selling a single one. EUA was a 6- to 8-bagger between 21-Oct and 11-Nov so you basically had about a grand's worth in the bottom drawer.

11-Nov was when you announced to the world that you were selling your SOU shares. Having crowed about how great they were right up until 6-Nov, you developed the screaming aversion that you have been whining about on this board ever since. You also prattled on about how you made £800 on EUA just lying in bed one morning. But EUA has traded between the lower and upper 3's ever since you sold out of SOU, on which you claimed you and your non-existent brother were down £10k.

Therefore you did not recover your SOU money on EUA. At best there was a serendipitous bump in EUA *before* you sold SOU, which you decided to mendaciously portray as the result of your genius in jumping ship. However, you have also forgotten that when selling SOU you said you would be back when the share price hit 2p as "it would be rude not to". So you are quite willing to trade the s41t out of this share for a fast buck at everyone else's expense. Yet you bang on sanctimoniously about the impoverished PIs as if you were their saviour.

You also make ridiculous assertions about the current and future state of the company that you could not possibly know. It's as if you desperately need to validate your own actions, in addition to a fairly obvious messiah complex. You're a fake on every level, as well as a pain in the a$$ time-wasting troll.

Bav3, how can you get your money back by holding anyone in SOU accountable? For every person who bought at 100p, someone else made a packet selling at that level. The sellers were not JP and crew. You cannot reverse those transactions. There is nobody at SOU who can pay the difference between a £1bn market cap and a £20m market cap. So what, exactly, are you hoping for?

Something afoot alright. Up 13% on decent volumes. Hope springs eternal, though it woudn't be like SOU to not have a reversal round the corner.

I think even those who are optimistic (like myself) about a deal have to be realistic. There will be no sudden recovery of the share price. There will be continuing massive selling pressure from those who missed their exit on the way down and now will hope to make amends on the rebound. If you have a high average you will need to be in it for the long haul, somewhere from several years to more than a decade.

Yes, Plan A was to discover so much gas that it could be sold at a massive discount -- while still making a large profit -- to someone else who would do the extraction donkey work. Since we have now found _tenths_ instead of tens of Tcfs, it has to be plan B. Bringing Tendara to production has been the backup plan since 2016. The announcement, post TE-10 failure, of a plan to monetise the assets was disappointing but should not have come as a surprise.

Combining the size of the resource with the projected extraction rate, we could be talking about more than 15 years. It's not quite as stark as that. After a few years SOU's finances will be in order, multiple wells will have been drilled, and a depletion rate reliably projected. I think the share price will then reflect a sensible discount to the total dividend to be paid out over the total field lifetime. Those who want to exit will then found the SP is a fair reflection of the gas value.

I hope by then we will also have done some lower risk drilling, such as re-entering TE-1 to TE-4. A doubling of the Tendrara proven and probable reserves would see investors at even the highest averages have a shot at recouping their money. Assuming the deal goes ahead, the keyword will be patience. That includes ignoring all the trolls, conspiracy mongers and evil-wishers who infest this board and spew uninformed, ignorant and malicious tripe on a daily basis.

Fine Gael and Fianna Fail have both vowed not to make any deals with Sinn Fein, and frankly there is not a snowball's chance in hell they would renege on that. It would be political suicide for either party. Another confidence and supply arrangement -- no matter how unattractive -- is more likely, and a rainbow coalition even more so if the Greens do well.

My guess is that Providence's biggest problem of the next few months may be nothing to do with domestic politics, but with global trade. The oil price is down $12 in January, in large part due to the Wuhan coronavirus outbreak. It's still too early to say, but this will either become a global pandemic or there will be massive trade and travel restrictions to try to stop it. The pandemic scenario is by no means apocalyptic as the lethality is starting to look pretty mild. But the alternative involving many months of widespread travel restrictions could depress oil demand in 2020.

In spite of oil development projects taking years to complete, investment decisions seem to have very short time horizons, which is why we see shortages lagging a few years behind recessions. It could dent PVR's chances of finding a farm-in partner in the near term. And the near term is what it's all about given their cash position.

>>> "It is of course appalling that the share price has fallen from 102p to about 1.7 p, although some think it was madness that it ever reached 100p. As I am sure you have noticed, ps, assuming a NAV of close to 16p per share in the event that the deal goes ahead, the market is valuing SOU at a discount of close to 90 percent to the supposed NAV. Is that not madness too?"

It didn't *seem* like madness at 100p, nor would it have been had one or two of the last four wells (including the never drilled TE-11) come in. But it left us in a position of weakness so that we've been forced to give away 70% of a billion dollar asset for just $150m. But yeah, that still leaves us with $300m worth of gas, plus the $150m in cash, less debts and (hopefully cheap) running costs for the next decade or more. Plus there is upside potential.

And all that *does* make the current price look irrational. I've made no secret that I've used the opportunity to average down from 95p to 17p. At least this time it's been done with eyes wide open. I've substantially increased my exposure for a chance of breaking even, or better. Regardless of how it works out -- and it may work out badly -- I will still consider it the sensible thing to have done.

>>> "First of all, the surveys did site clearance as well as environmental work. Check out Providence site on this."

Yes, that's why I said MOSTLY for environmental reasons. Seabed debris clearance is just as unlikely as sonar scanning to find something untoward. I was trying to avoid longwindedness.

>>> "Furthermore, the issue with Barryroe has always been that drilling holes have found numerous oil locations but they do not know, or at least they have not told us, they are all joined. up. In the work schedule it was estimated they would need 24 wells. That does not indicate joined up"

Well actually we know they are not all joined. The five wells that were drilled before PVR came on the scene penetrated different intervals. The area they covered was 20 kilometres on a side. According to current understanding you wouldn't expect to be able to cover all the strata with a small number of wells. The potential problem was compartmentalisation *within* those intervals. Providence took 3D seismic in 2011 and had it reprocessed in 2013. When they were granted an extension to the license in 2017 (until 2019 for phase 1 and 2021 for phase 2), the conditions for the extension was that they would evaluate the reprocessed 3D seismic and also assess the lower Triassic and Jurassic intervals. I have no idea why they would be evaluating reprocessed seismic that they reportedly received in 2013. But you will recall Jimmy on here opined that the higher resolution seismic had allayed compartmentalisation fears. In any case, Providence themselves said that compartmentalisation in the lower sands was unlikely based on a seismic inversion study, and that even if it occurred it could be addressed with horizontal development wells ( -- reported in Davy's 2013 report).

>>> "And we have never heard anything more about the gas."

The gas is dissolved in the oil. It's not a separate discovery. There's nothing further to report. The 2C resources are 311 MMBO & 207 BCF gas in solution (or 34.5 MMBOE). If produced it would be worth $10 b to PVR with an NPV 10% estimated at a quarter of that back in 2013. This is without ANY of the additional resources attributed to the Basal Wealden and Purbeckian.

The numbers are so eye-watering it is a crying shame that they have so thoroughly screwed-up the farmout process. Appraisal well planning was supposed to be at an advanced stage in mid-2014 and here we are without even the site surveys completed in 2020. (Reminds me to thank heaven once again that TO'R is gone).

>>> "if Providence is interested in any of this infrastructure whey will wait until the final decision because decommissioning is very expensive"

Providence is hardly in a position to express an interest with their lack of cash. Also, we'd need to know something about how/where they would plan to separate the oil and gas before knowing if the old gas infrastructure is of any use to them. Seems like the least of the worries.

Trying to remember previously mentioned dates. There was supposed to be some sort of decision about the land needed to build the pipeline on Jan 28th. No mention of it yet. JJ's leaving date is Feb 6th. Exclusivity period for the deal ends Feb 14th. The agreement RNS implied that even if the deal goes through, there is still a FID to be made. GSA still ongoing, extended to Mar 31st.

>> "Any ideas as to why there were extra trades today?"

Some of it was my planned half million top up. But it seems there must be a couple of other crazies who t think SOU isn't going to the wall.

>>> "But why was it chosen? What was wrong with the other two which they surveyed last September that they had to choose another one or is it just to protect the license?"

The site surveys are sonar scans of the seabed, mostly for environmental reasons. AFAIK, There's nothing they could show that would be detrimental to the prospect. Barryroe is under the Seven Heads gas field which by definition has an intact top seal, so it's not like you would spot seepage marks or something. In any case, they would be duty bound to RNS any known material change to the value.

I'm guessing they just want to reduce the average cost per survey after they had to do the last one on the cheap -- they should have had four sites surveyed for one mobilisation of the survey vessel, now they'll have five for two. Let's face it, they're playing with money they don't have. This is all hypothetical and premised on finding a deep-pocketed partner.

As for there being something fundamentally wrong with Barryroe, in spite of never trusting TO'R as far as I could kick him Barryroe has been independently audited twice. Even if you took the original estimate and ignored the two upward revisions, even if you ignored the Purbeckian and valued only the Middle and Basal Wealden, the oil is worth way, WAY more than the current share price. Nope, the whole fiasco is down to TO'R's long running failure to get a farmout, perhaps he always wanted to hold out for a higher percentage than potential farminees would wear. Who knows. All we know is that even a small retained percentage of a conservative estimate of recoverable oil would send the SP soaring, as long as Linn and co. can consummate a deal. Any deal.

Levelup just made the first sensible point I've seen in all this negative sentiment. I did actually believe the "£1.50 per TCF to Sound", which would have underpinned us at 57p for 355 Bcf recoverable. But when I think about it, I probably got that idea from this board not the company. I do remember at some point they moved to clarify it was 57p multiplied by SOU's 47% interest, i.e. 27p per share. Did someone deliberately mislead? Probably not, although it's worth asking the question. All the other stuff about selling golden tickets is without merit. We took a high risk, it didn't work out. There is still plenty of actual discovered gas. In fact, it's worth a lot more when it's actually produced than the NAV calculation used earlier. So even when we only retain 14% it's still worth about 30p per share (but over 16 years or so) plus a shot at further improvement.

Apart from all that, there is absolutely no merit in griping about Marco's conflict of interest -- director's loans are completely legitimate -- or payments to JP et al. which (afaik) are entirely within the directors' remit to set. It's not exactly Disney where Michael Eisner famously drafted in a new president who left after 14 months with $38m in cash and $100m in shares. Even then, after a ten year shareholder lawsuit, the court:

'despite describing Eisner's behavior as falling "far short of what shareholders expect and demand from those entrusted with a fiduciary position..." found in favor of Eisner and the rest of the Disney board because they had not violated the duty of care owed by a corporation's officers and board to its shareholders.'

I've no objection to trellis barking up this tree, he's doing it for no recompense. But I just don't see it going anywhere. My assumption is the company is working hard to get a decent deal over the line, and I look forward to it happening.