Member Info for Scot126

00:40 and 01:10

Guys - just quit with the personal abuse, will you? It's unseemly and belies your poor character and upbringing. As Redbeardoil2 wisely suggests, simply put me on filter. I promise I won't be offended in the slightest. Better yet, how about fact-checking me or providing your own comparative valuation? Too lazy? Incapable? Or are you scared your own calculations will support my analysis?

08:26

Slawsofgold - lol, good one, made me chuckle. I notice no-one has asked you to share your workings, lol? Unless the SMD flows liquid platinum instead of hydrocarbons there's no world where the 88E SP increases to 10p on the back of two successful flow tests at Hickory-1 this winter.

Just by the by, an observation. I totally "get" this whole schtick is, for the vast majority of you, a financial game of pass the parcel. The thing is, there appears to be a marked lack of empathy for the credulous ingenues you're all seeking to attract into this deceitful web of yours. No conscience? Or all is fair in love and trading?

And before the attacks start again. The *fundamentals* of the NN support a mkt cap many multiples of the current valuation. The same cannot be said of 88E. As at time of writing, 88E is overvalued on the fundamentals *even if both flow tests at Hickory-1 are successful*.

11:25

Hi Ausnsw - wee correction. I am not making a loss on the NN at the current SP. But thanks for your concern. Purely analysing the fundamental facts of the two investment cases, *if* you think 88E is worth buying at 0.27p today then, mathematically, you should be delighted to buy the NN at any price under 42p.

17:10

Ah, Shareguru22. You've finally broken me. I can't take it any more. Advise is a verb, advice is the noun. I've asked you repeatedly to stop defaming me. I am not licensed to give advice to anyone, therefore I don't. I share my research and analysis and it's up to readers to do with that what they may. You've got to try to be a better person, shareguru22. I'll even help you with a form of words which won't defame me further but will get your message across, ok?

"scot126 - you shared your research on lse about the NN when its SP was 130p. At that time you maintained the NN could be fairly valued well in excess of that share price. It subsequently fell to 10p. On that basis, I'm not reading any more of your research or analysis."

That is both accurate and doesn't defame me. Feel free to use it in the future, shareguru22. Oh, and when referring to analysis of listed companies, it's a generally accepted understanding by participants that you cannot "hype" a stock which is fully supported by the fundamentals. Thus it is accurate to say that "the majority on this forum hype 88E." Good stuff.

14:22

Bravo, Slawsofgold, bravo!

There are some bitter folk out there, but not me. I'm thinking of those credulous ingenues who bought 88E at 9.2c on the OTC having been sucked in by the factless hype.

If folk want to play a financial game of pass the parcel, they're free to knock themselves out. Have at it! But it always comes down to facts and the fundamentals in the end. Always.

People might not enjoy reading those facts and fundamentals but that does not make them incorrect or inaccurate.

Love the poem though. X

*correction of decimal points

My argument is that *even if* both flow tests are a complete success at Hickory-1, when the market wakes up to the fact that there is no justification for an 88E barrel in the ground being valued at a premium to the NN's, then 88E's fair value will only be approx 0.19p. That's if the market values 88E barrels the exact same as the NN's. Being strictly consistent, the market should actually be valuing the higher classification NN barrel at a premium to 88E's.

15:51

HandspringGuy - yep, that's a kinda fair summary. I agree it is incredibly unlikely that hydrocarbons will not be encountered in the flow tests. Happy to stipulate that. i reckon the market fully anticipates that too, fwiw.

What is undoubtedly a greater unknown is the ease with which the oil will/will not flow to the surface. The reason this is a great unknown is due to the fact that 88E's portion of the shared reservoirs are deeper than the NN's portion of the reservoirs. Thus, 88E's portion of the shared reservoirs is said to be "downdip" of the NN's the NN's portion of the shared reservoirs is said to be "updip" of 88E's portion.

So what, I hear you say? Well, first thing to do is not rely on me for this info0rmation. Head over to Dr Google and spend 5 mins making yourself familiar with these O&G terms. Then have a quick read of the considered opinion of a multi-decade O&G veteran who used to be an 88E shareholder.

"Then bear in mind these are down dip reservoirs at greater risk of reduced flow rates, due to compaction and composition, the SMDB is around 1000 ft deeper, plus DMAX adding about another 1000 ft of effective burial depth.

https://clients3.weblink.com.au/pdf/88E/02508470.pdf Pg3 " - Olderwiser on lse 17/2/24 @ 10:13am [he also offers his analysis of the volume of oil being targeted by the Hickory-1 flow tests which are less generous than I have in my model. He knows 100x more about this subject matter than I do. Fact. But I'm a generous type!]

Another thing....it'll take more than one well to accurately estimate the volume of recoverable resources on 88E's Project Phoenix acreage.

My argument is that *even if* both flow tests are a complete success at Hickory-1, when the market wakes up to the fact that there is no justification for an 88E barrel in the ground being valued at a premium to the NN's, then 88E's fair value will only be c.0.0019p. That's if the market values 88E barrels the exact same as the NN's. Being strictly consistent, the market should actually be valuing the higher classification NN barrel at a premium to 88E's.

08:23

Now, now, SuperRoty. Why don't you tell the forum whether you'd prefer, all else being equal, the updip or downdip portion of these shared assets?

Whilst you're at it, you should give them an explanation of the implications of Dmax on the relative commerciality of the two locations, north v's south of the boundary line.

I'm willing to bet you won't because you'll be admitting that 88E's portion of the asset is inferior in quality (perm and porosity) and is smaller in volume by an order of 8-10x minimum.

Hi Goldwater - if, and I repeat if, 88E's barrels in the ground are valued at the same price as the NN's barrel in the ground, then following two successful flow tests at Hickory-1, 88E shares ought to trade at 0.002p per share.

22:32

Ok, Candlestick, I've had a quick bash at the 88E cash position.

- Cash at hand at y/end of US$12m

- Gross budget cost of US$11m

- Prepayments of US$2m over the course of H2'23 (combination of your Q4'23 logic and my Q3'23 logic!)

- Receipt of US$1.745m from Burgundy today

- Quarterly cash shortfall of US$400k (Longhorn dividend minus G&A)

- Commitment to pay Namibian vendors US$0.9m by 1/6/24

Leaves a cash balance of c.US$3m at end of H1'24. Sound about right, Candlestick? Not vapours but lots more cash will be required for the future. Even if 88E walks away from Alaska (I'm not saying they will, just a scenario to reduce huge operational calls on cash), there are large cash commitments to the Namibia project in 2025.

I've said this before and I'm not being sarcastic. 88E are truly impressive at raising cash *before* operational results are announced. I would not be surprised in the slightest if there's a fundraise before the flow test commences. Equally, I wouldn't be surprised if they waited until the share consolidation has been sorted out. It's a 50:50 call IMHO.

A reminder. Using publicly available information, an 88E barrel in the ground is currently valued at 18-19p v's a higher classification NN barrel in the ground currently valued at 11-12p. I contend there is zero justification for this differential, *even if both flow tests at Hickory-1 are wholly successful*.

Burgundy has submitted the US$1.745m. Will recalculate cash position, incorporating Candlestick/scot126 debate on pre-payment of flow test costs. Will revert later. Good stuff.

*slight edit to post below timed at 22:20.

"As for the debate about a cure period and time taken to execute the AFE, etc, etc. I just read it differently from the two of you. My interpretation of the Qtrly statement is that the obligation to pay the $1.745m is separate from the execution of the AFE, see use of word "also" in first sentence of paragraph beginning, "Burgundy will also....."

Like Shareguru22, I view the receipt of US$1.745m, *or otherwise*, to be a material event especially in light of 88E's low cash position at the conclusion of the winter flow test program. It's for that reason that I expected the company to inform its shareholders late last week. Anyhoo, we'll know soon enough so let's see what happens."

16:35

Hi Candlestick - thanks for the reply.

I thought those might be figures to which you were referring. Good stuff. To answer your points in turn:

1) For Q3, after using the word "predominantly", had 88E reversed the order of "final Hickory-1 drilling payments" and "planning and permitting costs for Hickory-1 flow test program" I'd have agreed with your conclusion. I reckon it's the other way round - chiefly costs of drilling from last season as opposed to planning for the flow test. I'm not sure if we'll ever find out, are you? I appreciate many readers of this exchange will point out it's semantics. I get it. I would rebut that argument by stating it's not semantics if the company is running on vapours after the flow test is completed this season.

2) I have greater sympathy for your assessment in Q4. Happy to go along with your calculations.

For me, overall, perhaps cash outflows of US$2m associated with the flow test in H2'23 v's total gross budget of US$11m v's cash at hand at y/end of US$12m? Let's see what the Burgundy news is over the next few hours/days and re-assess?

To Brom and Redbeardoil2 - agree with Brom and disagree with Redbeardoil2 that 88E's costs for the first well will not fall in CY'24 as currently understood. However, there is the 4th instalment of US$0.9m cash to be paid under the original farm-in agreement (see RNS dated 13/11/23) by 1/6/24. Definite cash outflow.

As for the debate about a cure period and time taken to execute the AFE, etc, etc. I just read it differently from the two of you. Like Shareguru22, I view the receipt, or otherwise, to be a material event especially in light of 88E's low cash position at the conclusion of the winter flow test program. It's for that reason that I expected the company to inform its shareholders late last week. Anyhoo, we'll know soon enough so let's see what happens.

Polite observation. See how easy it is to bring out the points of debate and to discuss them politely with other folk who are prepared to do a little bit of reading/research? No name calling, just highlighting the key points at issue. If there's no definitive answer, a respectful debate of definitions, suggestions, calculations, interpretations, etc. This forum is capable if it chooses to be!

16th Feb 07:52

Hi Candlestick - thank you for your post. I have a couple of questions please.

1) You state: "Don’t forget that they’ve already allocated funds for the Flow Tests (possibly as much as US$2.6m) out of the published accounts over the last 2 quarters." I'd be grateful if you would point us to those line items you describe which I note you suggest *may* total up to US$2.6m. I accept fully you're not being definitive here.

2) You go on to mention G&A. By my reading, G&A for 2022 was US$2.8m and for 2023 it was US$3.2m. According to the latest Quarterly Report the Longhorn dividend for CY'23 was only US$1.31m. We know from the RNS dated 12/1/24 that the "Fully funded Flow Test [has a] budget of US$11 million (gross)." 88E received US$2m from Burgundy in Dec '23 so it will have been included in the US$12m cash at hand at year end. Accordingly, 88E are quite correct in saying they have sufficient funds for the gross cost of the flow test.

Happy to be corrected here Candlestick, but if Burgundy didn't pay the remaining US$1.745m by the 15th Feb, then 88E will have to pay the full gross cost of US$11m. That'll leave 88E with less than US$1m by the end of the winter season, correct? Ok, there's Longhorn dividends but it looks to be contributing c.US$400k per quarter max, which doesn't cover quarterly G&A costs of US$800k.

Unless 88E is able to access the Texas-originated debt facility, 88E could/will be running out of cash by June at the latest. Does anybody know if 88E is permitted to drawdown cash from the debt facility for non-Longhorn related expenditure? If so, please let the forum know? Brom - you must be curious about this? You've told us management always get back to you quickly when you have a question...any chance you could find out please?

To show I'm always being fair if Burgundy hasn't come up with the US$1.745m, on Monday afternoon/evening I will recalculate the value per barrel in the ground for 88E. It's currently c.18-19p per recoverable barrel in the ground which, of course, will decrease when we take into account the transfer of the 12.5% W.I. from Burgundy to 88E. Good stuff.

Let's see what happens when 88E management inform shareholders about the state of play with Burgundy. I agree with shareguru22 that it's a material piece of news whether Burgundy has paid the US$1.745m balance *or* hasn't paid that balance. I must admit to being a tad surprised 88E didn't update the market about Burgundy on Thursday or Friday of this week. Cracking photos from the Hickory-1 ice pad though!

20:05

Hi Olderwiser - firstly, many thanks for the professional explanation below. I urge members of both his forum and the SN's forum to take note.

I have a question for you, Olderwiser. On a like for like basis and with a nod to your explanation below, when you examine the unequal (in quantity and quality) portions of the shared reservoirs owned by PANR and 88E, is it at all possible to justify an 88E recoverable barrel in the ground at Project Phoenix to be valued at a premium to a PANR recoverable barrel in the ground?

Based on today's SP, a PANR barrel in the ground is valued by the equity market at c.11-12p. Using the exact same methodology, and employing 88E management's *own* guidance, a lower classification 88E barrel in the ground is valued at c.19p. I have tried to look at it from all angles but I simply cannot apply any analysis which justifies this differential in imputed value. I'd be interested in your assessment of the question?

As for the lse moderating your post. It looks like you've fallen foul of a rude word algo. It's happened to me before. An odd quirk of this automatic moderation (and insertion of asterisks) sees all the capital letters, at the start of sentences for example, changed to lowercase. Weird :)

No announcement or RNS confirming if Burgundy have paid the US$1.745m due by 15/2/24. Anyone got information on that front? *If* Burgundy haven't paid then 88E will have to raise capital pdq. 88E had US$11.8m cash at hand at year end and the Hickory-1 operations are budgeted to cost US$11m. We can all do the maths from that point.

21:06

erskine - I admire your thick skin, I genuinely do. Let me tell you why. Earlier today you sought to undermine my research by trying to catch me out about Hickory-1 becoming a production well. Do you remember? It was just a few hours ago.

I replied explaining that production wells on the North Slope these days are long laterals. I added that for tight-ish reservoirs like wot 88E has, it'll also be necessary to execute multi-stage fracks, perhaps as many as 60 per well.

Did you reply politely with, "Thanks scot126, I didn't know that. Thanks for the heads up. That'll help me when thinking about the 88E investment case. To all other readers of this forum - I withdraw my suggestion that Hickory-1 will ever be a production well. As scot126 states, it could become a gas re-injection well at some point in the future."

But bulletin boards, eh erskine?

As for the amateur psychology claptrap, whatever you say Mr Freud. Oh, and I won't take lectures from a guy who is seeding a public bulletin board populated by folk far less experienced than you and I with all sorts of fantastical target prices with absolutely no basis for such predictions apart from "but the herd...." Pathetic.

20:55

Hi Gman93 - to answer your points directly.

1) Fact check? False.

"The herd hasn’t been here since Q2 22’ because that was the last time 88E did a flow test."

Neither Merlin-1 (2021) or Merlin-2 (2022) were flow tested. The OTC herd of 2021 and 2022 was manufactured by a world class social media campaign, total h/t. The campaign caught the zeitgeist: working from home during the pandemic plus OTC punters thinking the markets are easy because they crushed a hedge fund using Gamestop. Oh, and don't forget about Alex Delarge, subsequently convicted of fraud for P'N'Ding stocks like 88E using social media. Fact.

Gman, I'm not surprised you didn't know this. But what I am is shocked that so many posters on this forum couldn't give two hoots about the facts of the 88E investment case. Even that would be fine, but you (and many others) then proceed to pour scorn on anyone who shows the slightest willingness to do even 5 minutes of research. C'mon man, we gotta be better than that, non?

2) "We all know positive results of the upcoming tests have the potential to significantly change the value of this company." My view? 88E is overvalued today, *before* the flow tests have started. Moreover, even if *both* of the flow tests are a *complete success*, 88E would still be overvalued at today's SP. The reason? Because bluntly there is no world where it makes the slightest sense that a higher classification barrel in the ground, owned by another company in the same reservoirs, but UPDIP of 88E should be valued lower than 88E, *even after two successful flow tests. And before you talk about debt, why do you think I added 103m shares to the SOI of the NN? To replace the debt with equity at a discount. I *am* comparing like with like, you just didn't recognise it.

3) For the 5 billionth time. I am seeking price discovery. The comparative valuation disparity between 88E and the NN is the clearest and most obvious I think I have ever worked on in my entire career. That's it. No more, no less.

4) The whole "guided" and "advised" thing is tiresome. Not because it hurts my feels but because it's not true. I share my research and analysis. What folk opt to do thereafter is their business and none of mine.

5) Nope, you're dead wrong about the whole caring about investors thing. I'm one of those weird professionals who finds it unethical to disseminate false or misleading information for financial gain. I just don't do it, I never have. I make mistakes of course, but unlike so many on these bulletin boards I NEVER set out to misinform or disinform. /end

Instead of this tiresome personal abuse, how about actually fact-checking me.....or, I dunno, doing your own valuation and sharing it with the forum? Grrrrr!!

17:09

GordonBennett1 - Candlestick has given you helpful information about Burgundy, as has soulac. Candlestick's info is the more up to date.

Here are the facts, as understood from publicly available information at time of writing. Cash at year end was AUD$18.3m US$11.9m. This figure includes the US$2.0 paid by Burgundy to 88E in December '23. The outstanding amount owed by Burgundy is US$1.745m, payable by 15th Feb otherwise the standstill agreement expires and 88E will receive a tranche of Burgundy's working interest in the project.

But here's the thing you and your social media momentum trading mates need to understand. The budget guided by 88E management for the operations at Hickory-1 this season is US$11m. By the time 88E pays the contractors in Feb/March/April they'll be operating on fumes => placing ahoy.

Have a look at 88E's history. Objectively, they are incredibly proficient at getting a fundraise away *prior* to operational results. I'm not being sarcastic here. 88E is genuinely adept at raising capital when there's increased chatter around the company.

Other options for finance? There's a US$5m debt facility secured by their Texas asset. I do not know whether the facility limits drawdowns to expenditure in Texas only? Does anyone else know? The other option for cash in the short term is for Burgundy to pay the remaining obligation of US$1.745m in the next 24 hours. That would buy 88E another couple of months.

Let's see what happens.

Genuine question for professional momentum traders like you. *If* the herd doesn't arrive (for the record I don't think it will, the last herd disappeared in Q2'22 and the OTC punters lost their shirts) am I correct in thinking you don't plan on hanging around for the next funding round?

Second question. *If* you're not 100% confident of the herd's arrival, why are you opting to pay 19p per barrel in the ground with 88E v's c.12p per higher classification barrel in the ground at the NN? Are you not relying on something outside your control (the herd's arrival or not) when the fundamental maths are *already definitively against you*?

16:34

Hi RP2020 - quick correction to your post. I don't know if 88E will issue an RNS before this weekend? I can see why you may think it possible. However, a number of members of this forum are pointing to the rig travelling from Deadhorse to the Hickory-1 ice pad on the 17th so perhaps an RNS is more likely on Monday, 19th Feb? Who knows?

The correction is to the following: "...and final one in two weeks". This is not as guided by 88E management. 88E is testing two horizons at Hickory-1. Moving from deeper to shallower (for reasons of physics) they will be firstly flow testing the SFS and then the SMD. Management has guided that they intend to notify the market at the conclusion of each flow test. Thus the market should expect two RNSs, one for each flow test, not one final RNS as you wrote.

Head to the 88E website and check out their latest RNSs and the latest video. Ashley Gilbert describes the timetable of events very clearly. Good stuff.

17:09

ShareNovice22 - quick correction to your post.

You wrote: "Stay tuned over the coming weeks though, 88e could go through the roof, and of course a good result there is a good result here."

What you should have written is as follows: "Stay tuned over the coming weeks though, SN could go through the roof, and of course a good result there is an even better result here. This is due to the fact that PANR's portion of the shared reservoirs are *updip* of the SN's acreage. The effects of Dmax are anticipated to strongly favour the updip portions of these reservoirs, all of which are located on PANR's acreage. Of course there is a logarithmic effect on reservoir properties as Dmax delivers better perm and porosity as we move updip. Thus we can say with mathematical and statistical confidence that a good result for the SN at Hickory-1 will have a leveraged positive effect for PANR."

That's far more accurate, isn't it?

As for Brom, I suspect you're dead wrong. There's not a chance in hell he's blocked me, or Rabito79 or Olderwiser for that matter. Not a chance.

NN = northern neighbour

SN = southern neighbour

If you don't know which is which, look at a map of the acreage of both companies, it's dead obvious.

lse seems to have departed from its previous decision to allow the forums to refer to each other. This is, of course, the correct strategy because the two companies own unequal (in quantity and quality) portions of the same O&G reservoirs. It appears we must go back to NN and SN. Hey-ho.

14:18

Hi Brom,

1) In your model, what's your value of a PANR barrel in the ground v's a lower classification SN barrel in the ground.

2) SN had c.US$11.8m cash at hand at year end. The budget for the Hickory-1 operations this season is US$11m. Do you expect Burgundy to pay the US$1.745m they owe SN? Are you anticipating an imminent fundraise for working cap for the SN?

Good to see you on this forum.

13:14

Hi sirmark. I'm with Rabito79 on this one. Your enthusiasm is infectious but let's stick to the confirmed facts on this forum. The punting cohort can talk of trains leaving stations and rockets but, in the long run, sticking to the facts is best. The rig to be used by our southern neighbour hasn't even departed Deadhorse yet!!

FWIW, the most rational way of displaying the irrationality of the market (lol) as far as these two stocks go is to compare the imputed value of a barrel in the ground for each company. Using today's share prices, an 88E barrel in the ground is valued at 19-20p using their management's guidance on volume and CoS. A PANR barre3l in the ground if valued at approx 12p today.

There is no, repeat no, mathematical reason for this. None.