Firering Strategic Minerals: From explorer to producer. Watch the video here.
I think that every investor in GGP will owe you much more than a drink for all your input Paddy. Not only does it give us confidence but confirms just how aggressive Newcrest are being in bringing this monster to fruition. Knighthood at least when we all become much wealthier.
As you point out Paddy, there does appear to be lots of activity towards the centre. I wonder if that could be in order to fill in the drill spacings in order to calculate the JORC maiden estimate, as they are extremely strict on the maximum spacing between holes in order to publish an accepted resource statement. Perhaps they have allocated a couple of rigs to continue exploring the outer limits whilst the remainder do the infill drilling. Only time well tell.
Keep the faith and stay safe.
I wonder what proportion of the re-entry to R3 will be paid by BP. If I recall correctly, in the intial agreement, BP were to have already brought R3 on stream prior to us taking control. Are they now going to argue that that should only pay the 40% proportion that they are drawing from the well. SQZ should be argueing that had BP carried out their obligation initially, then we would have been much more profitable over the last few years because of the extra boepd and as such should fund the whole cost. Somehow I think that BP's response may include two fingers.
As for Eigg, I am keeping my fingers crossed on that one because of it's proximity to Rhum and it was never explained why we were awarded it out of the normal licencing system.
Another long shot is Namibia if we do eventually get to farm out to others to cover the costs, it is in what is turning out to be a highly successful area.
Hi Mommur, BP had planned and were intending to re-enter R3 a number of months prior to SQZ taking control. However it was implied that they delayed/cancelled that because of the Iran connection and their need to keep their relationship with the American administration sweet. On taking control, SQZ did state that they were studying the method that BP had planned and may use a different method. As you say, it isn't a straight forward re-entry but I very much doubt that they would be proceeding if they didn't have the confidence of succeeding. If the procedure wasn't successful it is highly unlikely to affect the other side of the well any more than it did initially.
Stay safe.
Hi upmega, I am certainly not an expert oil man but I would be extremely surprised if there was any chance of that. The R3 well is away from 1 and 2 in a different part of the well, as it shows on the website. They did state on a few occasions that they were looking at a way to re-enter R3 and they have proved themselves to be some of the most professional operators in the NS, so I put my faith in their judgement. That part of the well is apparently the more productive part of Rhum and whereas I have been using 7,000boepd in my calculations to be conservative, I personally would be surprised if it was not greater than that.
i sasa, I'm confident that the two, R3 and Colombus will be completed and producing by then. In the results they did give guidance dates and historically they have tended to err on the safe side and usually beat expectations. However as you say, there are lots of variables and each of us will have our own idea as to where prices will be for oil and gas, and even all in costs. I am working on the minus 10% figure that they have already identified for costs but think that it could be even lower once the extra flow goes thro' our rig. I am assuming by 2022 our pe will be at the minimum of six, which when you come up with an expected profit, leads to a very healthy SP.
Keep the faith and keep safe
Hi NewKOTB, spot on there. So many oilies are either rushing to abandon the North Sea or are geared up too highly in this climate to even consider bidding for more fields in the knowledge that not only have they committed to paying back their borrowings but usually at quite high interest rates. If they need to re-negotiate those borrowings then it is usual for the lender to hike those rates even higher. Wasn't it Warren Buffet who said that "it's only when the tide is out that you realise who's been swimming naked". Some of those may even be contemplating divesting in order to repay debt. As you say, a good time to deal at an attractive price.
Keep safe
Hi sasa, many thanks for your comments, I know we have both been holders in SQZ for a similar period and am aware that, in the main, our views are generally similar.
One thing that I purposely missed from last nights posts, was that when and if you calculate the profits that the company will be making after January 2022, it is then up to the individual to work out their idea of what the pe will be to derive at the share value. I know what I believe to be a lowish pe, and that will give a share price many times that of where we are currently. Add to that a dividend at many times the 3p that hopefully will be passed at next week's AGM, even if that is paid at a similar ratio to the current proposed one which has been stated to be low because of the environment which we find ourselves in.
Otherwise, keep safe and avoid those nasty little virus's (or are they virii)
Hi NewKOTB,
Thankyou, yes I am fine and so far have managed to avoid this nasty virus, hoping that the same applies to you.
I understand your viewpoint on Kate, however my thoughts are that when previous deals have been sealed, we were a much smaller company with less than 10% of the staff that we have now and certainly with a minute fraction of the activity that our company is undertaking. The senior directors would have had to be more flexible, bet at times they even made their own brews. Don't forget in the near future, two more wells are to be brought on stream.
They cannot carry out all the functions themselves that they did previously and I'm hoping that Kate is on board to take some of the weight off their shoulders in her speciality. We are now definitely in the mid tier group of oilies and I'm hoping that they have set a target to achieve way in advance of where we are currently.
Only timer will tell, but I do feel comfortable and relaxed with how the BOD have so far built this company and as I said earlier, pray that they continue to do so for a while yet.
We all have our own perspectives and plans of when to exit, and should always respect other's views even when they may be contrary to our own.
Keep safe
My personal preference is for Serica to remain independant until at least 2022 when I believe the true value will begin to show. As for an amalgamation with RRE, the only commonalities I see between us are that we are both very well run companies, cash rich and both have a presence in the North Sea. Serica prefer to own and operate their own fields, have the experience and expertise to reduce (in the case of BKR vastly so) the all in operating costs. Whereas RRE seem to buy smaller shares in fields operated by others.
Just as am exercise, why not calculate the money that SQZ will be printing from 1st Jan. 2022. By then we shall have 100% of BKR at 54,000 boepd, Erskine say 3,000, R3 at around 7,000 and Colombus at 4,000. So with known knowns we shall be producing around 68,000boepd, I have higher hopes for R3 and who knows whether by then we could have taken over more production and made a discovery at Eigg. I am hoping that Kate has been brought on board for aquisition(s) and not disposal.
We have been told that a 10% saving in operating costs has already been identified and by then the extra throughput through our rig should reduce that further. The biggest unknown is just what the price of oil and gas will be, but our BOD have declared that they believe that gas will show an upturn, however we shall still be making healthy profits.
As a long term holder (now over ten years) I woulds prefer to wait 18 months for value to show that take a quick mini profit now.
HI Tiggerman, I was beginning to think that I was alone in thinking along the lines that you wrote, having read a number of the posts on here expressing expectations of imminent takeover bids of many times our current SP. Not only would the Newcrest BOD have great difficulty in justifying such a bid to their shareholders (I can't even recall a takeover bid that has been as high as double an SP and I have been investing for over forty years) but I truly believe that Newcrest will want to form a strong relationship with GGP and let allow us to identify other potential "hits"
My personal opinion is that when we are into 2022 and drawing 100% from BKR and have R3 and Colombus on line, plus by then the cost of production per boepd will be South of the current cost, then the dividend will be well in excess of your figure. With the caveat that oil and gas prices do not fall thro' the floor in the meantime.
Stay safe
Hi upmega, there is every possibility that SQZ will issue an RNS update prior to the AGM on the 25th of June. There is no obligation for them to do this but our BOD do appear to like to keep shareholders updated.
You are probably correct Paddy, I had initially read it to infer that there was no mineralisation beyond those points which seemed strange as it clearly declares that it is still open to the North East. Strange though and maybe cleared up in interview tomorrow.
Hi again NeawKOTB, I believe that our uplift from 2020 will be even better than the 12 to 14 thousand boepd. When we had 50% of production, we drew 27 thousand barrels from BKR, therefore on 100% we should be around 54 thousand, then add in Erskine, plus as you say a conservative 7 thousand from R3 (even though we believe that part of the well exceeds R1&R2). From Colombus I am expecting 4.000 boepd for our 50% share. Possibly by then we shall know if Eigg will be a producer and as you suggest a strong possibility of a deal from left field, who knows? Even on knowns from above, we may well be producing 68 thousand boepd from 1st Jan 2022, which is why I personally would prefer us not to be taken over prior to then, when we will be a true cash cow and hopefully on a much higher dividend.
Hi NewKOTB, just a quick point or two on your calculations. Firstly the BoD have said that they identified another 10% of savings on production cost, now although those will not take immediate effect, they are no doubt currently falling from the 12.60 towards that saving. Secondly, and more importantly, the production figure you used is the 2019 figure when we were on 50% and now we are receiving 60%, so effectively a 20% increase on the BKR production.
So all good news.
Stay safe.