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Gman93 - instead of the personal abuse, how about providing the forum with your valuation model? Or is it simply that you already acknowledge your sole strategy is to rely on unsophisticated, naïve, credulous newbies to be sucked into believing the "to the moon" nonsense, unsupported by any facts or the truth?
Gman93 - is it safe to presume you believe it's irrational to value a downdip, Dmax impacted, lower classification barrel in the ground at a higher value than an updip, advanced classification barrel in the ground in the same reservoir?
In that case, by applying PANR’s implied value of 11.3p per recoverable barrel in the ground (as at cob on Thursday) to 88E, then 88E’s fair value should be no higher than 0.2p when it opens in the UK in a few hours.
To be clear, the 88E fair value of 0.2p assumes the second flow test at Hickory-1 (the SMD horizon) is also declared a success in a couple of weeks. This value arbitrage will not continue into perpetuity, it never does. PANR is massively undervalued v’s 88E ***or*** 88E is massively overvalued v's PANR.
If you disagree with the above so vehemently then instead of personal insults why not inform the forum, using accepted scientific data and industry valuation methods, why it is you earnestly believe an 88E barrel to be worth 50% to 200% more than a higher classification barrel in the ground.
It makes no sense and the vast majority of this forum's members know it to be true, or at the very least suspect/fear it may be true. Has anyone thought that the Aussies are the clever ones and that they've caught on before the UK and US?
Dear All - please see updated model below.
Assumptions:
- GBP:USD = 1.25
- 88E management guidance on CoS for the upcoming SMD flow test is 81%. I'm going to increase that to 100% so the calculation below *assumes both flow tests at Hickory-1 are a complete success*.
At Thursday's closing price, a fully-diluted (adding SOI to account for CB balance) PANR recoverable barrel in the ground is valued at 11.3p
If we apply that identical valuation to 88E's Project Phoenix barrels in the ground *and* we assume both the SFS and SMD flow tests are 100% successful then the net value of 88E's share of Project Phoenix is worth £42m. Add on £2.4m for Namibia and £6.3m for Longhorn and 88E's fair value is £50.7m, or 0.20p per share.
Yes, you all read that correctly. Even if the impending SMD flow test is also labelled a complete success, 88E is overvalued by 20-30%.
"But, but, but......an 88E barrel in the ground should be valued more highly than a PANR barrel in the ground!!" I have a one word answer to that plaintive cry. "Why?"
Why should an equity investor or an O&G company pay more for a downdip barrel than an updip barrel within the same reservoirs? Why should an equity investor or an O&G company (on a relative basis) pay more for a 'negatively impacted by Dmax' barrel in the ground v's a 'positively impacted by Dmax' barrel in the ground within the same reservoirs? Why should an equity investor or an O&G company pay more for a lower classification barrel in the ground v's a higher classification barrel in the ground within the same reservoirs?
The answer to those questions is that no equity analyst or O&G company will make that assessment. Not one. Fact.
If anyone reading this post genuinely believes PANR is fairly valued then they should also acknowledge the fair value of 88E is no higher than 0.2p as soon as it starts trading in the UK later today.
If anyone reading this post thinks the fair value of 88E after the SFS flow test news is, say, 0.4p when it opens later today in the UK then you are acknowledging that PANR should open at a minimum of 57.7p (v's close of 26.5p on Thursday).
Newcomers to this forum who don't wish to play a financial game of pass the parcel should think about the message in this post.
Dear All - delighted to read 88E's ANN in Oz confirming light oil flow to the surface from the SFS horizon at Hickory-1. Great news for 88E but even better news for PANR.
Cue howls of outrage from those who don't understand the shared asset nor the investment cases of both companies.
Fact 1: PANR does not have a single barrel for the SFS in its guidance. We know the SFS exists in an updip location within PANR's Ahpun oilfield so it is entirely accurate to state that PANR is now pregnant with an upgrade to its recoverable resources, with an upgrade to contingent resources to follow once the 88E IER on the SFS is received.
Fact 2: we know from the most recent Proactive interview with CEO Jay Cheatham that PANR's guidance does not include the acreage immediately to the "north of the boundary with 88E". I do not know the extent of this exclusion. Happy to be corrected but I don't think we've ever been told by PANR management? We *do* know that Hickory-1 is located 150m south of the boundary between PANR and 88E. We also know PANR management has used the Talitha #A data as a *base case* for their guidance on resource volume. I'm not certain, and I'm delighted to be corrected, but I *seem to recall* Talitha #A is located 5-8 miles north of Hickory-1? *IF* my memory is correct then PANR is now also pregnant with an enhanced upgrade over and above the simple inclusion of the SFS into its guidance.
Fact 3: 88E's unequal share (in quantity and quality) of the shared reservoirs are downdip of PANR's portion. All else being equal, there is no O&G analyst in the world who would insert in their model a higher price for a downdip 88E barrel in the ground v's an updip PANR barrel in the ground. And yet this is how the equity markets are currently pricing the two companies. This will not remain the case into perpetuity as many 88E shareholders believe. The fundamentals always out in the end. Always.
Fact 4: The scale of 88E's portion of the shared reservoirs is far smaller than that of PANR. For simplicity, I'm pretty comfortable using a ration of 1:10, 88E:PANR. If you wish to be conservative when doing your own calculations then perhaps use 1:8, but there's *no empirical evidence* to suggest the ratio is any higher than that, 88E:PANR.
I suggest not permitting the volume of non-researched 88E social media advocates to divert folk from remaining attached to the fundamentals. I will shortly update my model but ***even after*** the SFS flow test result of today, 88E shares *should* be trading at a *lower price* than the closing price on Thursday last week (0.26p). That's if you use the price per barrel for PANR's acreage of c.11.5p.
It's *possibly* too early to be sure but the muted reaction to the SFS flow test in Oz (unch at AU0.5c at time of writing) suggests the market is waking up to 88E being overvalued.
Dear All - delighted to read 88E's ANN in Oz confirming light oil flow to the surface from the SFS horizon at Hickory-1. Great news for 88E but even better news for PANR.
Cue howls of outrage from those who don't understand the shared asset nor the investment cases of both companies, lol!
Fact 1: PANR does not have a single barrel for the SFS in its guidance. We know the SFS exists in an updip location within PANR's Ahpun oilfield so it is entirely accurate to state that PANR is now pregnant with an upgrade to its recoverable resources, with an upgrade to contingent resources to follow once the 88E IER on the SFS is received.
Fact 2: we know from the most recent Proactive interview with Jay that PANR's guidance does not include the acreage immediately to the "north of the boundary with 88E". I do not know the extent of this exclusion. Happy to be corrected but I don't think we've ever been told by management? We *do* know that Hickory-1 is located 150m south of the boundary between PANR and 88E. We also know PANR management has used the Talitha #A data as a *base case* for their guidance on resource volume. I'm not certain, and I'm delighted to be corrected, but I *seem to recall* Talitha #A is located 5-8 miles north of Hickory-1? *IF* my memory is correct then PANR is now also pregnant with an enhanced upgrade over and above the simple inclusion of the SFS into its guidance.
Fact 3: PANR's unequal share (in quantity and quality) of the shared reservoirs are updip of 88E's portion. Therefore, all else being equal, there is no O&G analyst in the world who would insert in their model a lower price for a PANR barrel in the ground v's a downdip 88E barrel in the ground. And yet this is how the equity markets are currently pricing the two companies. This will not remain the case into perpetuity as many 88E shareholders believe. The fundamentals always out in the end. Always.
Fact 4: The scale of PANR's portion of the shared reservoirs is far larger than that of 88E. For simplicity, I'm pretty comfortable using a ration of 10:1, PANR:88E. If you wish to be conservative when doing your own calculations then perhaps use 8:1, but there's *no empirical evidence* to suggest the ratio is any lower than that, PANR:88E.
I suggest not permitting the volume of non-researched 88E social media advocates to divert folk from remaining attached to the fundamentals. I will shortly update my model but ***even after*** the SFS flow test result of today, 88E shares should be trading at a *lower price* than the closing price on Thursday last week (0.26p). That's if you use the price per barrel for PANR's acreage of c.11.5p.
It's *possibly* too early to be sure but the muted reaction to the SFS flow test in Oz (unch at AU0.5c at time of writing) suggests the market is waking up to 88E being overvalued.
Brevarthan/Troughsnout - increase your short, I beseech you. Tell Tom and the rest of the unresearched cabal to do the same.
Now then, the whole lse PANR forum awaits your apology and formal withdrawal of your "research" note, dated 26/2/24. A veteran industry professional, olderwiser, has brutally dismantled the note, identifying multiple errors of fact and interpretation. If you retained an ounce of integrity and honour you would have, at the very least, replied to his fact-based rebuttals. But greed, eh? Can't beat 'em, join 'em? The City didn't reward my intellect and classical education so to hell with probity, I'll cheat my way to my rightful financial reward. Ha! You have so much in common with Tom after all. Makes me puke.
Just think, Brevarthan, had one of your former sellside employers published your note they, too, would have had to formally withdraw the note from circulation. Yikes! How you have fallen....a finance professional to amateurish troll.
Big change to the business model.
1) Previous guidance was requirement for 1 Gas injection well for every 3 production wells. If the gas pipeline gets the go-ahead (and it sure looks like it to me) then project capex could reduce by c.US$7bn. That will have a MASSIVE effect on the NPV of the asset. Equally importantly, for potential partners, the IRR will improve markedly.
2) Maths. The guidance given on the sale price of the gas equates to a daily revenue of US$500k. That is a meaningful amount which when viewed in the context of a 40 year offtake agreement will surely be of interest to financiers.
The PANR project has been significantly de-risked today. More The stock should be miles up. Full health warning - I bought another 100k shares on the open!
Holy guacamole!
1) Gas offtake. The jungle drums were too loud on this one for it to be hot air. I must admit I thought we'd be giving the gas away for free to nullify the requirement for hundreds of rejection wells....but to hear we're hoping up a gas revenue stream for the next 40 years...wooshka! And looks like I'll have to investigate the Helium market also?! Will the SoA or Alaskan banks or Alaskan utilicos offer a finance package to PANR based on a 40 year offtake agreement? I'd have thought that is certainly possible?
2) I know we didn't get the names of the oil service firms but as JH said last week, "negotiations are live". They've described what a deal or deals would look like so let's see what happens.
3) Sounds like the KODIAK updated Netherland Sewell IER is being finished off and will be with us in next week or two. Fine - a few days delay is no biggie. Jay told us to expect very, very substantial upgrades in the Proactive interview of last week.
If Neth Sewell too busy to do the Ahpun IER by end of Q2 then fair enough to look for other firms. Sounds like that'll mean we get updated Ahpun IER and contingent resources before the end of Q2 so I'm happy with that.
Good stuff. Stock goes up. I wonder if we'll hear news from the Alaskan authorities over the next few days on the gas pipeline going ahead? I'll be keeping an eye out as PANR will easily be the most leveraged way to play that "new news" v's all the other Alaskan O&G operators.
Excellent stuff.
09:33
Hey hillbilly1 - be a clever chap and tell the forum where 88E's primary listing is located? Then ask yourself if access to the internet is limited only to people in the UK.
Jeepers. And for goodness sake, man, discuss the *facts* of 88E and not what time zone someone is located in. Get a grip.
[Part 2, continued from Part 1 below]
“In my opinion they will recover it without loosing nothing and also seems more like an equipment for producing than a drilling equipment.” Once again, nope they will not be recovering the associated gas. The gas will be flared. That is why a number of commentators have been actively questioning whether drive-by photos or satellite images show signs of gas flaring. like others, the absence of proof of flaring already alerted me to the probability the operations were running quite far behind schedule.
Well, I guess we ought to congratulate the reddit poster for getting something right in a paragraph of made up drivel. Hickory-1 was drilled *last winter* season (winter 22/23) and only flow tests are taking place this winter season, 23/24. /end
[End of Part 2]
00.00
A few thoughts:
1) I agree with those who feel the company had to update the market on the timing of the flow test. Perfectly understandably, expectations had solidified around a Monday morning ANN in Oz. Had there been silence the speculation would have been awfully loud.
2) For the less experienced folk reading this forum, "flow back" does not automatically = "oil is flowing". It is normal, nay expected, for the fracking fluids to (water, chemicals, sands, props) to flow back to the surface before the ratio of hydrocarbons (hopefully) increases as the mix turns towards the reservoir fluids v's the frack fluids. There may very well be hydrocarbons mixed in with the fluids flowing back in the early stages but that does not necessarily mean the data will end up supporting a commercial flow at the conclusion of the test period. It might, it might not. Therefore please discount as lies or miscomprehension any posts which suggest this. Whether you elect to attach any weight to what I post, or oldwiser or Rabito79 post, people who post such nonsense about "flow back oil flowing" are not to be relied upon. Equally, those who declare they already know "it's a duster", or words to that effect, are not to be trusted either. The truth is that no-one knows yet.
3) There's now zero question in my mind that there's been some sort of issue with the well/equipment/availability of contractors/completion services/frack services. To be clear, I don't have a scooby which issue or combination of issues has caused the delay ("in *part* by the weather") but 88E is now waaaayyyyy behind schedule. Expecting to be on site until mid-April was definitely not in anyone's plans for this season. Doesn't mean the news is going to be bad/inconclusive/good, but I sincerely hope that both flow tests are able to be completed this season. I note the company has sought to reassure the market about moving on to the SMD-B flow test *immediately* following the completion of the SFS test.
19:35
Redirons - the post you have copied over from reddit is complete, unadulterated gibberish. It makes no scientific sense whatsoever. Let's go through it and dismantle it so you don't un/intentionally misinform anyone on this forum.
“$EEENF they know that there is 100% gas, this is the quantity that they are testing to know the value." Nope, gibberish.
"They do not need to flaring the gas and waste it." Gas is absolutely anticipated to be produced at hickory-1 with any liquid hydrocarbons. However, as with all other exploration/appraisal wells in Alaska, the Dept of Natural Resources grants the operator a license to flare associated gas. Why? Because there is no means to collect, transport or use the gas on site. And it goes without saying there's no nearby reinjection well to reinject the gas back into the formation. So this sentence is gobbledyg00k.
[Part 1, see above for Part 2]
Finally! The Governor of Alaska, Mike Dunleavy, name checks when discussing major developments in Alaska right now. Willow, Pikka/Horseshoe and "Pantheon Great Bear". This is progress and will increase PANR's profile substantially.
hTTps://ceraweek.com/video-gallery.html
02:35
Ausnsw - really easy answer to that point. Analysing both the fundamentals and constructing a risked/unrisked NAV model of PANR the outcome has *always* seen the fair value well in excess (often many multiples of) the share price at the time. That was true for PANR @ 130p and even more so for PANR @ 27p.
Two further things, Ausnsw. There a general market understanding that you aren't "pumping" if your fair value is supported by the fundamentals. So you can quit that nonsense for starters. Secondly, and to be crystal clear, the fundamentals of 88E do not support its current market cap. That is one of the many reasons I maintain it is ludicrous beyond belief that the market is valuing a lower quality 88E barrel in the ground at a premium of between 50-200%.
All that said, Ausnsw, massively looking forward to reading your comparative valuation of both stocks. Tell you what, even a risked/unrisked NAV valuation of 88E would do nicely. Too lazy or unable to undertake such a task? Which is it?
[Part 4, continued from Part 3 below]
12.00 - continuing answer to Brom's post.
b) "So all is not perfect over at our neighbours and they have a long way to go yet (as 88E does)." Let's dig deeper into this question. Brom - which of the two companies is closer to producing their first barrel of commercial oil (not part of a LTPT)? Would you agree with my assessment that PANR is *at least* 3-4 years ahead of 88E in obtaining the data required to move to a full field development? Do you further agree that, largely due to historical investment in Alaska since 2010 encompassing hundreds of millions of dollars in operations and 3D seismic, PANR's capital requirement is far lower than 88E's in order to move to a full field development? I reckon it'll cost 88E, as a stand alone operation, at least another US$100m+ before it has an equivalent amount of data as PANR has today. Where's that capital coming from, Brom? Where's the Namibian finance coming from? Post Hickory-1, consolidation and a prime focus on Namibia?
c) Brom is remarkably well-informed about the thought process of Oil Search executives as they looked at investing in Alaska. Hmmm.... remarkably well-informed. Challenge for you, Brom. Chase up the top execs of Oil Search at the time of that decision and ask them today, with the data now available from PANR and Pikka/Horseshoe if they would make the same decision again? I know the answer to that question. Do you?
d) You ask about proxies? Outrageous projection. I am a proxy for precisely no-one. Never have been, never will be. On the other hand, tell us more about your relationship with Erik Opstad and Dave Wall? Wasn't it you who declared they answered your phone calls "very promptly" whenever you contacted them? The brass neck of you , Brom.
e) "running out of cash" Ok, Brom, answer me this. We know from the PANR interims and Proactive interview from today that PANR's cash balance is US$8.7m. Looks like 88E's operation are going to stretch well into April. What do you calculate will be 88E's cash position once this season's operations are all paid for. Over or under US$2m?
For the avoidance of doubt, I do my own research and do not act as a proxy for anyone. Happy to be corrected but I don't think olderwiser or Rabito79 are proxies for anyone either. Odd question that one, Brom. Out of interest, did you make the same allegation about olderwiser when he was an 88E shareholder and posted regularly on Hot Copper? Nope, thought not. What a ridiculous thing to say. Shameful. /end
[End of Part 4.]
Part 3, continued from Part 2 below]
12:45
HandspringGuy - if you listen to the PANR Proactive interview and read olderwiser's explanation about updip/downdip, depth of burial, Dmax, etc, etc and you think that an **E barrel in the ground at Phoenix should be trading at a 50-200% premium to a higher classification PANR barrel in the ground then I don't know what more to say to you. I guess it means you're disinterested in price discovery and solely here for a non-researched punt. And that's fine....your money, your choice. But kindly have respect for people like olderwiser/me/Rabito79 who *do* the hours and hours of research required to analyse these companies. Stop being so rude! This isn't personal, it's all about numbers and maths, that's it. Price discovery.
12:19
Hi Brom - "on the cusp of something good." I'm sure the forum would be fascinated in your calculation of what the market is currently valuing 88E at on a per barrel in the ground basis? And then talk us through where you calculate that figure will move to if both the flow tests are successful? Or if you'd prefer, a risked/unrisked NAV model would be equally as fascinating. Or, and work with me here, are you going to post in a few weeks time that you sold your stock into the ramp/spike like you did in 2021 and 2022? You recently posted the truth about Longhorn being spectacularly underwhelming v's expectations at time of purchase of the Texas assets. How about similar honesty as you describe your valuation of 88E's Phoenix project right now, today?
12.00
Goodness Brom, lots of misinformation in this post. Let's take it apart, shall we? But before I do so, you haven't informed the forum what happened to Erik Opstad and ELKO? Proxies indeed!!
a) yep, the PANR reservoirs are tight-ish, but orders of magnitude less tight than many commercial assets in the Permian. But let's go with your description of "tight" for now. All things being equal, Brom, and with the knowledge we have from both companies about depth of burial, Dmax, perms and porosity, P50 guidance, 2D and 3D seismic, data from each company's wells....would you prefer to own the updip, shallower tight-ish portion of the shared reservoirs *or* the downdip, deeper, even tighter portion of the shared reservoirs? C'mon Brom, how about sharing your brutal analysis in the same manner you were prepared to post about Longhorn.
To remind the forum of Brom's ability to be straight when he chooses: "“I too have my doubts about some of our projects, Longhorn has been a slow burn despite the relatively high POO , when first announced Jan 2022 the wells were producing 300BOE per day, despite plenty of investment in workovers we are not producing much more today and nothing like the projections of 1300 BOE given as a medium term target.” – Brombarb on lse; 30/1/24 @ 16:58
[End of Part 3, see above for Part 4]
[Part 2, continued from Part 1 below]
20:47
Musk15 - good results at Hickory-1 would indeed be good for 88E, no question. However, and as I explained to taximan57 earlier, PANR will see a *leveraged positive effect* on its recoverable resources as a result of that good news. To be clear, this isn't because 88E has done anything wrong. This was all decided millions of years ago when the reservoirs were formed in the shape they were and then in recent years lines were drawn at the surface corresponding to leases the two companies own.
I must repeat for clarity. If there's bad news from the flow tests, 88E will see material downgrades to its guidance whereas PANR's guidance will not reduce by a single barrel. Just science.
20:20 & 19:50
Olderwiser - correct. Forum should read this post and listen to the Proactive interview again. listen to this guy, please. This was his job for decades. Why do so many of you think he's making stuff up when he's spent his whole career doing O&G projects around the world?
19:06
Hi taximan57 - of course you're free to think that, but it would be the wrong choice if you wish to see a return on your investment. This is really basic science. Please fact check what olderwiser and I are telling this forum. We're not lying.
18:42
Musk15 - the answer is "deeper below the surface". Think about it....all that weight above you....put simply, if you're deeper down the greater the weight on top of you and the greater the compaction of the reservoir => the lower the permeability and porosity => the lower the properties of the reservoir at those deeper parts of the reservoir. Serious question, Musk15. Have you not listened to a single thing olderwiser/me/Rabito79 have been saying on this forum? More widely, the fact you're having to ask this question (about depth) means that, truly sadly, you don't have even the most basic knowledge of E&P. And that's fine, your money, your choice. But please have the self-reflection to acknowledge you don't know very much about 88E and its asset. And even more importantly, have the honour to stop seeking to ramp other naive credulous readers of your content into buying 88E with your nonsense posts promising untold riches. I know it'll hurt to read this but you're doing no better than whispering in their ear to back No6 in the 3.30pm race at Kempton tomorrow. Please stop. Please.
18:22
Hi taximan57 - who has said otherwise?
16:40
Hi SRBS - "HODLE IF YOU HAVE NERVES OF STEAL" Lololol, couldn't have put it better myself. Freudian slip?
15:21
Musk15 - for the umpteenth time, it's about price discovery and only about price discovery. Why on earth would I wish anyone ill whom I only know from usernames on a screen? You still think this is one big conspiracy against you when it's just about uncovering value. No more, no less. 2/
[End of Part 2, see above for Part 3.]
23:29
Hi troajan - I sat beside market makers and sales traders for years. Never heard a peep about these codes. I only ever became aware of this nonsense when I began reading social media forums like this one!
21:17
Redirons - for the avoidance of doubt, I only have one username across all social media platforms. If olderwiser bumped into me on the street, I wouldn't know him from Adam. But if you want to keep dreaming up conspiracy theories instead of uncovering the *facts* of the 88E investment case, then knock yourself out.
21:11
Hi Rpj8438 - "biggest discovery" compared to which other reservoirs and owned by whom? Source please?
20:51
Hi again taximan57 - you need to listen to the Proactive interview again. Firstly, imagine two rectangles, one on top of the other. The top or northern rectangle is PANR's acreage and the lower or southern rectangle is 88E's acreage. Ok, in the top, right hand quarter of 88E's rectangle place a dot quite near the top of the rectangle. That's Hickory-1. Hickory -1 is located 150m south of the boundary line between the northern edge of 88E acreage and the southern edge of PANR's acreage.
Jay is telling you the following. Look at the two rectangles, one on top of the other. The further north and northwest on the *external* outline of the two boxes the better the properties of the reservoirs. This is what olderwiser and I have been banging on about for years now. The further north and northwest the location, the shallower the reservoirs - this is the "updip" portion of the shared reservoirs. That part of the acreage has better permeability and porosity (thus more likely to be commercial) then the acreage to the south and southeast of the *external* outline of the two boxes.
Thus, the further south and southeast within the *external* outline of the two rectangles, the deeper the depth of burial, more overburden (remember me banging on about Dmax....did any of you Google it?), and the poorer the quality of reservoir permeability and porosity => less likely to be commercial. Understand?
The second point he was making is that the guidance by PANR management on the volume of contingent and recoverable resources within its acreage does not include the acreage at the southern edge of PANR's border with the northern edge of 88E's border. Thus, if there is good news from the flow tests at Hickory-1, there will be a *leveraged* upgrade to PANR's numbers. That isn't Jay boasting, it's just basic science. PANR will be able to upgrade its numbers on the basis of quality (updip, Dmax, perm, poros) *and* quantity (be able to include volume from PANR's southern acreage that PANR management had conservatively *not* included in its formal guidance until after the Hickory-1 flow tests.
However, if the flow test results are poor at Hickory-1 (and I truly hope they're not) then PANR's base case numbers will not change by one barrel whereas 88E will have material downgrades. Not boasting, basic science. 1/