Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Time to update the comparative valuation for an 88E barrel in the ground v's a PANR barrel in the ground, taking into account the new SOI for 88E (fundraise shares plus shares issued to Namibian partner).
Assumptions:
cable = 1.25
PANR CB = US$27m
PANR closing price = 33.6p
88E closing price = 0.165p
88E new total SOI = 28.9bn
88E CoS for SFS = 50%
88E CoS for SMD = 81%
SoTP for 88E: Leonis £1m; Namibia (updated cost of acquisition) £3.136m; Longhorn £6.3m
A downdip, lower classification 88E recoverable barrel in the ground is valued by the market today at 14.5p.
An updip, higher classification PANR recoverable barrel in the ground is valued by the market today at 14.0p.
Frankly, this is a bewildering outcome. *If* you earnestly believe 88E is fairly valued today, or even undervalued, then mathematical logic suggests you should consider PANR is vastly undervalued. This is not only due to the 0.5p disparity in implied value per recoverable barrel in the ground. The market *must* also, whether in the short, medium or long term, recognise the value of PANR's higher classification of barrels, ie. the percentage of contingent barrels and, crucially, the labelling of PANR's two oilfields as commercial by PANR management *and by Schlumberger*.
Regular readers will be aware I have been more generous to 88E in calculating its number of recoverable barrels than others would have done. Reviewing the disappointing flow test data, I will now recalculate the value per barrel in the ground for 88E except this time I will reduce the CoS below that of 88E's management's pre-flow test guidance.
SFS pre-flow test CoS guidance = 50% scot126's post flow test CoS = 35%
SMD pre-flow test CoS guidance = 81% scot126's post flow test CoS = 40%
Revised value per 88E barrel using *downgraded* CoS for SFS (from 50% to 35%) and SMD (from 81% to 40%) due to disappointing flow test results would see each 88E Phoenix recoverable barrel in the ground valued at 19.9p. Note that I am not using olderwiser’s Netherland Sewell “shrinkage of BFF” thesis as a readacross. Had I applied olderwiser’s analysis, an 88E barrel would be valued well in excess of 25p. I have kept the NSAI BFF P50 estimate at 102mmbo (net of W.I. but pre-royalties).
As I made crystal clear previously by using these words, the following is "not advice."
*If* you wish to retain your exposure to the shared stacked reservoirs which make up Phoenix/Ahpun/Kodiak then the market is offering you a truly bizarre (IMO) opportunity. You can sell a higher valued, downdip, lower classification 88E recoverable barrel in the ground for 14.5p and buy an updip, higher classification PANR recoverable barrel in the ground, labelled commercial by management and Schlumberger, and with much more data collected, for 14.0p.
The irrational disparity between the value of the barrels is only enlarged when incorporating the disappointing flow test data. Make of that what you will.
Taximan57 - you posted the following sentence earlier today: "Derampers, you must be very proud of your achievement, we LTHs have lost out yet again."
You know what, taximan57, I genuinely believe that's how you think. Reading your content over the last period that sentence is entirely consistent with the naïve manner in which you view the stockmarket. How dare you accuse fundamental investors/analysts like me of being "proud of [our] achievement".
taximan57 - when are you going to wake up? Losing an uncomfortable percentage of your investment in 88E doesn't seem to be causing you to reflect. How about you reflect on the amount of research you did about 88E before you hit the "buy" button? How about you reflect on the conduct of 88E management and BoD who are your employees? How about you reflect on the voluminous unscrupulous posters on social media (including a convicted fraudster in the USA) who have waged a campaign of misinformation to hook the less informed, unsophisticated investor into the 88E investment case? How about reflecting on the frankly childish and vulgar behaviour displayed by many prolific posters on this forum who, despite knowing the fundamentals as well as I do, refuse to engage on the ***facts*** of the investment case with those who are seeking the truth?
And specifically for you, taximan57, how about an apology to posters like olderwiser and me? What started as a perfectly polite exchange where you were chiefly seeking to educate yourself about listed companies/E&P terminology/88E investment case deteriorated into multiple posts filled with vitriolic personal abuse ranging from allegations of unethical financial manipulation to comments about another human being's psychological and mental health.
Do you have no shame, man? Where is your introspection, your sense of humility? At first I thought of you as good person, bit over their skis, but fundamentally polite and well-mannered. However, as soon as your financial position was degraded (by the *facts* of the investment case, not by people like me) then you turned into a snarling, hateful character. Had olderwiser and I been liars, making stuff up to feather our own short positions, we would have deserved every single piece of abuse directed at us. That you failed to comprehend it was us who were the truth seekers, solely interested in the facts, should, at the very least, cause a significant amount of introspection about taking responsibility for your own investment decisions.
It is shameful you and others have, once the fundraise was out the way, started filling this forum up once again with made up nonsense about the flow test data, conspiracies about an Aussie short fund, conspiracies about a paid for deramper campaign, conspiracies about market makers getting "tipped off to rip us off".
Have you learned nothing?
02:52
Is that right, taximan57? Speaking of "promoting", what are 88E shareholders going to do about the highly unethical promotion by 88E management of a bunch of dishonest articles the company's Twitter account reposted in the run up to the fundraise? The articles were absolutely riddled with factual errors and yet, by reposting the articles on Twitter, 88E management lent their imprimatur to this blatant misinformation. I contend they knew exactly what they were doing.
88E shareholders should be apoplectic, especially those who "averaged down" in the days between the RNS relaying the results of the SMD flow test and the announcement of the fundraise. An active and informed shareholder base should be demanding answers from the Chairman of 88E. It his responsibility, together with the NEDs, to oversee the conduct of the executive team.
The AGM is coming up shortly, isn't it? How about the UK and Aussie shareholders stop abusing olderwiser, rabito79 and me and instead direct their ire towards the individuals responsible for 88E's travails?
00:03
HandspringGuy - are you referring to Ashley Gilbert, MD of ASX-listed E&P company 88 Energy (not mining company)? The guy who is so confident in the quality of his company's assets that he hasn't invested a single Aussie dollar in the company shares? That guy?
The guy who *elected* to take his first 88E bonus in cash rather than shares? The guy who has sold *all* the performance rights granted to him as soon as practically possible (Jan '23 and Jan '24). You must mean that guy, correct?
The guy who didn't find 0.16p a sufficiently attractive prospect to support yesterday's fundraise with a single dollar of his own cash?
You surely cannot mean that guy, can you HandspringGuy?
To the person or persons thinking Dave Wall may be lining up a triumphant return to executive duties at 88E, why on earth would he do that? At Inyati Capital he's clipping a mighty 6% of funds raised in every fundraise since he departed the company in April '21. If I was a betting man I'd bet Dave Wall departed 88E with a huge database of contact details of investors/traders/punters who had a connection with 88E during his time in charge. I would be mighty surprised if good ol' Dave Wall's Inyati Capital hadn't collected a 6% commission on the *majority* of the AU$100m capital raised by 88E since he departed. Do the maths, folks.
88E shareholders have treated Dave like a king, or perhaps cult leader is more accurate? 88E bought XCD (in which Dave was the largest or second largest shareholder, remember) at a premium, and then bumped the bid further! They also paid him a decent salary along the way, naturally. Then he and Erik budgeted for and overspent on the stranded folly which was Peregrine, soaking up the benefits of an organised social media campaign as they went on their merry way.
Yep, you must mean that Dave Wall? He's some guy.
By the way, Brom, you never did get back to the forum with an answer to the question posed about Erik Opstad. Is he still retained by 88E? If not, why not? You stated you had excellent communication links with the company....what's going on?
......but that's odd.....I can't see any details of directors supporting the fundraise at this all time low price? Huh, no mention of management supporting the fundraise either?
Tells you all you need to know. Pathetic.
Shareholders should be furious.
21:27
Sharebel - you wrote the following: "[88E has] cash in the bank US$11.35m, and a further US$6.36m on its way [providing the fundraise is supported to the maximum extent permitted]. I am sure we can do something with that over the next 12 months!"
To assist you with the maths, I have expressed the sums to which you referred in US dollars. I also caveated the total amount of funds being raised currently. Presumably we'll find that out in the next few hours. I'm not nit-picking, just adding in a caveat until the formal results of the fundraise are announced.
The reason I expressed the sums in US dollars is because 88E told us a balance of US$11.6m remains to be paid to contractors for the work carried out this season at Hickory-1. The company informed us that they intend to settle all those bills "by the end of June."
Because 88E is the operator at Hickory-1 it is their responsibility to settle the bills in full. There is a possibility Burgundy will, at some point in the future, contribute some or all of their 25% of the costs (US$3.625m). However I assess the likelihood of Burgundy contributing anything before June 30th as nil. I base this on the disappointing flow test results *and* Burgundy's patent difficulty in sourcing funds and/or hesitation to pay their share of last year's drilling costs.
Either which way, 88E are on the hook to pay US$11.6m by the end of June, with or without Burgundy's contribution. So when Sharebel is "sure we can do something with that over the next 12 months" he's not wrong. Net of fees, let's say the fundraise brings in US$6m....plus the US$11.35m cash at hand. By the end of June cash at hand will be US$5.75m.
Please don't be taken in by the likes of Sharebel that 88E has a US$17.7m war chest to conduct operations over the next 12 months. They don't. After paying for the Hickory-1 operations the balance of cash at hand will be keeping the lights on for the company: paying salaries, listing fees, advisor retainers, office rent, annual lease payments for acreage, travel, dataroom management.
The only actual activity in the field is likely to be shooting the 2D seismic in Namibia. Speaking of Namibia, please be aware that the Australian term sheet for the fundraise states that 88E intends to pay the balance of US$920k due by 1/6/24 to its Namibian partner in 88E shares. SOI currently is 25.12bn....add the fundraise shares, say, 3.27bn....add the new shares for Namibia, say, 473m and that's a grand total of 28.863bn SOI. No wonder the BoD is considering a share consolidation.
Oh, and finally, don't be fooled by the narrative about "88E buying out Burgundy so 88E will retain a 100% W.I. in Phoenix." This is intellectually moribund thinking. If the flow test results were spectacular, Burgundy would pay their share with ease.
Let's see if the directors and management of 88E support the fundraise this time, shall we? Yes/no??!!
09:07
Sharebel - Wow! Just wow!
Instead of a healthy dose of introspection I see you've opted instead to take the 'spew further disinformation' route!
To the forum. Sharebel can't read or do maths....or he's straight up lying to you. 88E will not be sitting on tonnes of cash after this fundraise. The AU$17.5m cash at hand pre-fundraise will be used *in its entirety* to pay for the remaining costs of the flow tests at Hickory-1, as per company guidance. Notice how Burgundy wasn't mentioned with its named partnership status up in lights? 88E management more than suspects Burgundy will default and walk away.
The rest of sharebel's post is fantastical gibberish.
Buy/sell/hold 88E but please don't attach any weight to sharebel's content.
08:45
Ilovesushi - 88E has drilled its last well in Alaska. It doesn't matter if you're talking about a future vertical, horizontal or trapezoid well.
The pivot has already happened in management's mind. The primary focus is now on Namibia. Didn't you know that the Namibian acreage is "over 70 times larger" than the Alaskan acreage??!!
I suppose there's a possibility 88E *may* find a farm in partner for Leonis, perhaps leaving 88E with a small W.I.?
I think it highly, highly unlikely 88E will find a farm in partner for Project Phoenix. Take any residual emotion out of it.....why would a farm in partner invest in the downdip, lower classification, 'less data collected' portion of the shared asset v's the updip, higher classification, rated commercial by management and Schlumberger portion? And get this....according to the equity market, that potential farm in partner would be paying the same buy in price for a higher CoS project (PANR's) v's a lower CoS project (88E's Phoenix).
Yes, I've done a very quick calculation based on the 0.16p placing price. Using 88E's pre-flow test guidance on recoverable resources for Phoenix (which I assess will have to be downgraded once the analysis is completed fwiw) an 88E barrel in the ground is valued by the market at 13.5p v's an updip, higher classification commercial PANR barrel at 13.6p.
This is *not* advice. *If* you wish to retain your exposure to the shared asset north of 88E's Phoenix then, bizarrely, the market is still offering you a chance to do so without paying the logical premium which a PANR barrel *ought* to attract. Make of that what you will.
Just saw the Aussie term sheet. 88E is paying the US$920k due to their Namibian partner (by 1/6/24) in shares. I *think* that's another 450m shares to be issued on top of the 2.6bn in the fundraise but I am happy to be corrected. I couldn't see this detail in the UK RNS? Did I miss it when I skimmed through it? Happy to be directed towards it.
If this share based payment to the Namibian partner wasn't mentioned in the UK RNS, that would be a bit odd? Either which way, if the Namibian Project needs cash to shoot the 2D seismic in 2024 then those shares will be sold too.
The most immediate and simplest question to ask is if the 88E BoD and management are investing their own cash at 0.16p (AU0.3c) in this fundraise? If you're trying to work out whether there's fundamental value at this all time low fundraise price then listen to what the insiders are telling you. I suggest their non-involvement in this fundraise is deafening.
21:52
Hi olderwiser - lazy journalism or cynical PR placement? Who knows?
What is beyond outrageous is that 88E has tweeted out the Vox, Next investors and Frontiersman articles, thereby granting the articles an entirely undeserved credibility.
Shareholders should be disappointed in management's conduct. 88E's UK NOMAD should be concerned.
As I've posted previously, buy/sell/hold 88E but please do not rely on the accuracy of these articles when making any decisions.
10:27
gemstar - I do not know if Geodes currently hold 88E or PANR shares. What I am clear about is that he has posted on socal media that he initially invested in 88E. Subsequent to his investment in 88E he posted he was unaware of PANR's existence when making that initial investment. He also posted that he has invested in PANR shares.
For your statement about Geodes not owning 88E or PANR shares to be accurate then he must have divested entirely from both investments. Can you please provide a source for that contention?
All that said, I think we can all agree Geodes is certainly not to be considered independent.
Happy to stipulate I don't have a crystal ball.
11:33
Brom posted the following:
"In my opinion it would not have mattered what results were achieved at Hickory-1, we would still have had that same posters on here either ex "investors" who lost money and are bitter and twisted, those who are just bitter and twisted and those apparently terrified that 88E may actually gain some traction, its a shame but a fact of life on anonymous boards. I see very little altruism rather self interest."
Brom - you must mean the "self interest" of someone who has published a mere 27k posts on this forum? Is it *that* self interest to which you refer? What about the self interest which saw admissions being made a number of months *after* the event that LTHs had taken advantage of the US OTC social media-inspired spike and traded out of most or all of the position? *That* self interest?
Absolute nonsense that good data from the flow tests would have been greeted with universal negativity, no matter what. Absolute bunkum. When are you going to admit to the forum that there exists a cohort of honest fundamental investors and analysts whom are interested *solely* in the data, the facts, the truth? And if the flow test results were good then that would have had a massively positive readacross to the entire shared asset base?
Jeepers, Brom. Know thyself.
17:26
I agree with 88E's most prolific poster, Brom. It can actually be argued logically that the Biden admin's attitude to federal land in Alaska *should* lead to productive state land becoming *more* attractive.
FYI - depending on how you look at it, the SoA relies on the extractive industries for a minimum of 80% of the state's revenue. These North Slope royalties are vital to Alaska's future and could be further bolstered by the proposed gas pipeline deal.
12:33
sharebel has encouraged forum members to read an article written and produced by Vox Markets. He provided a link to same. Buy/sell/hold 88E but please do not rely on that article as a source of information from which to make decisions. Regrettably, the article is littered with ***errors of fact***.
olderwiser had this legitimate criticism of the Vox article.
"The credibility of the VOX comes under serious doubt when they are willing write this:
"These results complement the deeper BFF reservoir's existing 250 mmboe contingent resource. In total, 88E is targeting 647 mmboe of prospective oil resources at the site."
That 647mmboe erroneously includes the Kuparuk (at 56mmbo) which did not even get drilled. The Vox headline volume also erroneously includes 341mmbo from the BFF which has already been assessed (see IER by NSAI) at an 88E share of 28mmbo plus 57mmboe NGLs plus gas 72mmboe => only 157 mmboe. Wowsers - the BFF has already shrunk by nearly half (by Netherland Sewell, Independent Expert), and even more if you rightly take the gas off - which would only sell for $6 per boe into the pipeline if it gets built.
88E already knows the 647mmboe has shrunk by 184mmbo in the BFF and a further 56mmbo in the Kuparuk => all up a material reduction of 240mmboe. Yet incredulously, VOX has the bare faced cheek to print a number they already know is factually incorrect."
As for this sentence: "88E is fully funded to develop Project Phoenix and its other assets." Hoo boy, what a whopper!
88E's cash at hand on 31/3/24 is US$11.22m. The balance of costs for this season’s operations in Alaska is US$11.6m. *If* Burgundy (25% W.I.) elects to walk away from Project Phoenix following the disappointing flow test results, 88E as the operator is obliged to pay the bills in full. 88E has stated the bills will be paid by the end of June ’24.
88E is also committed to pay US$900k to their Namibian partner by 1/6/24. Cost cutting has already commenced (88E’s COO is departing 29/4/24) but unless Burgundy pays some of the outstanding balance for the Hickory-1 flow tests, 88E will run out of cash at some point in June.
88E is definitively not "fully funded to develop Project Phoenix and its other assets." Yikes.
IMO 88E will need asset sales and/or an equity fundraise at a substantial discount to remain solvent after June '24. Let's see if the directors and executives support the company with their own cash whenever the next fundraise occurs? They haven't thus far....even supporting the November fundraise at 0.23p wasn't considered sufficiently attractive for them to invest a single Aussie dollar.
16:13
Yeah, I'm pretty sure. Pretty, pretty, pretty sure. It was at that precise moment that Geodes stopped commenting on valuations, sticking solely to his views on the geology.
You clearly didn't read my post correctly, taximan57. Why would I "correct" an expert in geology? I stated categorically that I didn't do that even once. Repeat, not once. My suggested corrections to his posts were limited *entirely* to *facts* about the investment cases.
I've suggested repeatedly you ignore my username, olderwiser's username when reading our content. Remove your misdirected anger and read the content as if it came from a new user called "Curtain1". Quit the eternal abuse and do more research.
05:23
taximan57 - I note you have kindly copied over a paragraph written by Geodes.
"Personally, I congratulate 88 Energy Ltd. They have made a significant discovery in the North Slope of Alaska and did so on a "shoe string Budget" and had to dilute the shareholders to do so. Now they have something to build on and attract financing or a buyer. Bottom line, they have discovered a Giant Field by the Globally accepted definition'."
Yes, PANR and 88E have indeed discovered a massive hydrocarbon accumulation in the Alaska North Slope, immediately adjacent to existing infrastructure (TAPS and Dalton Highway). The trouble is that the characteristics of these shared stacked reservoirs *vary considerably* depending on the location. Most especially, the depth of burial, the effects of Dmax calculations, lead to a pronounced effect on the producibility of the southern and southeastern parts of the acreage. Of course the measure of *producibility* has a huge bearing on the *commerciality* of the varied locations.
To all forum members. Please understand that 88E hasn't necessarily done anything wrong. They haven't drilled Hickory-1 badly. I have no reason to believe the flow tests weren't carried out professionally. Nope, all this data was decided millions of years ago. The data was collected and brought to the surface only a few days ago. When these formations were formed, the reservoirs had no idea lines would be drawn on a map in the 20th and 21st centuries which would have such decisive implications for a bunch of stockmarket investors and traders!
Could/should 88E have invested in 3D seismic earlier in the life of the project? Might 3D seismic have led them to make different decisions about where to apply 88E's capital? Maybe yes, maybe no. I urge forum members to listen to PANR's CEO in a recent Proactive interview, see link below.
https://www.youtube.com/watch?v=Dts7k5oMR8k&t=144s
Have a listen between 2mins and 3mins 30seconds. For many years now, PANR has modelled the reservoirs' characteristics improving the further north and northwest the location. These stacked reservoirs in the northern and northwestern areas are also *shallower* than in the southern and southeastern areas. Imagine a stack of 5 dinner plates being tilted...the lower part of the stacked plates is 88E's acreage, the higher part of the stacked plates is PANR's acreage.
PANR clearly feared the negative effects of Dmax on the producibility of the reservoirs in the southern areas. So much so that PANR *has not included* in their own guidance of recoverable barrels the hydrocarbons assessed to be present from their Talitha #A location southwards to the boundary with 88E.
This strongly suggests to me that PANR's technical team will not have been overly surprised by the data collected during the two flow tests at Hickory-1. Is it making more sense now?
00:59
Hi Rpj8438 - I note your link to Geodes' reddit thread. I thought a bit of background would be useful.
Geodes has more knowledge about geology in his little finger than I could hope to learn in a lifetime. However, he self-admittedly no longer strays into commentary on valuations, including comparative valuations of PANR and 88E. He and I used to communicate. I enjoyed reading his geological commentary very much indeed. Sadly he made *many factual errors* about the investment cases of PANR and 88E.
Initially Geodes was happy enough to correct his *factual* errors when politely pointed out. However, over time he bristled at the *factual* corrections and then blocked me. I *never* questioned his geological commentary, solely his errors about the investment cases. Thereafter he ceased to comment on the financial implications for each company and limited his commentary to geological matters.
*My* opinion. Geodes has stated he is hugely under water on 88E. It happens. IMHO his commentary is, understandably, tainted by his desire to dig himself out of his 88E financial hole. Why not ask Geodes the following question: "Knowing what he knows now about the datasets from each company, which of 88E and PANR would he invest in today if only allowed one stock?’ Also, ask him for a data-supported justification for a downdip, lower classification 88E Phoenix recoverable barrel in the ground to be valued at a premium to an updip, higher classification PANR recoverable barrel in the ground?
in his latest reddit post I *think* I understand the point he is trying to make. In summary, publication of incomplete data leads to incomplete conclusions. Broadly, I acknowledge the point. *However* and specifically in the case of these two flow tests at Hickory-1, there are pertinent and fully applicable comparisons to 88E's data. I am referring to PANR's published data collected at Alkaid-1, Alkaid-2, Talitha #A and Theta West-1.
Put aside for a moment the actual results, look at the greater degree of data shared by PANR and compare it to the meagre data presented by 88E, thus far anyway. So, yes, Geodes urges folk to wait for further data and/or explanations on the "4 stk barrels in the tank" conundrum. But he, himself, was *not* able to come up with any irrefutable explanation for that precise piece of data.
Occam's razor requires that the simplest of competing theories be preferred to the more complex; or that explanations of unknown phenomena be sought first in terms of known quantities. It's not contentious, IMO, to suggest 88E's history shows a propensity to be promotional wherever possible. If there was positive data to be shared with the market, 88E would have done so. There were no corrections in the next three RNSs. Think about it.
Occam's razor is the problem-solving principle that recommends searching for explanations constructed with the smallest possible set of elements.
19:58
Hi Alex_F - I doubt very much that banditputin1 is a paid labourer. He's smarting at losing money on 88E and blames olderwiser, rabito79 and me for his losses rather than his own lack of research when he went long the stock. Have a look at his history of posting on 88E. He becomes a cynical supporter of 88E when he thinks, wrongly, that the peak oil rates reported following the two flow tests heralded good news about commerciality. There are even a couple of "BOOMs" in his posts, lol. Looking at his posting history, he doesn't appear to believe in research or analysis. He's a self-admitted "trader" - No reason to disbelieve him, I'd suggest.
I'll quickly dismiss the nonsense in his post timed at 19:14
- I don't tell fibs. I find publishing lies to secure a financial gain to be contemptible. Examining banditputin1's historical content it is clear he has no such reservations on that score.
- He informs us he "made his money" on 88E. Not if his posts on the 88E forum are to be believed. Looking at the timings of his posts v's newsflow v's SP, I reckon he's not being entirely truthful ...again.
- 10p placing on way, is it? Join the long list of folk who have said so since 2019. Note how he doesn't show his working for his so-called calculations.
- Financial Conduct Authority states Mangrove short position has been static since 11/9/23. Concrete evidence of banditputin1's non-existent relationship with the facts.
- sentence about how market values PANR. Let's ask him for some evidence? I earnestly believe banditputin1 does not possess the training to construct the industry accepted risked/unrisked valuation model for PANR to back up his evidence-less claims. Hey banditpuutin1 - post your model, would you please? Without doing the work, how can he possibly have arrived at such a conclusion?
- management mistakes? How many UK small cap management teams have discovered the second or third largest onshore conventional oil accumulation in US history? I'll take that mistake every day of the week and twice on Sundays!
Speaking of value, does anyone else find it mathematically preposterous that, using Friday's closing SPs, the market is valuing a downdip, lower classification 88E Phoenix recoverable barrel in the ground at 18.2p v's an updip, higher classification PANR recoverable barrel in the ground at 13.8p? Such irrational disparities in value do not continue into perpetuity. They never do.