Yes, I think like Charlie, Talitha will have 100% chance of geological success (oil there). The question is all about commercial flow, Charlie is quoted as 50:50 and I would hope Talitha Appraisal would be similar or higher given PANR modelling has shown to be success on Alkaid.
All, please a well known poster (scot126) on the other site has contacted the board and confirmed the CPR will only be conducted on Alkaid/Phecda alone. I think this is important information and am happy to share on Scot’s request.
I find Oil Man’s Jim approach to PANR truly bizarre. From the information released to the public it would appear there are a lot of similarities between PANR and 88e’s opportunities. Brookian targets, previous discoveries in old wells supported by advanced 3D inversion techniques. PANR’s however having had a successful flow test achieving the rate of 100bls/day which 88e are targeting for the Torok well test (as per DW’s recent presentation audio). I see no reason why the 50% COS stated by 88e for the Torok zone is not accurate. Likewise I would imagine that PANR’s Talitha Appraisal well would carry at least a similar COS given the model read across from Alkaid which likely forms the basis of eSeis $2M commitment.
However if Oil Man Jim is questioning PANR’s numbers he would do well to review the following OIP numbers and oil recoverable numbers released/discussed by PANR, Premier (discussed during August Half Year results) and 88e (OIP from DW comments on Proactive Investors and recoverable from presentation slides).
PANR Alkaid - OIP 900Mbls / Recoverable 90-135M bls/ Recovery rate 10-15%
Premier - OIP >1000Mbls / Recoverable 250M bls/ Recovery rate <25%
88e - OIP ’Slightly more’ than >1000Mbls / Recoverable 604M bls/ Recovery rate likely >50%
Whilst it may well be that PANR’s OIP numbers may be wrong, it’s difficult to say that the recovery rates the are quoting are ambitious in light of the Premier and 88e numbers. Having recently spent time comparing numbers between the two companies I believe that our Oil recoverable numbers appear far more conservative than that of 88e in respect to the OIP estimates, a point completely missed or ignored by Oil Man Jim.
GG, first of all Happy New Year, I hope you and your family had a good one.
Yet again, mixed emotions with the recent turn of events. Like you mentioned, I have no reason to believe that there is anything more than the reasons stated for the delays in issuing the year end financials. Furthermore I think the issuing of a CPR will be a good thing and will hopefully go along way restoring/adding credibility to the claims made by the company in respect to Alkaid and Alaska in general, assuming the CPR will cover the whole acreage (and also Texas). Yet again the wording in a RNS leaves this open to interpretation and it may just be Alkaid/Phecda that are getting reviewed.
As you will be aware, my investment in Pantheon has been largely based on the fundamentals regarding OIP, so the CPR will hopefully be a great thing in this respect. I still remain confident they will get a farm out agreement which will be positive in regards to the share price, and should serve to allay fears regards funding/cash flow.
However yet again we have another example of poor public relations/reporting. This is my biggest criticism of the company and I believe it is overshadowing all the fundamentals. We have numerous examples of this, short AGM last year, poor communication of eSeis deal regards omission of Alkaid, not recording September presentation and a bedroom Skype call discussing the East Slope!
The board need to rectify this and now. The release of the CPR needs to be accompanied by a significant promotional push. Even if it’s lower values there is room for it in our current valuation, as long as the messaging is on point.
In summary what Harry K said.
One last comment would be is we have already been successful in farming out the acreage . The eSeis agreement all be it on a smaller scale was for all intents and purposes a farmout. A farmout with a company that specialise in essentially finding oil fields and would appear to be founded by people with a successful track record in Alaska. Now I have no perception regards the risk tolerance of eSEis but a $2M commitment on the non flow tested acreage seems to be a considerable investment given the company looks to have between 5-10 specialists (134 years of experience).
Dol, there will always be an element of confirmations bias when watching these things, you were drawn to ‘finding’ whilst I was drawn to ‘picking’.
Having watched the interview again, prompted by Darcon’s post on the other site and realised it comes down to a few sentences:
‘It’s key for everyone to understand that we re looking for one, a very large program from our farm-out partner. We hope to get a four well program plus payment of some back-costs. So it’s a fairly expensive program. And we also want a farm-out partner that views these assets as importantly as we do. So that itâ€™ll be a high priority for whomever we farm-out to’
Now in fairness Jay did his best to bring it to our attention, but it was only watching again I noticed the ‘it’s key people understand’ part.
So the presentation in September did show the aim was to drill two development well and two appraisal wells, however from attendees notes BR opening comments were a bit less committed ‘negotiate an upfront payment plus carried interest on undefined future drilling activity’
But 3 months later Jay appears to have doubled down on the aim of a 4 well program, highlighted it’s fairly expensive and indeed ‘it’s key we understand this’. To me this is very deliberate and Jay will understand the implications of him highlighting this so strongly 4-5 months into the farmout process.
As stated previously the next comments for me indicate expect a mid tier player.
Lastly I believe the updated timings are likely to be an outcome of the discussions with potential partners also.
So Newanda, a sober new year due to having young children has allowed me read a bit more. You will be glad to hear that I am now in the same page as you. Having checked both PANR and 88e's description of Winx which allowed for comparison. So based with this new mindset I carried out a quick exercise to apply a risk weighting to the Prospective Resources of each company. Applying the weightings as follows:
Alkaid/Phecda - 100% (this is just a weighting I am not saying Alkaid is a 100% certainty)
Talitha Appraisal/ Torok =50%
Everything else excluding Central/Eastern Leads - 15%
Central/Eastern Leads - 5%
This gave Pantheon Weighted Prospective Resources of between 290-357Mbls and 88e 190Mbls (post farmout)
A couple points not factored in the weighting are the higher NPVs expected due to location, rate of return on investment (not sure if this is factored in NPV calculation) and think PANR have spent more on delineating acreage (hopefully wisely). Would also point out based om DWs comments regards OIP it would appear PANR have been more conservative regards recovery rate and only factored in primary recovery (its this point that put me of track). I cant see 88e getting those returns on primary recovery alone
Of course 88e could add more in the Central and Eastern blocks and would expect Pantheon's numbers to increase with new acreage also.
Anyway thanks for playing a role in increasing my understanding and apologies for bombarding the board. Hope all had a good new year.
Newanda, I went back and listened to the Proactive Investors interview from August as I thought I could remember DW commenting on Premier’s numbers somewhere.
In this interview he confirms Premier assign 1M OIP barrels to the three Torok zones (I don’t think he meant Stellar) with 88e’s OIP numbers being slightly more. Therefore if the numbers presented as Prospective Resources are recoverable they are not applying the same methodology as Pantheon who are only factoring primary recovery in there stated recovery factors. Please note Pantheon have indicated water flooding should be applicable but not factored it in to recovery rates. In regards to 88e even the low numbers are looking at 20-30% recovery, best numbers in excess of 50% which exceeeds standard water flooding and high numbers pretty much 100% extraction.
In summary I am not trying to down play the 88e acreage rather highlight the a possible discrepancy in valuations between the two companies.
On my ‘Cenkos numbers’ rather than assign $3 to the full OIP we could look to apply a 33.3% recovery rate (achievable through water flooding) and a $9 NPV (below midpoint of $7-12 provided by PANR. As you will probably work out you get back to the same valuations for all acreage next to TAPS (everything bar Talitha exploration).
I understand your thinking regards the SPE wording. I believe potential recoverable and Pantheon’s recoverable figures may not be the same thing. The key point about Pantheon’s numbers are the only reflect Pantheon’s primary recovery, given the OIP numbers stated in DW’s Proactive interview, if indeed the 88e Prospective numbers are ‘potentially recoverable’ this is not the same number as Pantheon’s primary recovery numbers and I believe my point regards discrepancy in valuation is valid.
Anyway looks like 88e off to another good start today, good luck with both investments and happy new year when it comes
He states from 1000M OIP they will get 250M recoverable (25% recovery rate).
If the numbers are recoverable, which I am pretty much sure they are not, what recovery rate are they using?
PANR are stating 10-15% on primary recovery and between 30% and 40% with waterflooding. Pretty standard numbers for the industry? What recovery factors do 88e’s numbers assume? They don’t even know the Oil will flow full stop yet are using recoverable numbers?
Under the SPE PRMS, the generic term “resources” is used to describe all quantities of petroleum (recoverable and unrecoverable) naturally occurring on or within the Earth’s crust, discovered and undiscovered, plus those....
From olderwiser in Hotco
Using PMO who are the hardest marker on Stellar. In their half year presentation ( https://www.investis-live.com/premier-oil/5d307a239add6d1100dca1b3/onvd ) they give an expectation, of 150m barrels from Stellar, for their 60%. Which gives 75m barrels for 88es 30%.
In total they see 250m barrels recoverable, from the ~1000m barrels oil in place in the Stellar formations.
To give that some context PMO appeared to present the crude bones of their investment case, an investment case, on which US $23m is risked, will always be rigorously tested for failure, under a minimum return scenario.
In this presentation PMO pretty much only mention Charlie and Indigo as an additional potential, so completely agree Stellar is the prime target.
They are Jiddy but the drops will be the same. The share dropped 40% on opening on Winx news with your normal PI not getting a chance to sell, this could be interpreted as minutes. I think this drill has a good chance of being successful but people need to be aware of the downside. When Pro is getting accused of being a deramper things are getting out of hand.
Newanda, I know a lot of people on the 88e respect older wiser on Hot copper, if you look at his recent post it seems to be in agreement with me regards 88e numbers not including a recovery factor and therefore the discrepancy between 88e and PANR being as per my earlier post.
Please note in my ‘Cenkos note valuation’ I got an unrisked shareprice of ~£42 when using $3 per barrel for conventional across the PANR resource numbers and $1.6 for 2billion of unconventional (company mention multi billion).
If I apply the $6 value for oil nearer TAPS and Texas, I get ~£83. Texas could be low as only 157 recoverable figure used.
Please note I am in no way saying these values are achievable (please read this sentence GG). To me the Cenkos not was mainly PR, and it seems to have worked.
Cenkos don’t do Pantheon notes but if they did it would probably be............
Don’t worry George only winding you up. One thing to note is that at the time of the Oil Search deal they mentioned the cost of discovered barrel could reduce from $3.1 to $1.3 if Repsol’s gross resource estimates are used.
From my understanding the companies NPV10 range of $7-12 per barrel in the ground likely relates to reserves not resources as it would appear this is the standard way of calculating NPV 10.
Therefore in Newanda’s calcs I think if we are using $3 we should be using the gross resource number, not the recoverable number.
I think at the AGM it would be good for the board to clarify their development plans and end goals much like DW did in the recent 88e presentation. Also agree some clarity regards Texas would good. Although I don’t think there is the big conspiracy hinted by it others rather just poor operational delivery.
Furthermore the presentation should be recorded as to date the PR, although improving, is very poor. This has contributed to the big (by my calculations) difference between 88e and PANR’s valuations.
Merry Xmas George
Newanda, please listen to the Premier’s Half Year Results August presentation. You will hear the clearly talk about them chasing 1 billion OIP and targeting 150M of reserves. The reserves will factor in recoverability. He further describes market share which I believe is different terminology for recoverability (I am less sure on this).
Please note this will not affect your 88e calculations as the Oil Search deal was based on discovered oil, not recoverable oil or reserves (after 16 drills GG). I had initially thought it was recoverable but believe I was wrong . It does however affect your Pantheon calculations by a factor of 10.
Totally agree with your point on the unconventional piece and indeed Otto highlighted this after the first Icewine well, there are some slides on this on their site.
Whilst I have mentioned Otto there are two things to note:
1. There was what GG would call a real world transaction when they paid $23M of carry for 10% of the non Alkaid acreage. Please note the acreage is reduced since then but all 8Tier one prospects are still largely in place (1 prospect slightly reduced by reduced acreage). The price agreed for the Alkaid option is also worth a look, but admittedly this was not taken.
2. The Otto presentations around 2015/16 are well worth a look as give more clarity regards the location of the prospects. You will note some of them are only mapped to the border of our acreage but may well extend into 88e territory.
On the Cenkos note, I have actually ran the numbers using their methodology for Pantheon. As you can imagine the numbers get pretty big. I will perhaps look them out tomorrow just to annoy GG. Apparently one can be optimistic on a 10 bagger but a 20 bagger means you are on a different planet.
I hope GG isn’t listening to this.
Good luck Newanda, would be keen to hear your thoughts after listening to the Premier presentation, or anyone else’s for that matter. Happy to be be proven wrong.
Newanda, I don’t believe any recoverability factor has been applied to the 88e numbers. Indeed in their recent presentation Premier referred to the Magaluk 1 well as having >1billion STOIP. Furthermore in quarterly presentation Premier discussed possible recoverability ranges referencing ConocoPhillips, however at no point did they state the have applied a recoverability factor to the numbers. In the initial stages I believe all oil is considered potentially recoverable.
I should add PANR 90M is based on primary recovery of 10% and does to include secondary recovery methods let alone EOR.
GG what’s your take on it, let’s get use of that MSc
Newanda, as per my post on the other site I think the information regards timelines and carry of the farmout will be based on discussion with potential farm out partners. The talks have been going in long enough for the board to have an understanding on the direction of travel.
I struggle when comparing 88e and PANR because to me the share prices are not compatible. Whilst 88e have secured a farmout it’s not really added anything to the share price, indeed the initial reaction was negative. In PANR case we have had the flow test that all 88e members would wish for, a commercial discovery which exceeded expectations in every department in the ZOI. If we assume the Stellar plays are 88’s ZOI then success will be derisk 192M barrels, that’s less than a quarter of Alkaid/Phecda alone and in a worst location (lower NPV and longer time to first oil). I understand they have a large acreage but there has been very little seismic carried out on the other blocks. I will watch the Charlie drill with great interest and hope it’s a success, but I can only imagine the 88e shareholders reaction if after the drill the market cap is still ~£70m. Yet that is where PANR following our successful flow test. I think 88e could be a good trade into the Charlie deal but I don’t hold any shares.
I must admit I am surprised there is not more discussion on the 88e thread regards PANR I do believe there are learnings to be had on both sides. Jay could certainly learn from them on the promotional front. It could well end up we have the same partner in Premier and agree we are probably looking at a mid tier partner.
Please feel free to correct me if I have got anything wrong in my comparison and good luck with both investments.
Nobody is sweeping anything under the carpet, I don’t know any posters who are ignoring Texas. However some are willing to move on and see the opportunity which Alaska brings. Calling Jay names and repeatedly bringing up ‘cracked the code’ references achieves nothing.
The reality is since the merger the company it is a different beast. We no longer are reliant on Vision operationally in Texas and we have a whole new team of expertise from Great Bear. This has been further supplemented by the addition of eSeis, who would appear to have a good track record in Alaska given their involvement in the Alpine field and appear to have put a significant amount of skin in the game. If and when a farmout is completed (and I believe it is when) a further level of expertise will be added to the mix. In reality PANR are a completely different company from before the merger and in my mind Jay deserves significant credit for pulling of the Alaska deal. The information released by the company indicates that Alkaid/Phecda alone may have twice the amount of recoverable barrels than Texas, Talitha appraisal doubles it again. Given the new team, new acreage I think people should be looking at this as a new opportunity. If they can’t get past the operational failings of the past fair enough, but I think they are missing a trick if they don’t. Time will tell.
I believe him and the AGM will likely be in January.
Texas has no oil production due to failure to complete the wells properly.
Here’s a question MEM, what if it is true? What if the eSeis founders, who helped find the Alpine field are correct? What if the flow rates reported are true and indicate Alkaid/Phecda is commercial? What if we get a deal similar to the Otto Energy deal in 2015? What if the farmout removes the immediate concerns regards funding?
There are now a lot more people than Jay telling the story, of course they could all be wrong but what if they are not?
A number of interesting comments. Similar to previous comments made by 88e, the farminee choice will be heavily influenced by the rate at which the farminee want to develop the assets. My take is the may point to a mid-tier player.
Great to hear him confirm they are seeking a 4 well program, recent presentations had been a bit more vague, hopefully they have taken confidence from negotiations to date. This would suggest carry of at least $40M plus the additional ‘payment of some back costs’. If we assume worst case farmout of 50% then that covers the current share price and more depending on size of cash payment.
Interesting comments regards the targeted acquisitions. It would appear from previous Otto presentations that those in the South West are related to Talitha (Brookian), but will be interesting to find out what those in the North relate too. I have not seen any plays that far north highlighted in anything I have read therefore points to something new.
I will expect some to moan about delays but bar timing (which I half expected) I think it was positive to hear the 4 well program being highlighted as the target.