Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
00:52
Taximan57 – sadly, you’re entering into the realm of wilful ignorance. You wrote, “I see that you are still stuck on the market valuation of a barrel of oil, please let it go and maybe just maybe some will listen to you without ridiculing or insulting you.”
Do you honestly think I dreamed up this valuation method all by myself? This is *exactly* how industry professionals and equity market analysts value O&G assets. Thankfully you don’t have to take my word for it. Have a read of Oil Search’s official announcement of its investment in Pikka/Horseshoe in Alaska.
https://announcements.asx.com.au/asxpdf/20171101/pdf/43nvwgl0r48s95.pdf
You also wrote, “My opinion is that LONGHORN will be exactly what 88E wants it to be, a cash cow for future leases and exploration.” There is no evidence to support your belief, exactly the opposite is true, sadly. Perhaps you should have posted, “My ***hope*** is that LONGHORN will be exactly what 88E wants it to be, a cash cow for future leases and exploration.”
Maybe change this sentence too? “I also think Phoenix will not be developed by 88E but will ***hopefully*** be farmed out with a non working % retained and a lump sum. IMO.”
07:53
Taximan57 – the remark aimed at me about the value of barrels of oil and the overnight attack on Israel is contemptible. I admit to being surprised you elected to post this outrageous remark on a public forum. I invite you to apologise and withdraw the remark. You have no idea about my links to Israel, or Iran for that matter. I had thought better of you. Was I wrong?
FWIW, if I used olderwiser’s more conservative threshold for collating data-supported volumes for 88E’s recoverable resources, an 88E barrel in the ground would be valued by the equity markets closer to 30p v’s PANR’s 15.3p.
It appears you understood olderwiser’s points about the requirement to flow test individual reservoirs to definitively establish commerciality? The maths suggests you, therefore, ought to acknowledge that a downdip, lower classification 88E barrel in the ground is valued around double that of an updip, higher classification barrel in the ground. This is, IMO, an unsustainable disparity in valuation and wholly irrational.
[Part 1, see above for Part 2]
23:09
Serious question, Taximan57. Do you not feel *any* responsibility to your fellow shareholders to ensure you post accurate data and facts. Do you not think about those who read your content, who perhaps even adopt some of your content as they come to make financial decisions?
Should we not all aim to be better than this?
[Part B3, continued from Part B2 below]
Let’s be blunt. Longhorn is nowhere near to covering G&A, never mind the annual lease payments too. And that’s after investing 50% more into Texas than originally budgeted, soon to be 80% more in H2’24. Indeed, Longhorn has performed so poorly that 88E’s COO is leaving the company (29/4/24) to reduce G&A. To correct yet another error, Taziman57, I did not state “Texas is losing money”. Like Brom, I have said it is massively underperforming.
A few more corrections to finish off and to ensure your content doesn’t mislead the other members of this forum.
- When writing down a PE ratio, the accepted format is, eg. 10x or 15x. The ratio is numerical only, it’s not based on a currency as you have written.
- PANR’s CB repayments can be paid in cash or shares, at PANR’s election. Your post implies repayments must be paid in cash, which is not the case.
- I note you have correctly relayed PANR's cash at hand. What cash at hand do you anticipate 88E will possess once the operations at Hickory-1 are all paid for?
[End of Part B3]
[Part B2, continued from Part B1 below]
10:07
MysticMeg - correction. Instead of "When we announce commercial oil" you should have written "If we announce commercial oil". Aren't you the same prolific poster who reminds everyone that they don't know the results of 88E management's analysis? the same rule surely applies to you too?!
Ok, you suggest 88E will sell Project Phoenix and apply the sale proceeds to advancing Texas and Namibia. Unlike olderwiser, I am prepared to be more generous when looking at the recoverable liquids at Phoenix. For the purpose of this exercise, let's say 88E management does indeed prove up the 371,300,000 recoverable barrels as noted in their P50 best estimates. In such a scenario, what value would you place on 88E's Project Phoenix? I "get" you'd look to apply those funds to Texas and Namibia, but approximately how much are you calculating will be realised by the sale of Phoenix? You're a very prolific and forceful poster on this forum. You must surely have some sort of an estimate of the cash 88E would realise if it is to follow your strategy? We look forward to reading your valuation of Phoenix.
13:10
Hi Taximan57 - I had another listen to the Q&A video you posted. Interestingly, MD Ashley Gilbert addressed head on one of the points you often repeat about Longhorn concerning its purpose within 88E's portfolio of assets. He states that Longhorn "helps fund the G&A and leases" which "means that when we raise money all of that goes into the drillbit." I completely accept that was the intention behind diversifying into Longhorn. The trouble is that the execution of this strategy has failed thus far, and failed really quite badly.
When 88E initially bought into Longhorn, production was guided to “double from 300boepd to 600boepd by the end of '22”. Then after further investment in July'23, guidance on production by the end of ’23 was reduced to 500boepd. Longhorn exited 2023 producing 355boepd. New acreage was acquired in Dec'23 and, once 88E invests a further US$3m on two new wells after the workover program, guidance is for Longhorn to exit ‘24 producing 600-675boepd. Total investment in Longhorn by 88E up to the end of 2024? US$18.56m ($7.1m payable in shares, $11.46m in cash).
What dividends has 88E received from Longhorn since its first investment in Texas, Taximan? Previously you refused to accept the figures I quoted. I note you haven't acted on my suggestion to ask Brom this same question if you're not prepared to trust me? Why haven’t you ask Brom or looked up the answer yourself? Don't want to learn the facts? That's not the behaviour of an informed investor surely?
[End of Part B2, see above for Part B3]
12/4/24 @ 14:52
BigBear2 - couple of points. I follow your logic about repaying the CB. The thing is there's a contract between PANR and Heights Capital which means it would require both parties to agree to an early repayment. Why would Heights do that? They'd effectively be giving up for little or no consideration the upside optionality inherent in the CB structure.
I agree with you that PANR is further down the line than 88E in proving up the joint reservoirs in Alaska. You describe 88E's portion of the asset as "simpler". I disagree with that description. If you mean that 88E has invested less time and capital in appraising their portion of the shared reservoirs then that's correct. It's also correct to say 88E is miles behind PANR in data collection. So "simpler" isn't accurate, perhaps a "much less advanced stage of appraisal"?
Either which way, we agree 88E is some way behind in the journey to fully proving up the asset, agreed? Does it not therefore worry you greatly that the market is currently valuing a downdip, lower classification 88E barrel in the ground at 19p v's an updip, higher classification PANR barrel in the ground at 15.3p? How can it possibly be mathematically rational for the lower quality (Dmax and classification) barrel to be valued at a 25% premium to the one that you, yourself, describe as being "further down the line"?
12/4/24 @ 16:49
JohnWick1 - nope, no conspiracy theories....the market is made up of buyers, sellers and holders. all 25.12bn shares are free to be traded as far as I'm aware. I'm not aware any of the shares are subject to a lock up period, are you?
12/4/24 @ 18:35
Hi dorfman - happy to be corrected but I *think* Dave Wall owned c.220m shares when he exited 88E in 2021. The latest Top 20 list shows him owning 58.26m. Reduced his total exposure by c.70%? Hmmm.....
10:05
Kpasa - to address this infantile conspiracy theory, olderwiser and munnietorx could bump into me on the street and I wouldn't know them. More research, less conspiracy theories please, Kpasa.
[Part B1, see above for B2]
15:43
[Part 3, continued from Part 2 below timed at 15:43]
Ok, I had a look at the Lonestar I LLC shareholding. You'll recall this was prompted by Taximan57 drawing the forum's attention to the Top 20 88E shareholders as at 22/3/24. Along with 88E's Namibian partner (which has sold 80% of the 88E shares it was originally issued) he noted the presence of Lonestar I LLC in the Top 20 shareholders list as at 22/3/24.
Taximan57 stated that it was, "Nice to know they [MEL and Lonestar] are supporting the company and not just selling off." It turns out that since 88E announced the Texas acquisition, 700m 88E shares have been issued to Lonestar. Yet Lonestar's current holding is only 336m shares. So Lonestar has sold >50% of its 88E shareholding. Better than the Namibian partners who have sold 80% of their original holding, I suppose, but it's certainly not what Taximan57 would have had us believe.
As I say, just happy to correct the record.
It surely won't come as a surprise to anyone reading my posts of today that I'm able to highlight two other entities which were issued millions of 88E shares but which no longer appear to own any shares. The first example is SAE Exploration which received 181m 88E shares as part of 88E's acquisition/licensing of SAE's 3D seismic data. No sign of SAE in the Top 20 list.
Of course the largest recipient of 88E vendor shares has been ELKO, Erik Opstad's oil services firm. This particular holding has previously been litigated on this forum. Speaking of Erik Opstad, Brombarb still hasn't informed the forum what's happened to Erik? Mr Opstad is/was (?) General Manager of 88E's Alaskan Operations but no-one associated with 88E seems to know where he is? Maybe they felt he had assisted the company enough by a) setting the budgets for Merlin-1 and Merlin-2, b) appointing his own family oil services company (ELKO) as the prime contractor, c) operational costs coming in at over twice the budgeted amount for the drills, d) arranged for 88E to place vendor shares to ELKO as soon as ELKO's work invoices were paid by 88E, e) immediately sold all of the vendor *and* placing shares in 88E without any lock-in arrangement for Merlin -1, despite being continuously inside during every single second of operations at Merlin-1.
Perhaps he's too busy counting his money? Out of interest, have any 88E LTHs received a thank you card from Erik?
I'd forgotten about this, but just reminding the forum that Ashley Gilbert sold 33.75m performance rights/shares on or around 9/2/23. That's a nice little £200k in Ashley's pocket. What is it about 88E that means its own Managing Director cannot be persuaded to become a shareholder? Even when the company raised fresh capital at 0.23p in November '23, he opted not to support the fundraise despite his hefty salary, his bonus taken in cash and his sale of £200k worth of performance rights earlier in the year. Jeepers.....what on earth is he trying to tell us?
[End of Part 3]
[Part 2, continued from Part 1 below]
12/4/24 @ 00:33
Hi Taximan57 - just politely pointing you in the right direction for the future. PE ratios aren't an effective tool to comparatively value E&P stocks, especially those whose primary/chief activity is the E rather than the P. The industry-accepted methodology is to run a model called a risked/unrisked NAV. Generally, this is what City analysts use to assist them in coming to a fair value for E&P stocks.
You may have read me referring to such a valuation method on this forum? Helpfully, 88E management does publish CoGS (Chance of Geological Success) although I have never seen them issue guidance on Chance of Commercial Success. I'm happy to be directed to CoCS for 88E's Alaskan assets if I'm mistaken.
Ok, what now? Shall I have a look at the Longhorn shareholding next?
11/4/24 @ 12:53
Hi Taximan57 - I recognise the point you were attempting to make with this post. You were referring to the Top 20 88E shareholders as at 22/3/24, where you noted the presence of 88E's Namibian partner, MEL OIL AND GAS EXPLORATION (NAMIBIA) PTY LTD as the ninth largest shareholder in 88E. You stated that it was, "Nice to know they are supporting the company and not just selling off."
The trouble is you have not accurately described MEL Oil and Gas's shareholding and share sales. I'm sure you didn't do this deliberately so I'm happy to correct the record on your behalf. Since signing the Namibian deal, 88E has issued 720,094,742 shares to MEL Oil and Gas. As at 22/3/24 MEL held 144,147,513. Thus MEL has sold 575,947,229 shares, which equates to 2.3% of the SOI for 88E....or 80% of the 88E shares issued to MEL.
As I said, not quite the point you were attempting to convey to other members of this forum.
When I was looking into this matter, I couldn't help noticing the vast number of performance rights issued to 88E employees in January '24. 84.6m shares awarded on 12/1/24 (and a further 700k on 29/2/24 fwiw). That's a cool £200-250k awarded to management. If those performance rights were awarded to one person, or even two people, you'd expect them to just about creep into the Top 20 shareholders. Let's have a look.
Huh, that's odd. I can't see any management or board members listed in the Top 20. Hmmm.....I wonder who received the shares (via performance rights) and if they still own all those shares today? I doubt it, don't you? Especially as ***every single member of management*** elected to take their bonuses in cash, not shares. Yes, 88E management received bonuses in 2023!
In fact share ownership by the directors and management of 88E is, bluntly, pathetic. Only Dr Staley owns shares (14.4m).
Wait a minute, what's this? MD Ashley Gilbert owns/owned 80m performance rights at at the 2023 year end. I wonder if it was Ashley Gilbert who was issued the shares in January, post balance date, and maybe sold all/some prior to the Top 20 shareholder list date of 22/4/24?
No doubt 88E shareholders will contact the company chairman to ask why it is that no-one within 88E, apart from Dr Staley, wishes to own a single share in 88E. Surely they'll ask him, in the spirit of transparency, who within 88E benefited from the performance rights/shares issued in January and why it appears they have sold them shortly thereafter.
11/4/24 @ 22:05
Hi Taximan57 - you've got the definition of a cash cow wrong, I'm afraid. For your future reference, in financial terms a 'cash cow' is "a business, investment, or product that provides a steady income or profit." Longhorn was intended to be just such an investment for 88E but sadly, as Brombarb confirmed a while back, it has turned out to be quite the opposite, ie. a financial drain on 88E.
[Part 1, see above for Part 2]
10:31
MysticMeg - do you honestly believe what you've just written in that post? It means that you don't believe the conclusions of the analysis carried out by 88E management. It means you don't believe in the data collected by 88E's own employees and contractors last season when Hickory-1 was drilled and logs/cuttings analysed. It means you don't believe in the science behind seismic analysis.
It means you're trading on hope, on fantasy and that you are rejecting established science.
It means, Mystic, that you're just lashing out because you have absolutely no comprehension about what it is that you've invested in.
Buy/sell/hold 88E but MysticMeg is completely uninterested in the scientific data and has zero connection with the facts of the investment case. If you read this morning's exchanges with MysticMeg and still opt to attach any weight to his fantastical claims then......
09:48
MysticMeg - please take 60 seconds away from your phone/keyboard and really ask yourself if the following is the truth, ok?
It's not olderwiser who is "throwing ridiculously low numbers our way." It's 88E management's own official guidance which olderwiser is highlighting and then explaining what it means when viewed through the eyes of an O&G professional who has done this exact same type of work for decades.
Please forum - instead of shouting down olderwiser, ask him questions. Ask him where he found this information. Look how he interacts with taximan57. When taximan57 asks a factual question, olderwiser walks him through the answer.
All this nonsense about billion barrel discovery in Alaska....it's hokkum. 88E's own management doesn't believe it but it cravenly amplified the nonsensical Next Investors article on their Twitter account.
Ask yourself if olderwiser was just making stuff up, why hasn't someone like Brom replied with a silver bullet of data which proves olderwiser was inventing numbers out of nowhere? I'll tell you the answer.....it's because olderwiser is telling the truth and you're all so full of hope and (understandably) defensive about the cash you've invested that you're not listening to the facts olderwiser is highlighting. Note ***highlighting***, not "throwing made up numbers at us".
Breathe and think.
23:01
Spot on, JohnWick1. It's your cash therefore your call to invest it as you see fit. What you're not entitled to do, none of us are, is to disseminate false and misleading information in order to dishonestly secure financial gain. A large number of this forum members do this on a daily basis.
Isn't it interesting all the angry emotions directed at olderwiser, rabito79 and me....and yet not a word of concern for all the naïve, credulous newcomers these posters wish to ensnare in their attempts to deliver their trading profits? I can't recall a single post form a member of this forum expressing sympathy for those folk who lost their life savings (see 88E's Twitter account) when spiked at US9.2c by all the dishonest social media hype. And we know it was an organised campaign because Steven Gallagher was found guilty of conducting this exact fraud.
22:05
Hi taximan57 - jeepers, are you actively trying not to understand what the word "comparative" means within the term "comparative valuation"??!!
No, PANR is not worthless if 88E's Phoenix is valued at £58m. You know very well I used PANR's implied value per barrel in the ground to arrive at a value for 88E's Phoenix. Thus, if Phoenix is valued at £58m today then PANR's value is a minimum of £338m.
Preposterously, you continue to write posts in which you maintain the profoundly anti-science stance that an 88E barrel at Phoenix has the same value as a PANR barrel in the updip portion of the shared reservoirs. You point blank refuse to do even the barest minimum of research into Dmax and updip/downdip. Your refusal to educate yourself is unfortunate but ultimately your call. Your refusal to cease misinforming the readers of this forum in the face of industry-accepted data is unethical and dishonest.
I'm also concerned you do not understand the cashflows or dividends due to 88E from Longhorn. I suggest you ask Brombarb what dividend he anticipates receiving from Longhorn in 2024 because I laid it out and you've obviously decided my calculations are wrong. In order that you make an informed decision for yourself *and*, more importantly, don't misinform the other readers of this forum, you should ask Brom if your Longhorn calculations are accurate. Bluntly, you're dead wrong. You can continue thinking what you wish, untethered to facts and accurate modelling, but you must surely feel a responsibility not to misinform others?
Commercial Flow. Yet another correction required, I'm afraid. 88E has clearly stated they will assess whether the SFS flow test meets the threshold for commerciality and revert back to shareholders. Quite reasonably, they'll likely repeat that advice when publishing the initial data from the SMD flow test. PANR, OTOH, has completed its analysis of the flow data from Alkaid-1, Alkaid-2, Talitha #A and Theta West-1 and formally declared its assets to be commercial.
You suggest waiting for the SMD flow test results and afterwards the equation (comparative valuation?) may become "easier to make sense of". For the record, I ***already*** assume the SMD flow test is successful in my model. You know this.
16:42
Hi TheWetBandits - bot here. Something that so many on this forum refuse to acknowledge is that PANR has ALREADY delivered the "good results" that you're expecting to receive from 88E in the next few days. The market has subsequently decided that a PANR barrel in the ground is worth 15.1p. Right now, today, an 88E barrel in the ground is valued by the market at 19p, fully presuming the SMD flow test is successful.
*If* the SMD flow test is successful (and I 100% hope it is) and *if* the market reacts by increasing the mkt cap of 88E then that is a speculative bubble with no basis in the fundamentals as previously established by PANR's data (PANR's data is greater in volume and of higher quality due to > years of experience on the asset, plus 3D seismic plus more data points/drills).
That means that an 88E investor/trader is not only relying on a successful SMD flow test, it is also relying on the market reacting with sufficient positive sentiment/emotion/unwarranted upside speculation that it delivers a profit to today's price. It *might* happen that way but evidence thus far this winter season suggests the naive first time buyers aren't around in sufficient numbers to deliver such an outcome.
Enjoy the party, but dance close to the exit.
PS Stop with the "But PANR has debt p$sh. Google "debt for equity swap" and "fully diluted". In so doing you will understand you can compare the capital structures of the two companies on an equal footing.
Part 2, continued from Part 1 below]
12:07
Stas20 – I have zero problem with your “fast follower” theory. To complement my earlier answer on this matter, let’s just say 88E management reckon the gas at Phoenix is worth a fortune and they’ll just sit on the acreage until they can sell the gas into the pipeline. I reckon they’d have to drill a couple more wells to achieve the threshold of data required to guarantee the required amount of gas to the pipeline, don’t you? Shall we call that US$40m of further investment? Then wait for, say, 5 years until first sales? How is 88E going to fund it’s US$15m commitment to Namibia? Longhorn is still nowhere near funding G&A so shareholders can’t look to that asset to provide the answer. Once again, I look forward to reading your response and your guesstimate as to the % dilution 88E shareholders would inevitably face to execute successfully the strategy of “fast follower”.
12:53
taximan57 – not quite right about the bond holder over at PANR. Heights Capital will likely have a semi-permanent short position of 0.5% to hedge their downside risk without being declarable. During the quarters where PANR has elected to repay the bondholder in shares, the evidence suggests they spread the selling pretty evenly across the defined period in which they’re permitted to be sellers under the terms of the bond. This smoothing out of their selling in this manner is the selling equivalent of dollar cost averaging. Where I think you’ve got mixed up is that PANR’s FD highlighted the fact that Heights has supported PANR’s two most recent fundraises by investing in the placing. There was no expectation Heights would retain the shares after the placings; rather it was to show the market (especially buyside institutions) that Heights was supportive of the Board’s strategy. It worked on both occasions.
17:02
Hi B1ll – guess we’ll have to agree to disagree in that case. No worries. /end
[End of Part 2, continued from part 1 below]
08:09
Stas20 – to be crystal clear and not wishing ever to be misquoted, *if, and I repeat *if*, PANR finds it difficult to access external finance then the sole logical progression from that scenario would see 88E having 10x more difficulty in accessing external capital due to the relative weakness of its asset v’s PANR’s. You may think you’re making a strong point in favour of 88E but it’s clear you haven’t thought this one through.
That is why the risk/return contained within the two investment cases is heavily in PANR’s favour and why it makes no mathematical sense whatsoever for a downdip, lower classification 88E barrel in the ground to be valued by the stockmarket at a premium to an updip, higher classification PANR barrel in the ground. This value differential will not remain into perpetuity. It never does. In fact, I contend the market’s reaction to 88E’s winter season this time around means that, IMHO, the market has already started to recognise this irrational value disparity.
08:28
Stas20 – if this is a genuine answer to Rabito79’s post timed at 08:24, then you’re in big trouble because you’re embarrassingly misinformed about the O&G sector.
11:40
Holy guacamole! C’mon Stas20 and MysticMeg, this is GCSE level stuff here. I’m almost scared to ask you both the following question, but here goes!
Q1)
Company A has 1m shares and they’re trading at 100p.
Company B has 100m shares and they’re trading at 1p.
You’re only permitted to invest in one company….which one do you select?
Q2)
Company X has 1m shares and they’re trading at 97p.
Company Y has 1bn shares and they’re trading at 0.098p.
Company X and Company Y own exactly 50% of the same asset, each half of the asset is identical to the other. You’re only allowed to invest in one company. Which one do you select? I await your answers peering nervously between my fingers, lol!
11:51
Stas20 – I follow the point you’re making in this post. Ok, let’s examine your scenario where an existing PANR shareholder is diluted by 50% in order to raise sufficient capital to start commercial oil production and self-finance the rest of the Alaskan projects.
Same question to 88E? Firstly, how much capital will be required for 88E to move to first commercial production of oil, sufficient to then be self-financing thereafter? Using that figure (and be sure to show your working!) kindly inform the forum of the dilution 88E shareholders will be required to reach that point?
Look forward to reading your calculations.
[Part 1, see above for Part 2]
Readers of this post can react to what I say about market makers - I care not a jot if you believe me or not!
I sat beside market makers and sales traders for years. I am not exaggerating for effect when I state that I cannot think of one market maker I worked with who could point to Anchorage's location on a world map, never mind Deadhorse.
There is no conspiracy. Market makers react to volume and price, and the intensity of that volume. They invariably rely on analysts/corp brokers/sales people to interpret the underlying meaning of price moving news contained in RNSs. Nope, they get the purest of market reactions by doing something really basic. They look at the reactions of stas, taximan, neversatisfied, Gman, Brom, chrisev1 as their orders to buy and sell come in and that tells them in which direction the market is likely to move.
Remember everyone - you *are* the market. There's no conspiracy enriching market makers. There's just the market.
15:45
Stas20 - to answer your points in turn:
1) Yes, 88E has a lower mkt cap than PANR. That is factually correct. However, and this is an error to which you recommit every single day, at current SPs a potential partner would be paying an irrational premium for those 88E barrels in the ground v's higher quality PANR barrels. There's no executive team in the OFS sector who would expect to keep their jobs if they presented that idea to their BoD, lol.
2) Ok, you're now talking about an external party bidding for 88E in its entirety. That wasn't the subject at hand but let's give it a look, shall we? I'm going to pose some questions to you directly and I'll give my answer in brackets. I look forward to reading your considered responses.
- What value would you place on Umiat? (scot126 - £0)
- What value would you place on Peregrine? (scot126 - £0)
- What value would you place on 88E's share of Namibia? (scot126 - purchase consideration so far of £2.4m)
- What value would you place on Leonis? (scot126 - £1m)
- What value would you place on Longhorn? (scot126 - £6.3m)
- What value would you place on Icewine? (scot126 - £0)
- What value would you place on Phoenix? (scot126 - based on my assessment that an 88E barrel should be valued at or below a PANR barrel in the ground, Phoenix valued at £56m)
SOTP for 88E using scot126's calculations = £66m v's 88E's current mkt cap of £85m => 88E is overvalued by the market, its fair value is 0.26p per share. I await your counterpoints?
3) There is no data to suggest the quality and quantity of 88E's oil at Phoenix is of a "similar" value. All available data suggests the value of a downdip, lower classification 88E barrel in the ground should be lower than an updip, higher classification PANR barrel in the ground. Happy for you to point to any seismic or drilling data which counters that conclusion? Hint - there isn't any.
4) I'm aware of the concept and often adopt it in my own life!! The trouble with this concept when we apply it to 88E and PANR is that the empirical data collected thus far suggests the quality of 88E's downdip portion of the shared reservoirs is sufficiently below that of PANR's that, without the proposed gas pipeline, 88E does not achieve the threshold required to develop the asset.
No dodging this response, Stas20. Time to engage properly. Looking forward to reading your assessment of the value of 88E's portfolio of assets.
[Part 2, continued from Part 1 below]
10th April @ 22:47
Hi WAGANDTER – thank you for your post. I *do* understand the plea you are making. I would respectfully reply that it’s brilliant to have a debate and to clearly express one’s opinions/views/assessments, etc, etc. The issue, IMHO, is that to have a constructive debate all parties must, at the very minimum, agree on the foundational *facts* of the debate. I put it to you that despite multiple attempts referencing the empirical data, there is a large and noisy cohort on this forum who not only refuse to engage and agree on the empirical facts, but who are overtly hostile towards those who seek to inject facts and truth and expertise and decades of experience into the debate. All that said, thank you for your thoughtful post.
06:52
Hi taximan57 – good question about the Ahpun East acreage PANR picked up in SoA lease sales in December ’23. PANR confirmed that they bid for those specific leases because the reservoirs could be accessed using long lateral wells on pads located to the *west* of the Sag River. You’re quite right to have relayed the reason they didn’t bid for leases any further east. Such lease blocks could not be accessed from the Dalton Highway and would necessitate huge infrastructure spending of roads and bridges from Deadhorse, 20 miles southwards. As Bob said, PANR has more than enough to be getting on with for now!
07:35
Hi taximan57 – I note your point about potential opposition to the proposed Alaskan gas pipeline. I’m sure you’re correct on that front. I don’t dismiss it as a risk. That said, it is worth bearing in mind that the Federal government and the State of Alaska administration are both supportive of the gas pipeline. The US is a litigious nation, no question about that. However, the presence of existing infrastructure operating safely since the 70s (TAPS) and the support of the Feds and state govt *ought* to mean the project will be constructed, subject to finance. But I certainly take your point.
[End of Part 2]
10th April @ 17:48
Hi taximan57 – noted, with appreciation, that you took the time to listen to PANR’s webinar yesterday. That said, it continues to bewilder me that you simply refuse to educate yourself about the effects of Dmax and the downdip nature of 88E’s portion of the shared reservoirs v’s PANR’s updip portion.
In what possible scenario in the real world would you even imagine an OFS company say to themselves, “For X,Y,Z reasons we have decided not to enter into a vendor finance arrangement with PANR. Tell you what though, let’s instead try to come to an arrangement with PANR’s southern neighbour. Yep, we viewed PANR’s data but we’d rather *increase our risk* and *reduce our potential reward* by doing a deal with a company whose asset is located downdip of PANR’s; whose asset is subject to greater Dmax effects in an already tight-ish formation; whose asset is at least 7x-10x smaller in scale; and whose asset has considerably less data supporting its potential commerciality – data which will take years and hundreds of millions of dollars to match PANR’s.”
Taximan57 – if you’re not prepared to open your mind to the empirical fact that 88E’s portion of the shared reservoirs is both smaller in scale *and* of lower quality than PANR’s portion then I contend you are placing your head in the sand and wilfully keeping it there in the face of voluminous evidence of your miscomprehension.
10th April @ 17:52
Hi taximan57 - no, that’s an incorrect interpretation of what PANR’s Exec Chairman said. Strongly suggest you re-listen to the webinar in its entirety.
I may as well address the whole PANR/88E merger/JV/partnership debate now. I think we can all agree there’s limited capital going around, yes? There is no scenario I can imagine which would see PANR allocate a single dollar of capital to developing 88E’s Project Phoenix. Why would they? Their first priority *must* be to appraise and develop its own larger and higher quality asset prior to diverting a single dollar to the lower quality assets owned by a neighbour.
The only, I repeat only, scenario where it *might* make sense for some sort of tie-up is if/when the Alaskan gas pipeline proceeds and is built. Even then, PANR has more than enough gas of its own to be thinking about a 20 year supply agreement with the AGDC. taximan57 goes on to post that the gas pipeline would benefit 88E. As olderwiser has suggested, correctly IMO, construction of the gas pipeline will be crucial to 88E’s continuing presence in Alaska, whereas it’ll be an added bonus for PANR. PANR’s project succeeds if it produces only liquids. 88E *need* the gas pipeline for Phoenix to be worth pursuing on an active, operator basis.
[Part 1, see above for Part 2]
Oh Brevarthan/Troughsnout - did you see the directors all laughing at your pseudo-science explanation of why PANR will need to retain all associated gas to ensure the producibility of the hydrocarbon liquids?????
You just make stuff up and throw it at the wall hoping some will stick. The PANR BoD are wise to your nonsense now. Go cry to Pete and Tom and be sure to increase your short tomorrow. Make sure it's a full unit, won't you?