Member Info for Scot126

Happy days, eh?!

Before you all get your knickers in a twist about milkshaking laws in Alaska, etc, etc. may I suggest you ask the oilmen on here a few questions?

1) What does the term "distal" mean in connection with an oil reservoir? Perhaps start reading about the Basin Floor Fan, how Talitha is described by PANR management as "distal" v's the Theta West drill location.....and then look at a map and note how Icewine is even further away from Theta West than Talitha #A. Oops.

2) Ask them if it is better to possess the updip or downdip portion of any oilfield, knowing that oil is less dense than water?

3) Ask them why PANR management has published maps and associated webinar commentary which state their interpretation is that PANR owns >90% of the combined oilfields?

4) After all that, and happy to stipulate Premier had other things going on at the time, why did Premier walk away after Charlie-1? I wonder if they picked the wrong farm in project? Maybe 88E shareholders ought to have asked Premier that question?

Still, it's an awesome ANN/RNS, no doubt. Can't help wondering why it is that the market is valuing 88E's 10% of the combined asset at £350m and PANR's 90% of the combined asset at £1bn.

I can see why 88E management elected to make such an announcement prior to the market working out that ***even if Merlin-2 was spectacularly successful geologically***, the NPV will hardly move. I 100% welcome the wider market's comparative analysis of the two investment cases. Just wait until the thousands of US punters read some American broker research which informs them they've backed the Shetland pony when there's a Woolly Mammoth a few miles to the north of them. ;)

Some will recall I promised this forum the mispricing wouldn't last into perpetuity? 88E's announcement this evening has just accelerated that process.

Think.

Enjoy the party in the petting zoo but, I contend directly, Jurassic Park is next door! :)

Dear oh dear, Brain4321. I know, I know, reading is tricky, isn't it?

"Aggressive caps lock as well….
He’s a wee bit upset back-home"

Might be an idea to re-read the first paragraph of my post timed at 17:56?

Now then, let's have a quick review of your two reply posts, shall we?

Personal abuse? Tick.
Attempt to fact check my content? Negative.
Attempt to debate the fundamental? Nope.

Brilliant.

LAUGHABLE BUT DANGEROUS FANTASY which needed to be fact-checked in the strongest possible terms.

Before anyone gets a tanty, forget the personal abuse, duck's back an' all that. Show me up. Embarrass me. Tell me and tell this forum where I'm going wrong. I challenge any of you to do so......but you won't because you can't.

Wed 23:18
Hi BB32 - notwithstanding the accurate response from cbaron today (timed at 08:53) I thought I ought to factcheck your original post because it would be a shame if the 25 readers who "ticked" the post were (un)intentionally misled by your content. My corrections will be in CAPITALS to differentiate my content from yours, I'm not shouting!

"Oil field sales are based on Oil in Place, ie proven reserves, [OIP IS NOT THE SAME AS RESERVES] that is what we have to do, proove up this drill, it is glaringly obvious we do not have the money to build the infrastructure [CORRECT] to bring the Oil to market ourselves, so what happens ?

We sell it [TO WHOM?], and guess what , as part of those negotiations the buyer will take into account how much it will cost them to get it to market, and offer us a price based on the proven resources. [BUYERS ASSESS RESERVES + RECOVERABLE RESOURCES + OIP + CAPITAL COSTS + COST OF PRODUCTION + TIME TO FIRST COMMERCIAL OIL + DURATION OF PROJECT + LOADS MORE]

The higher the current price of oil the better [TRUE] , but it is usual the average cost over a number of years will govern the buy price [TRUE], figures have ranged over the years of $3-$10 per barrel in ground [FACTUALLY INCORRECT], the buyer covers the cost of production [TRUE] so we as the seller do not have to worry about future development cost [TRUE] !

HMMM.....SEEMS LIKE YOU'VE OMITTED TO MENTION THE TRANSACTION WHICH IS MOST PERTINENT TO PEREGRINE? ANY GUESSES? YEP, IT'S 88E'S VERY OWN PURCHASE OF THE 100MMBO RESERVES AT UMIAT WHERE 88E PAID 1 US CENT PER RESERVE BARREL IN THE GROUND. YOU'RE 100% CORRECT THAT THE SELLER OF UMIAT DIDN'T HAVE TO WORRY ABOUT THE FUTURE DEVELOPMENT COSTS, BECAUSE 88E ARE NOW RESPONSIBLE FOR THOSE COSTS! OK, THE POO HAS DOUBLED IN THE INTERVENING PERIOD BUT THE MASSIVE CAPITAL COSTS ASSOCIATED WITH PIPELINE CONSTRUCTION HAVEN'T DISAPPEARED. IT IS FOR THIS REASON, THE STRANDED NATURE OF PEREGRINE/UMIAT THAT 88E WAS ABLE TO BUY 100MMBO FOR A PIDDLING 1 CENT PER RESERVE BARREL. PEREGRINE HAS ZERO BARRELS OF RESERVES AND 88E WILL NEED ANOTHER 2 OR 3 WINTER SEASONS (MINIMUM) TO MOVE PEREGRINE TO RESERVE STATUS => CHANCES OF PRICE PAID BY A FUTURE ACQUIROR BEING ABOVE A FEW CENTS PER BARREL IS INFINTESIMALLY SMALL.

If we proove 600m barrels of oil even at $3 we would get $1.8Bn if we just sold Peregrine, enough to use to find and proove up Oil in our other areas and give out special dividend to all share holders. [PIE IN THE SKY, FANTASY LAND NONSENSE. YOU MUST, REPEAT MUST, ASK YOURSELF WHY 88E'S OWN BoD WAS ABLE TO BUY 100MMBO FOR US$1M? YOU'RE LIVING IN LALALAND, BB32.

FOLK NATURALLY REFER TO THE $3.10 PER BARREL PAID BY OIL SEARCH FOR PIKKA/HORSESHOE. NOBODY, REPEAT NOBODY, ON THIS FORUM MENTIONS THE 12 VERTICAL WELLS AND 7 LATERALS ARMSTRONG HAD TO DRILL TO PROVIDE A FUTURE BUYER WITH SUFFICIENT DATA. AND THIS FORUM THINKS MERLIN-2 WILL PROVIDE SUFFICIENT DATA TO ACHIEVE $3 PER BARREL IN THE GROUND? LAUGHA

11:07
No worries, Princess. Dry your eyes.

Here's the thing, Sefton82. You can bleat all you like about the wisdom of posting on a public forum your ridiculous conspiracy theory that PANR (and Canaccord the NOMAD) would purposely hold back a much anticipated flow test RNS prior to President Biden's SOTU. The *fact* remains that you had no basis for your conspiracy theory and no evidence of similar behaviour historically by PANR and/or Canaccord. In addition, you clearly didn't listen to the webinar dated 24/2/22 where Justin Hondris dealt directly with the "timing of news strategy" question.

Despite all of the above, you have chosen not to act responsibly towards your fellow shareholders, you've doubled down and you're now acting like a scolded child by refusing to be accountable for your own actions. That's a Sefton82 problem, not a PANR or scot126 problem.

scouser - you asked about the official PANR Twitter feed. Google a guy called Art Berman and look at his Forbes profile, then head over to his Twitter account (@aeberman12) and you'll see pretty much the same content. Art knows the PANR personnel pretty well and has done project work for them in the past. I suspect he has given PANR permission to use his proprietary content. Personally, I think PANR could do a bit better with its online IR and PR but equally I recognise fully they have very few employees and they're very stretched currently. As for the Chevron tweet specifically, wait a day or two and there'll be a tweet about Exxon, another on BP and a third on Shell. There's no hidden meaning intended whatsoever.

FWIW most US media reports are using the same statistic which is that currently the US imports c.600k bopd from Russia. Ties up nicely with the data kindly provided by Unlikely2.

Hey Sefton82 - you may be a horse lover but even horse lovers can makes mistakes with numbers, eh? Thanks for the correction and apology, appreciated at this end. As for "vitriol", think you need to look up the dictionary definition. I shut down your baseless conspiracy theory robustly but there was no vitriol. I just think we owe fellow shareholders a greater standard of care, and we need to accept some personal responsibility when we post spurious content on a public forum. If you don't wish to be shut down so "robustly" then the solution is really rather simple. Don't post baseless, factless, unsubstantiated, evidence-less, proof-less nonsense!!

07:21
500m bopd? The world consumes 100m bopd. Think something isn't quite right there, Sefton82.

19:35
poiu - you know what, poiu, I honestly think it's the first time I've ever used that expression on this site. It's odd that you feel sufficiently aware of my input to make a staggeringly oafish remark whilst at the same time not realising "the other place" appears to be the traditional way of referring to other forums on lse. It's certainly in common usage on this forum and the SN's forum - fact. FWIW I usually refer to "the other place" as Alpha Delta Victor Foxtrot November but decided to take a short cut today. I know not why.

Still at least we now know you're a total ***t.

09:46
Hi Sefton82 - I don't know what type of companies you've invested in in the past which lead you to believe that's a possible consideration for PANR management but I can 100% promise you that's not how the PANR directors conduct themselves. During the recent webinar PANR management made it crystal clear they would announce news "as and when it was available" and furthermore "there's no point holding back news, be it good or bad". These are direct quotations and PANR's history as a listed company does not suggest anything other than that policy being followed.

I think we would all do well to desist from posting such baseless conspiracy theories.

The following is an attempt to manage expectations based on probabilities.

*Opinion*: I reckon, based on the duration of prior operations, historical guidance and monitoring the regional weather, that there's a decent possibility we could receive news about the SMD flow test result at Talitha #A at some point this week. That said, I won't be crestfallen if we don't receive news about the SMD this week. All the same, there's got to be a more than reasonable chance of news from that horizon fairly soon.

Just in case anyone links words posted on this thread (such as "expecting an RNS this morning") with possible news from Theta West, to me that is a longer shot. How so? We know there was a human error at Theta West which required a week of remediation during which there was a period of 24-36 hours where *all* roads on the ANS were shut by the SoA due to weather conditions (I monitor these sites daily, fyi). FWIW I do agree with the logic of some posters on the other place who have posited that the absence of a "sidetrack is our next option" RNS likely has positive implications. However, to expect remediation *and* a full flow test to have occurred on the BFF Lower at Theta West such that a "momentous" result could be due this week is, IMHO, unrealistic.

I hope that helps with shaping expectations. I'm not being definitive in any way but setting hares running when they ought not to be doesn't do anyone any good.

My *personal* expectations of newsflow, in order:

1) flow test results for SMD at Talitha #A
2) flow test results for BFF Lower at Theta West
3) flow test results for BFF Upper at Theta West

Good stuff.

23:07
Blackadder2708 - your schedule of operations doesn't look unreasonable. However, there's no getting away from it, they're cutting it mighty fine on timing and the season ending. I 100% accept it was correct for management to add in the caveats of logging results and weather (operating window) before flow testing can be justified/expected to take place.

I note you've only left approx 1 week for flow testing prior to demob, correct? Is that not a tad tight to test three horizons in your experience, with the proviso the logs warrant flow testing all three intervals of course? Looks tight to me.

My *opinion*? The schedule has moved to the right from mid-Feb to early March to w/c March 7th over the course of the last few RNSs. I wish every possible success for Merlin-2 but with this latest guidance on timing, *any* objective observer would have no choice but to conclude the execution risk has increased attendant with the scheduling slippage.

Let's say spud is the 7th or 8th of March, ok? That's a full three weeks behind the initial guidance of Feb 15th. Gotta hope the weather stays cold for them but as Brom informs this forum frequently, it's more about the sun's rays when you get into the second half of April v's absolute temperatures.

For traders out there, it is my best guesstimate the NN will be reporting the flow test result from the shallowest Shelf Margin Deltaic (SMD) at Talitha #A at some point this week. For those who don't know, a) the SMD was the primary horizon which the NN wished to flow test at this location and b) I do think there's a more than reasonable chance the SMD extends southwards from the NN's acreage into 88E's. I'm happy do discuss relative proportions when you are! But before Howey1927 starts playing number bingo, it's no where near as high as his fanciful 20%!

Think.

Enjoy the party but dance close to the exit.

20:19
Noted and understood, theiceberg. Whatever your trading/investment strategy it's always better to get the background facts corrected if someone *mistakenly* publishes them on a public forum, as I'm sure you will agree.

I 100% take your point about setting expectations and 100% agree with you that we'd all do well to wait for the *empirical flow test numbers* to arrive *prior* to examining and incorporating Telemachus' thesis on Theta West.

Your flow test numbers look just about spot on to me. If we get those two guided numbers I will be absolutely delighted - fact.

20:16
Hi again bigpat - good to see you respond by forensically taking apart my research and analysis of 88E. Uh, wait a minute......

19:57
Hi bigpat - for me as a fundamental investor, it's not a case of "believing" or not. You don't appear to have followed closely my argument? In fact my argument removes entirely any requirement for "belief". I contend that *even if* Merlin-2 is drilled and flow tested successfully this season, and proves every single one of the 652mmbo it's targeting, the increase to NPV as calculated by analysts (like me) and industry operators will be no more than $70m.

Merlin-2 could prove up a veritable lake of sweet, light crude. The trouble is, the cost and time required to construct the infrastructure required to produce the first barrel of commercial oil is so prohibitive that 88E will not benefit financially from its drilling activity in Peregrine.

Please stop fighting this anonymous "scot126" internet persona. Start fact checking my "facts" and then once a common understanding of the facts is agreed, then argue about the conclusions I have arrived at.

I know I've posted this before but if any readers of this forum think analysts inside brokers, investment banks, fund managers and industry operators *don't* use the same methodologies and valuation techniques I have described, then you're living in cloud cuckoo land. I 100% know this to be true because I was one of them for >20 years. I'm not saying analysts are always correct, far from it. What I am saying is that 88E is about as far removed from its fundamentals as I've seen in my time in the markets. As one of the prolific posters on this forum stated, "88E is now a meme stock". If posters admitted that on this forum I would have zero intellectual issue with their decision to punt 88E shares this season.

FWIW I'd still have a moral problem with taking advantage of US OTC punters who are being sold a lie by some dodgy social media "influencers" but that's a scot126 problem, I accept that.

18:56
Hi theiceberg,

1) Noted with thanks the corrections from "lateral" to "vertical".
2) Noted with thanks your acknowledgement of the correction on TAPS daily volume.
3) Your call but I reckon there's a massive difference between TAPS daily volume of 350k v's 500k. Down at the 350k bopd level and below, the owners of TAPS will have to invest billions of dollars to either heat TAPS or install more pump stations along the route otherwise the crude will become difficult/impossible to transit.
4) That said, you're primarily placing 120k bopd in the context of existing production, I get it. On the main UK site for PANR, if you go back to my notes from earlier webinars and London presentations, Bob Rosenthal stated their development plans at the time saw peak daily production from Alkaid of 30k bopd and 90k bopd from Talitha = 120k bopd. This was ***before*** the majority of Theta West was leased by PANR.
5) I have gone on record on the other place stating I could foresee PANR (or the owner of PANR's assets) contributing close to half of the total daily volume of TAPS. I'm happy to repeat that *theoretical calculation* here. (NB Conoco currently provides c.40% of TAPS daily volume.)
6) If, and I repeat if, PANR/GB/eSeis are correct and Theta West ends up being larger than Kuparuk River, and perhaps even rivals Prudhoe Bay in scale, then it is a natural follow on that PANR (or the future owner of the asset) will produce the majority of crude on the ANS at some point in the not too distant future.
7) I am not anywhere close to Telemachus' level of knowledge nor experience - fact. I do 100% agree with you that increasing expectations ahead of empirical results is unhelpful. Like you, I recall management guiding to a 100-150bopd from the BFF Lower at Theta West being an extremely satisfactory result for shareholders. Personally, I will be over the moon if that's what's reported back to us. I'm with you on that, totally. However, and with a nod to Telemchus' world class expertise, if he reckons there's a development model which would see Theta West horizontal production wells capable of those figures then I, for one, will be giving his thesis my undivided attention when I attempt to place an NPV on a newly proven Theta West asset.
8) I think that perhaps some folk don't appreciate the full ramifications of a successful flow test at Theta West. I can *easily* make a case for the the company *doubling* in market cap *on opening* (so from c.£1bn to £2bn) if the company reports a successful flow test at Theta West. Let's see what happens, shall we? Great stuff.

12:05
My, my, my......all of a sudden Brom pops up with a nudge to his flock of credulous sheep to start considering the possible value of Project Icewine. Well I never, lolololol.

FWIW, and to repeat an assessment I have shared repeatedly on this forum, Project Icewine is by some considerable margin, 88E's most valuable asset. By a mile. How so?

(i) The owner of acreage next door to 88E's Yukon, and spookily 88E's General Manager of Alaska Operations, Erik Opstad is on record stating the acreage has a negative NPV. Who are we to argue with Erik Opstad so let's zero Yukon.

(ii) Peregrine/Umiat. Erik Opstad, being 88E's General Manager of Alaska Operations, was part of the 88E management team which paid $1m for Umiat and valued Peregrine at $28m just a few months ago. Call it $30m combined.

(iii) Mathematics therefore concludes Project Icewine is being valued by the market at approx £300m.

Wait 'til you all read the following, folks. I actually believe Project Icewine will likely be valued in excess of £300m at some point in the future. Want me to repeat that? I actually believe Project Icewine will likely be valued in excess of £300m at some point in the future.

However, before anyone starts to get a warm'n'fuzzy feeling towards me, think on this. For me to be correct about Project Icewine being valued in excess of £300m in the future, you must, repeat "must", accept the geological and mathematical *fact* that 88E possess a small minority of the shared asset by volume, and an even smaller minority of the shared asset by value.

Some of my historical posts have been labelled as addressed only to "investors". This post is clearly addressed to investors *and* traders who read this forum. If any of you, investors or traders, have a suspicion Project Icewine is 88E's most valuable asset then are you positioned accordingly to maximise your return?

If the market is currently valuing 10% of a shared asset at £300m and 90% of that shared asset at £1bn, ask yourself when a fresh wave of UK/US institutional investors come upon the results from Talitha and Theta West over the next few weeks, which stock are they going to buy? The one with 10% of the combined asset, or the one with 90%.

Hell, I'll even indulge Howey1927. To be blunt, he's dead wrong, but let's say 88E owns 20% of the combined asset by value, ok? £300m for 20% of the shared asset v's £1bn for 80% of the same asset => 88E is overvalued and the NN is undervalued.

Yes, 88E is a meme stock and the NN is not. Accepted in full. But that's still a helluva risk for anyone who a) doesn't believe Merlin-2 will have sufficient time to flow test this season, b) doesn't believe *all three* horizons will be successful at Merlin-2 c) doesn't believe Conoco has any imperative to pick up the phone to 88E about Umiat/Peregrine for at least another 5-10 years.

Think.

PS Looking forward to hearing more from you, Brom, on Project Icewine. I bet we will!!

11:14
Hi theiceberg - a couple of points?

1) TAPS daily volume is approx 500k barrels of oil, not 350k as you state. For the last few months I don't think there's been one day when it's been outside the range of 480k - 520k barrels per day?
[source http://www.tax.alaska.gov/programs/oil/dailyoil/dailyoil.aspx ]
FYI - when constructed in the 1970s, TAPS was designed to carry up to 2mmbo per day.

2) This is a question rather than a correction, theiceberg. On a couple of occasions in your post timed at 11:14, did you mistakenly use "lateral" where you meant to write "vertical"?

(i) "That equates to 100 bopd or so from a lateral." Perhaps it should read "That equates to 100 bopd or so from a vertical flow test"?

(ii) "The idea that we could get 4000 bopd from a single hole or even 400 from a lateral, is dream like, but it isn't going to happen and building up expectations is dangerous." Perhaps it should read "The idea that we could get 4000 bopd from a single hole or even 400 from a vertical flow test, is dream like, but it isn't going to happen and building up expectations is dangerous."

Delighted to read your response to 2)(i) and 2)(ii), theiceberg?

On a wider point, I contend that "The idea [that] we can produce 35k bopd from a few pads and 30 odd holes would be fantastic" is absolutely achievable when examining the company's initial guidance on roadside production wells targeting the SMD and Alkaid Deep (original Brookian ZOI). I'll go a tad further. I think theiceberg's scenario which he describes as "fantastic" is *exactly* what is being envisaged by PANR management when developing their roadside (adjacent to the Dalton Highway and TAPS) assets. For the record, my research suggests the horizons capable of being produced adjacent to the roadside are as follows: SMD, Alkaid Deep (original Brookian ZOI), SFS, Kuparuk. Yep, that's four distinct horizons. Furthermore, it is my contention the vast majority of the market does not yet appreciate this. Nor, for that matter, do many shareholders.

I'd have thought there's a decent chance we receive some news this week from either/both sites. Unlike some, I am *not* hung up on news dropping on Monday morning. Anytime this week will be fine with me. I'd far rather the company and contractors take the time to be as accurate as possible v's rushing and leaving questions unanswered. Great stuff.

17:11
Hello again Howey1927 - have you had a moment during your time as an 88E shareholder to ask the Chairman for an explanation why the company handed back to the SoA some superb lease blocks last September?

With that in mind and with all due respect, I'm going to go with the management team which spotted the regional seismic anomalies first; the team which moved from focussing on the unconventional to the conventional years before the other team; the team which kept schtuum about Theta West for years until their capital structure allowed them to pounce; the team which has had two Units approved by the SoA; the team which *didn't* miss the anomalies at Charlie-1. In other words, on matters of interpreting seismic, mapping the geology subsurface and allocating proportions of hydrocarbons, I'm going to go with the team which knocked back a $1bn farm in deal late last year.

Hmmm, unless you think Premier walked away from 20% of 17bbo OIP?

FWIW, whomever posted that I agreed 88E likely owned 2-20% of the combined asset, I reject this entirely. I am happy to stipulate the following range by volume, 1% - 9%, and 3-5% by value.

Once again, I highlight the ludicrous mispricing which currently sees an investor/trader confronting the following scenario: we can buy c.10% of a shared asset for c.£300m and at the same time on the same exchange, we can also buy 90% of that shared asset for c.£1bn.

Again I repeat, the chances of the market maintaining this mispricing into perpetuity is Nil. I do appreciate the majority of readers of this forum are here to trade 88E, seeking to profit off the backs of thousands of unsophisticated, credulous US punters on the OTC market but I fear you're ignoring a massive risk to that trade. If, and I repeat if, the flow tests from the SMD at Talitha and the flow tests from the BFF Lower and Upper at Theta West come in before the logs from Merlin-2 (for the record, I *suspect* the SMD and BFF Lower results will almost certainly arrive prior to the Merlin-2 logs) then the ratio I have outlined above is, almost certainly, going to blow out in the NN's favour.

Think.

Enjoy the party but dance close to the exit.

12:00
Hi Cenkman - I can see the narrative you're trying to support with these three examples. I am not sufficiently aware of the fundamentals of RECAF or CGXEF to make a valid comment. However, when examining your example of PANR (the NN), I trust you do realise the upside risk (ie. sheer potential scale of the asset) is *at least* a standard deviation higher for PANR than it is for 88E?

Have you actually examined the OIP figures for each of the four companies and their respective assets? I'm on record as stating it is my belief, using comparative analysis modelling, that the NN's mkt cap ought to be approx 7x larger than 88E's on any given day. FWIW, I think this mispricing is a combination of 88E's mkt cap being waaaayyyy too high and the NN's being waaaayyyyy too low.

I've provided this forum with plenty of comparative valuations for the distinct assets owned by 88E and it's NN, and for the shared asset too. Not one person has challenged the logic, the rationale, the mathematics behind my contention. Currently, an investor or trader can buy 10% of a shared asset for £300m and 90% of ***exactly the same shared asset*** for £1bn. The chances of this mispricing remaining into posterity is precisely Nil. The equity markets will sort out this mispricing in the Spring/Summer IMHO but if they don't, the sector soon will when the assets are subject to attention from external O&G operators. FWIW, *even if Merlin-2 is an unalloyed success geologically*, I do not believe any external party will be interested in acquiring the asset because a) it's too stranded b) relies almost entirely on the beneficence of Conoco c) will be too capital intensive to move to full development and d) will take a minimum of 8-10 years before first commercial oil.

CoS for Merlin-2.

I appreciate geological CoS guidance from 88E management is 56%. I'm *happy* to be corrected but that 56% refers to the chance of *one* of the three horizons coming in. As I understand it, it does not mean that there's a 56% chance of the 652mmbo being proven a recoverable resource.

I'm also concerned, and therefore keeping a wary eye on the calendar, about the clock running out on Merlin-2 prior to a flow test being conducted this winter season. It's far from a formality either way, I recognise that. But it is an execution risk for this season, no doubt about it.

As a prolific poster and consistent 88E supporter stated very honestly a couple of months ago, "88E's value has nothing to do with the fundamentals. 88E is a meme stock now."

Think.

Enjoy the party but dance close to the exit.

22:56
Hi Howey1927 - my pleasure, you've earned it.

If you read carefully, which you haven't done historically, you'll note I have never declared my assessment of 88E's percentage of the shared asset as "fact". Rather I have referred to my analysis of the relevant maps and seismic images which rebut directly Dave Wall's unwise decision to publish diagrams without an accompanying contextual explanation.
You're more than welcome to use a figure of 88E owning "20%" of the combined asset in your model but you're going to be in for a rather rude shock in the coming months. FWIW, I reckon if you take the zero away from your percentage you'll be closer to the final figure than your 20%!

88E shareholders should be praying for the NN's complete success in everything they do. How come? Because IMHO that's your safety net, a net you'll all be desperately scrambling for by the end of May '22. At that point, Howey1927, do you think you'll be able to buy <10% of the shared asset for £300m and >90% of the shared asset for £1.05bn. Nope, I don't think so either. The maths don't stack up, do they?

Think.

Enjoy the party but dance close to the exit.

22:04
Oh dannyboy - 'fraid not. Whether you or I like it or not, 88E and their NN own a common asset(s). As soon as that was confirmed as a fact by both companies, it became a duty of fundamental investors to conduct comparative analysis on the relative valuations of the two stocks. If you think for a millisecond that analysts inside broking firms and investment banks aren't doing the exact same thing then you're not reading this forum properly. I can say this with absolute certainty because I used to do this exactly this sort of thing for my job, starting as far back as 1994. If you think my content is not "meaningful" you'd be wrong but, truly, just block me. I promise I won't be offended in the slightest.

You ask very reasonably, "Why do they need cash if the drill is fully funded?" I could, of course, ask if you meant the 2021 version of "fully funded" or the 2022 version of fully funded which 88E apparently only reached *after* their fund raise of a few days ago?! I'll answer your question directly. Management realise that even if Merlin-2 is a geological success, it will not add much, if any, tangible value to the investment case (due to asset being equally as stranded in May '22 as it was in the 1950s). Once the OTC stooges have been scalped once again and the market realises this to be the case, it'll be extremely difficult for the company to raise fresh equity capital.

IMHO management has rather craftily bought sufficient cashflow to keep the wages/bonuses being paid and the lights switched on for a wee while. What are they waiting for, you may ask? They're waiting for the value of the shared asset(s) south of the boundary line to be unveiled over the next couple of years by the NN's continued programme of operations at Talitha and Alkaid. IMO Yukon is worthless ("negative NPV" by Erik Opstad) and Peregrine/Umiat is worth $30m - $75m. That leaves a big hole to fill v's today's mkt cap of c.£300-330m, doesn't it?

"....and enhancing expertise in production" - dannyboy, you do realise 88E is effectively buying 73% of the cashflow from these 32 wells, don't you? 88E are not going to be operating the wells, they're not going to be the "operator". It's like collecting dividends or royalties from a business run by someone else......like owning a rental property where the estate agent does all the property management, tenancy work, etc. where the property owner gets the rent after fees, service charges, taxes and royalties have been deducted. Ashley Gilbert may never even set foot on the Texas acreage! He and any other 88E employees will certainly not be "enhancing [their] expertise in production."

Summary? The Texas deal is a brilliant deal for the BoD and management. For shareholders? Not so much.