The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Disappointing results as we all know.
Not over yet. Still have Icewine conventional and unconventional which was the initial reason LT investors joined. Yukon/peregrine are and were side projects.
It’s time we had a proper roadmap and plan for icewine. BOD need to target alpha and Charlie next year
The RNS is simply an update as to where they are with positive results during drilling to move on to next stage. Nothing more....nothing less. People interpret words on a document differently coloured by emotion/previous experience.
Difference between this year and previous is there is less ambiguity and updates only at the end of each stage (remember what happened at Winx). It also makes it difficult for traders so wild swings on a daily basis are less likely this year. I definitely don't see the pre results peak of last year occurring again but Im not bothered as I hold for fundamental reasons.
I think the traction this company has got over the last few weeks has set a new baseline. Plenty of people including those in OTC marker will average down. As Brombarb says the ASX are matched trades so those who invest for fundamentals may be seeing a good opportunity.
I think the RNS wasn't outstanding by any means but confirms more work needs to be done (unlike a failure like Winx). Catalysts going forward:
Final Peregrine well results and volumetric data
Charlie farm out
HRZ farm out
Yukon farm out
Capital raises will be needed as per usual but I think if you are investing in fundamentals the future is still bright here. Short term fluctuations are painful to watch but until there is actual bad news I won't be selling
Since the American market isn't a true exchange how does the OTC manage demand and supply when both AIM and ASX exchanges are closed?
Anyway its been a crazy couple weeks! We are now beyond the broker price prediction of a Merlin success! Amazing what sentiment does...
Long time since I have posted anything! My worry is that the volume of trading on OTC markets is leading to a potential volatile situation in the short term. Good or Bad there will be huge swings up and down as I doubt most of these new investors are holding for the long term Charlie and unconventional play.
There is a massive dissociation between the current hype and the reality. Although I would have never envisaged selling my shares if it was good news I feel I should do as there will inevitably be an almighty crash as none of these Reddit traders are going to hang around through the summer and autumn of no activity!
I don’t think the market will move till another farmee partner is announced. Good news is that Charlie conventional isn’t dead.
Prob best they wait till 20/21 season for the next icewine drill - covid and low oil price environment make it a much riskier prospect for this winter.
Hopefully Peregrine will entertain us this season!
If XCD leases end up being productive then malamute energy may be the next take over targets. The Umiat well that LINC energy drilled got 250 barrels/day of sweet oil from their vertical well. They had plans for 50,000 bpd production before oil downturn, financial penalties and subsequently going in to voluntary administration
XCD released a statement on the harpoon well drilled by CP.
https://hotcopper.com.au/documentembed?id=uOMxKKzFkiWRTLKhOROKAxjvTDYD5Am7zxGZuPR9ke92GA%3D%3D
Looks encouraging for 88e if bids are accepted by XCD shareholders
My thoughts regarding this takeover:
There will be around 15% dilution for about 40% addition of acres with another potential 1.6bn barrels of oil
88e's potential projects are still Yukon, HRZ and conventional area A, B, C and now D (takeover acres)
Future farm-out for Yukon with jade/Exxon?
Future farm-out for HRZ
Future farm-out for conventional with improved dataset and revised resource estimate
Dave will want similar terms to he premier oil farm-out i.e. 100% funding with mutual benefit but I doubt he will get it this time. Might be a 80:20 split this time.
Charlie well was disappointing (so far) but if it improves the risk calculation for next well placement then that is the silver lining.
Covid and current oil macro outlook may mean that farm-outs are deferred for a year and the next drilling occurs 21/22 season. Capital raise at the end of this year is inevitable but necessary for admin costs.
88e shareholders have incomplete information regarding this deal so best not to react positively or negatively at this point. The strategy of the BOD has not been communicated to us at this point but I'm sure will be in future announcements. After the announcements over the next 4-6 weeks it might be an idea to submit another Q&A document to Dave. Hopefully there will also be a forward strategy plan announced for the next couple years. I anticipate that any future drills will be via farm-out covering 100% costs as going to the market in the short/medium term to raise capital is very dilutive in current climate. Hopefully the world stabilises by 2021
Thanks Moneyhawk. That makes sense. I wonder what is included in B and C?
Nevertheless DW has given away 70% of 88e share on a small area in order to give us a much better bargaining chip for the rest of conventional if successful. I don’t think we could have asked for anymore.
It’s just a shame the market does not see that. Q1 2020 is going to be interesting! Let’s see what news awaits us regarding Yukon and unconventional before Q12020
Is it clear to anyone how much of the 2.2bn net to 88e is included in areas A B and C? There is nothing in presentations of past. Charlie prospect in area A has only got a recoverable amount of 163m barrels net to 88e.
PMO state that there is 1bn oil in place but this is not all recoverable. Even at an optimistic 30% recovery that leaves the majority of our conventional oil still in our hands i.e we haven’t given much up even at 30% free carry.
I'm not sure Shell is the best partner for Alaska other than being tier 1. They seem to have bad experience with offshore alaska drilling and little experience on shore.
CP seem to be the most experience at getting results in the area on shore!
https://www.adn.com/energy/article/shell-alaska-timeline/2015/09/29/