Member Info for Scot126

https://twitter.com/GeodesRock49/status/1495797864299126786?s=20

If the info contained in this tweet comes as a surprise to you, you're been taken in by the social media disinformation and you're in the wrong stock.

If the info contained in this tweet does not come as a surprise and you consider yourself an investor, you're in the wrong stock.

If you don't give two hoots about the information contained in the tweet then you're a punter playing the social media hype surrounding 88E and you don't care about the fundamentals of this company. You're a punter and not an investor. Not my bag but knock yourself out!

14:14
Hi WY5IWYG - I followed easily the narrative of your post and can see how it has worked for you over that timeframe. Very well done and congratulations. I suspect your attitude is the correct one. Also well done for spotting the strategy and evolving your stance from investment to trading.

I do, however, have one major issue with the narrative you describe. For your strategy to work, it requires another tranche of "first time home buyers" to ensure the game of pass the parcel continues from one promoted ramp and spike to the next. IMO, 88E has achieved this by sailing exceptionally close to the wind in their communications with the market and their shareholders (eg. Erik Opstad's patently obvious conflicts of interest and Dave Wall's extremely unwise decision to include images which erroneously infer a degree of geological overlap at a boundary and allowing unsophisticated shareholders to fantasise about volume and value of that overlap without providing the necessary contextual explanations....plus his exit package and lots of other stuff of course).

The company has also enjoyed, whether by design (paid campaign in March '21) or happenstance a social media-led ramptastic rampathon which sees credulous US OTC innocents grabbing their nearest calculator and multiplying the "number of barrels of reserves (!) times the price of oil which equals 88E's company value".

Perhaps you as an individual have not been fanning the flames of misinformation and disinformation, WY5IWYG, but be under no illusion, some folk have been. It happens on forums like this one (nearly 26k posts for goodness sake, lol) and elsewhere on social media. Everyone stop for a second and imagine 88E's share price had it not been for the Game Stop/Stocktwits/Reddit/Fintwit whirlwind around 88E? It has propelled 88E to a valuation so far beyond the support of its fundamentals that it's mathematically absurd.

Those on Twitter should have a quick look at @Oilman_Jim's commentary on 88E today. He's been a fervent and unwavering supporter of 88E for at least two years (maybe longer?). He's a trader of E&Ps by strategy so not an investor like wot I am. Even he is exceptionally cynical about the Texas acquisition and what it symbolises in guaranteeing employee salaries and bonuses v's capital being applied to add value across the portfolio of Alaskan assets. FWIW he's also concerned there will not be sufficient time this season to drill, log and flow test Merlin-2. I'm concerned about that also and am keeping a very watchful eye on 88E's work programme, the calendar and the Alaskan weather. Everyone here should do the same thing IMHO.

Reminder, 88E's mkt cap is c.£300-£330m and the NN's mkt cap is c.£1.05bn. In my analysis the market is paying £300m for <10% of a shared asset by value and at exactly the same time is paying £1.05bn for >90% of that same asset. This will not continue forever, it never does. Think.

All - please do the maths. It'll take 8 years of Texan cashflow (bit less if the 7 workovers are successful) to pay for Merlin-3.

Management and the BoD have just secured their salaries while they wait to see how Project Icewine plays out for 88E.

Think, guys. If you earnestly, earnestly believe you're on the cusp of discovering and then selling one of Alaska's largest oilfields at Peregrine then you direct shareholders' funds at that project, you don't spend $7m of your precious cash at hand on buying a $3m annual revenue stream.

Think.

Enjoy the party but dance close to the exit.

Oh, and anyone who follows Steve'n'stocks and his twitter nonsense......ask him if he knows the difference between updip and downdip in O&G. Then ask him what exactly it is about slide number 23 in the NN's recent webinar presentation deck that makes him suggest 88E has anything higher than a low single digit percentage ownership of Theta West, never mind a majority?

17:09
Hi 3sandsoffbottom - that's very interesting indeed. I was today years old when I learned that was a technique used by the O&G industry when flow-testing. See, that wasn't too difficult, admitting I had no clue about a specific subject matter!!

3sandsoffbottom - do you happen to know if this technique is being used in Russia or Alaska currently? Does anyone else know? What duration of time would be normal to burn off diesel used in such circumstances? just unlucky that the satellite was overhead at the exact moment there was a short period of diesel burning or would it possibly have been burning for hours?

Anyone else experienced in these matters got an explanation for the images, especially the second one dated 19/2/22?

(NB Please note liberal use of "?" in this post. Why? A) Because I know fine well I know nothing about this specific subject and B) I know there are posters on this forum who *do* have that experience.)

17:48
Hi cbaron - you're kidding, aren't you? This whole kerfuffle started off with some random poster making suggestions about how PANR personnel and Nordic-Calista/Baker Hughes/Schlumberger contractors should be working in the cold temperatures ffs?????? Once a well bore is drilled in the Artic, that's it, it's open. If 'elf and safety intervenes because of a cold snap what in the wild, wild world of sport can personnel do about it? To even think for a moment that some laptop warrior wrapped up warm in the UK has miraculously come up with advice that thousands (millions?) of people working in the Artic over the last 70 years hadn't previously thought of is either extreme arrogance or extreme stupidity.

To repeat, there is nothing wrong in the slightest with not knowing stuff about any topic on earth. I swear to God there are folk on these bulletin boards who would back themselves to conduct their own root canal treatment based on the few YouTube videos and owning a mirror! All I'm doing is imploring folk to be responsible with the content they post for fear of misinforming other shareholders/potential investors. Plus, just ask questions if you don't know stuff for goodness sake.

Surely, cbaron, you can't be arguing that because you highlight the word "chat" it absolves posters from all personal responsibility for their content? Anyway, that's me done on the subject. I fully accept you think I've been rude to some posters on this forum. In turn, I accuse those same posters of acting incredibly irresponsibly by posting their content in the first place. It is *those* posters who are acting disrespectfully to their fellow shareholders. If I give them a serve back, they deserve it. If folk stopped posting stupid stuff or act in a nefarious manner, there'd be no reason to respond to them.

Now then, SFS news this week. Agreed?

please see below a cracking satellite image of Talitha. Happy to be corrected on this but is that evidence of gas being flared in the second image? Or could it be exhaust fumes from the equipment conducting fracking/flow testing of the SFS? The dates look about right with the second image dated 19/2/22?

https://twitter.com/AdzUK81/status/1495372252044566529

Thank you to whoever put these images together.

As for the hullabaloo of Friday. There is nothing, repeat nothing, wrong with not knowing something. The problem arises when posters, who self-evidently *don't know* about a specific subject matter, decide to post on a public forum using definitive and declarative vocabulary. C'mon everyone, we must be better than this. When we post on a public forum, we do so knowing other people, who likely have a financial interest in the stock under discussion, are reading our content. Thus, electing to post must surely mean accepting the responsibility which comes with that decision, agreed?

The solution is incredibly easy. Instead of guessing and assuming, ask a question. Make liberal use of the following punctuation mark "????????". I'll give an example. Not in a million years would I state with certainty the process behind a cement job in the frozen Artic Circle because it is indisputable that a) I don't know about the subject matter and b) I 100% know less about this subject than other shareholders/posters to whom I can *easily* address a question.

Another obvious example within the recent memory of this forum is engineer GS's bizarre determination to publish a litany of conspiracy theories despite a) self-evidently not knowing what the word "hedging" means within a financial markets context and b) the fact a 25 year investment banking professional took the time (hours and hours) to forensically pull apart his nonsense, ad nauseam.

So, really simple solution. Ask questions, lots of them. And for goodness sake resist any urge to post suggestions for PANR employees and Nordic-Calista/Baker Hughes/Schlumberger contractors on site when the closest you've got to drilling for oil in Artic conditions is putting another ice cube in your vodka Red Bull in a Val d'Isere apres-ski bar. Ok?! :)

*Opinion*: I suspect we'll get some news about the Talitha SFS flow test in the week ahead. Looking forward to reading about it. Worth remembering that whatever the result from the SFS, the broking analysts don't have anything in their models and valuations for this particular horizon. Thus, I have argued it's a bit of a "free hit" for the company and for shareholders. Good stuff.

Thu 23:27
Howey1927 - keepin' it classy, I see. No attempt to engage on the 88E investment case. No attempt to conduct any research? No attempt to add any value to this forum? Just abuse the anonymous poster, that'll do the trick, eh Howey1927?

FWIW, I'm not paid by the word to write posts. I'm aware such "jobs" exist out there in the ether but I can assure you a) they couldn't afford me and b) if you believe me when I state my conscience doesn't permit me to take advantage of thousands of mug US OTC punters, then I'm hardly going to accept a paid job sowing actual misinformation and disinformation on a UK bulletin board, am I?

I *do* have an interest in 88E. Since Dave Wall formally confirmed in an RNS in March/April 2021 that 88E and its NN shared an asset in the 88E Central Blocks, I've had an "interest". My "interest" turned into action on this forum when the same Dave Wall elected, unwisely IMO (and perhaps unethically too?), to publish a couple of maps (without the essential context) which gave the false impression 88E owned a significant tranche of the combined asset.

That said, Howey1927, if you reckon <10% by value (and I reckon more like 3-5% by value) of a shared asset is "significant" then you just keep on kidding yourself, knock yourself out. But don't deliberately and unethically communicate that baseless nonsense on a public forum. Have you bothered to listen/view the last two NN webinars as part of your DD? If so, you would know that far from "significant" it'll be a small minority of the shared asset which is owned by 88E. Ironically, it'll be the shared asset at Project Icewine which turns out to be the greatest value to 88E shareholders. However as long as Peregrine is all that the social media "influencers" tweet about, that's all folk like you are interested in! Correct?!

Thu 22:05
Hi Metalbasher - yep, I accept that in purchasing a producing asset in Texas, 88E will presumably receive an income stream all year round.

I do, however, have to fact check you on the second part of your sentence where you state ".....[as] apposed [sic] to the seasonal one which we currently enjoy." 88E does *not* have any revenue currently. Furthermore, it is my contention, based on examining various other regional projects, that it will be *at least 8-10 years* before 88E generates any revenue from its Umiat/Peregrine project. Let's face it, it's the Umiat/Peregrine project which is the pretext for all the social media hype, isn't it? As I've stated repeatedly, with not one poster forensically pulling apart my logic, even if Merlin-2 is a complete success this winter season, the mathematical uplift in fundamental value wouldn't justify 88E's ****current**** market capitalisation, never mind justifying a rise in the fundamental value of the company. Sure, the ill-educated credulity of thousands of mug punters in the US OTC markets might see the SP appreciate, but it'll all be hype and not genuine added value.

To your point about the revenue from the Texas asset being applied to 88E's operations in Alaska, yep, very fair point. Makes sense. Can someone kindly point me to the historical cashflows generated by this Texas asset please? Reserves report? Decline curve? Cost of production? Once 88E management inform their shareholders about these and many other background facts, folk like you and I will be better able to judge if the Texas investment will be sufficient to fund future operations in Alaska.

Anyone else seeing a pattern of extremely poor communication on the part of 88E, whether under Dave Wall or Ashley Gilbert? No communication about the disgraceful conflict of interest Erik Opstad manoeuvres himself into every year? No communication about Dave Wall's exit package and forced restatement of shareholdings (twice). No communication about the true cost of drilling at Peregrine.....remember the days when two wells were going to cost $15m???? No communication about the 130% cost overrun at Merlin-1? And now no communication about the historical and future cashflows associated with the potential purchase of a Texas asset.

Enjoy the party but dance close to the exit.

I can 100% confirm marmaris has operated in these conditions for decades. Please listen to him because he knows what he's talking about. Why? Because he's done it himself and later on in his career he taught others how to do it. Fact.

13:08
HI brownliquid - notwithstanding the knowledgeable responses posted this afternoon by a variety of posters who self-evidently have experience/education on the matter, I'm just checking that you do know PANR is operating within the Arctic Circle, don't you? You also know, I hope but am not too sure, that the Americans have been drilling in the region since at least the 1940s? You also know, I hope, that literally hundreds if not thousands of wells have been drilled on the North Slope since the early 1970s? All of which suggests, does it not, that the oil industry in Alaska and all the service providers know what they're doing when operating in such conditions as it pertains to personnel, equipment, consumables, etc, etc.?

I find it seriously, properly, genuinely mind-blowing that posters sitting in front of laptops and pcs in the UK think they're the first to have realised drillers in the Arctic Circle had better beware of the weather and adjust their work processes accordingly!!! Lololol.

Ask questions, people. Stop posting using definitive vocabulary, for goodness sake. What if someone else relies on your definitive language and acts on it? Responsibility? Accountability? If you know you don't know about a subject matter, ask questions!!!!!!!!! TIA

(Part 2, continued from below)

Based on the market’s value of Project Icewine of $375m, and noting the NN’s mkt cap at time of writing of c.$1380m, this infers the market believes 88E owns 21.4% of the combined asset at Icewine by value. Any objective viewer of the NN’s webinars in August ’21 and January ’22 could not make such a claim with any genuine seriousness. My *personal* view is that 88E owns <10% by value of the combined asset (I reckon it’ll be around 3%-5% by value FWIW). Let’s be generous again and stipulate 88E owns 10% by value of the combined 88E/NN asset. That would lead to a valuation of $153m for the acreage south of the boundary. $153m + $75m = $228m. So that’s a fundamental value of $228m for 88E v’s the current mkt cap of $450m……and remember most importantly, the fundamental valuation for 88E is based on Merlin-2 being a complete success.

Is this making any more sense now, marlbs? I am contending anyone buying 88E today at 2.2p is already buying a company which is twice the value it should be ***after*** Merlin-2 is declared a complete success. Imagine what the fundamental value calculation will be if Merlin-2 *isn’t* a complete success?

You must surely now understand me when I say anyone owning 88E shares at 2.2p today and hoping to make a profit is relying ***entirely*** on US OTC hype and gullible US punters because the 88E assets do not justify the *current* mkt cap on a success case. Make sense now?

I disagree with you that “most people here are aware of the risks”. I base my opinion on the content of many of the posts on this forum, not least your own. That said, adults are generally held responsible for their own financial decisions, I accept that.

“I'm not sure there are many long term investors here though.” Again, I’m not sure you’re correct. Have you not read the posts from the likes of Ddraig, Reaper and all the others, some of whom still believe in the unicorn of the unconventional HRZ?

Your idea for 88E to sell on the ORRI on Peregrine/Umiat to extract some value? Yeah, nice idea in theory. Trouble is that having valued these types of *potential* future cashflows in my career, I’m not able to assign any value to that ORRI based on the current information available *even if* I assume Merlin-2 is a complete success. So, IMO, no value in the ORRI for 88E to extract.

More broadly, don’t the members of this forum realise if the 88E BoD genuinely believed they were sitting on a proverbial gold mine at Peregrine, that they would be looking to diversify by investing in Texas? If they thought Peregrine was going to lead to a massive step up in 88E’s equity value they wouldn’t be diverting a single dollar to alternative acquisitions in Texas. Nope, they’d be applying every single dollar of 88E’s shareholders’ capital to Peregrine.

Enjoy the party but dance close to the exit. /end

Wed 19:55
Hello again marlbs - thanks for your reply. You're asking some excellent, logical questions, IMO, but the penny isn't dropping. That's up to you of course. Let's examine an excellent point you made in your latest post.

"There is more to 88e than just Merlin 2. Here are all their current projects. Investing in the company and not one drill gives a better idea of value and potential strategy to make it commercially viable."

Totally agree, spot on. So let’s got through the three main projects and attempt to place a fair valuation on each, ok?

Yukon: we know Erik Opstad is on record (Petroleum News) as describing his adjoining acreage (owned personally) as having a negative NPV at this time. That’s direct from the horse’s mouth so Yukon’s value to 88E must therefore be $0. [As an aside, does anyone else have a funny feeling that whenever 88E management mention “negotiations with nearby lease owners” at Yukon, that it simply means Dave Wall/Ashley Gilbert pick up the phone and have a chat with Erik Opstad, owner of those adjoining leases. NB Erik is also the owner of ELKO and 88E’s General Manager of Alaskan Operations? Conflict of interest anyone?] Speaking of Erik, you never did reply whether you reckoned Erik/ELKO had already started selling their 88E shares yet this season? They sold the lot last season.

Umiat/Peregrine – there are two reasonable methods to value this combined project IMO. Let’s look at recent hard transactions first. We know for a fact 88E paid $1m for Umiat in January ‘21. We also know for a fact that “a group of experienced Alaskan O&G veterans” sold 50% of Peregrine to 88E for $14m *after* they had received the results from Merlin-1. That method runs out at a valuation of c.$30m for Peregrine/Umiat. The second method is to examine the NPV of the combined project should Merlin-2 prove up every single one of those 652mmbo it’s targeting with Merlin-2. In a success scenario the combined total for Peregrine/Umiat is c.750mmbo. One cent per barrel in the ground seems a bit mean. Let’s multiply that by 10, thus 750m x $0.10 = $75m. I’m feeling generous so let’s go with the higher of the two valuations => $75m for Peregrine/Umiat.

88E’s mkt cap at time of writing is c.$450m, with another 900m shares on the way on Monday of course. Let’s just use today’s mkt cap of $450m. With Yukon’s zero value and Peregrine/Umiat valued at $75m that leaves the market valuing Project Icewine at $375m.

(Part 1, continued above)

Bob Rosenthal is on site!

https://twitter.com/PantheonResour1/status/1494297442136866821?s=20

19:47
JS490 - you're blaming human beings for temperatures about which they could have done nothing about. You do know that Theta West is located in the Arctic, don't you? For goodness sake man, do you for one moment think before you post?

"One of the very few negative 'checks' I've had for this company recently, ...as otherwise I think they've done almost everything right."

Don't you get it? There was no right or wrong here. The weather (which they can't control) meant equipment tolerances were stressed. There was an 'elf and safety issue too. If that means the wellbore was left exposed for a day or two, that's no-one's fault, it is simply a fact of life when drilling in the North Slope.

Instead of spouting rubbish on a public forum, ask questions.

Here's what you should have posted:

"I don't understand why there's been a snag uphole from the BFF Upper which, unfortunately, has meant the company has been unable to complete the full range of logging data collection prior to casing and then flow testing the BFF. Just so I'm clear, was this as a result of human error? Or was it due to the ultra-cold weather? Could PANR management or the Nordic-Calista crew have done anything to protect the wellbore from the effects of this extremely low temperature environment which led to a halt in operations for a period of time? Has PANR contracted an inexperienced crew? Has PANR contracted the wrong rig for the task at hand?

I'd really like these questions answered because I want to be properly educated before spouting off some ill-informed nonsense on a public forum, thus potentially damaging not only my own investment but the investment of my fellow shareholders. I've noticed the various PANR forums are chiefly factual and evidence-based. This is in stark contrast to other forums such as for our SN. I wouldn't wish to post something which is not only factually incorrect, but which could have been avoided had I simply asked a few perfectly reasonable questions."

You're welcome. And you still deserve a negative tick in the box for doubling down and trying to justify your original post. In fact, make that a double negative tick. lol.

18:36
Hi JS490 - there's so much wrong with your post timed at 18:36 that all I can say to other readers of this forum is to ignore it completely.

Invariably, there will only be one, sometimes two, PANR employees on site at any given time. The other 85 personnel are all experienced Alaska North Slope contractors. There is no way PANR nor the bosses of the contractors will knowingly place the crew in any danger due to adverse weather conditions. Nor will the contractors risk their equipment for fear of Ed Duncan shouting at them.

A negative tick in the box, eh? The only person who deserves a check in the negative column is you, JS490, for having the bizarrely self-assured gall to post an opinion on a public forum about a subject you self-evidently know nothing about. I suspect you'll be hearing shortly what marmaris thinks of your post so I'll leave it at that.

18:53
Hi Protein - you're not understanding the point I'm attempting to make, I'm afraid. Hey, at least I tried.

"So when 88e prove what they have, the share price will be multiples of what it is now, therefore we will be in profit, as simple as that."

I fully accept that's what you believe. In response, I'm trying to inform you that that's not how the equity market nor the O&G sector would view any such success at Merlin-2. Sure, there may very well be some social-media inspired hype and a SP spike on the publication of any good news from the drill. What I'm pointing out is even if Merlin-2 is as successful as it possibly can be, the *fundamental* value created/proven by any such success ***is less than the current market capitalisation of 88E today***.

All of which means that any 88E shareholder who buys stock today hoping to make a profit is 100% reliant, IMHO, I repeat 100% reliant on the gullibility/lack of informed decision making of future buyers of 88E stock EVEN IN THE SCENARIO IF/WHEN MERLIN-2 IS A TOTAL SUCCESS.

I'm arguing there would be no *extra* value created by a complete success at Merlin-2 because the current mkt cap of 88E is *already* too high. If you are to make a profit on your "investment", protein, it'll be because you play 'pass the parcel' well, not because of any enhanced value creation.

Anyhoo, don't say I didn't try to explain my argument clearly and bluntly. Out of interest, do you not find it weird that someone with an equal background to mine in terms of equity market experience, someone like Brom for example, doesn't post rebuttals to my logic or rationale? The reason is that he can't argue against me because the evidence does not permit him to do so.

"Enjoy the party but dance close to the exit."

17:38
Quick fact check/correction for SeaHawk's post.

"Thankfully the investors here have done their homework and are waiting for the big move which will happen if we get decent flow rates from Theta West (delete "Talhita" [sic]). In the mean time lets not forget (insert) Talitha #A - the other well that is being flow tested which could also prove up a significant amount of oil."

*All things being equal*, the next cab off the rank *ought* to be the result from the first (ie. deeper) of the two Slope Fan System zones due to be tested at Talitha #A. News could arrive any time on that one. Maybe this week? Maybe next week? We know the weather has been incredibly cold so perhaps next week is more likely? Hope that helps. Good stuff.

16:40
Hi chrisev1 - 100 lines please. "I must learn to conjugate my verbs correctly." Lol

16:56
And hello also to protein88 - quite right, prove up and sell on. Absolutely correct. What I'm trying to inform anyone who hasn't been part of real life transactions of this nature (I have) is that even if Merlin-2 is a startling success, the price any potential acquiror would pay for such an asset is, in my assessment, lower than 88E's current market cap, today, right now.

Traders don't care because they have identified, correctly, that 88E is a "meme stock now". They don't care about the fundamentals, they care only about the hype generated by the US OTC social media "influencers" which they anticipate will allow them to make a trading profit in the coming days/weeks. Not my bag, goes against my moral code taking advantage of thousands of credulous fools in the US but I 100% accept not everyone shares my view on that.

If you're an "investor", protein88, thinking that if Merlin-2 is a complete success 88E will be able to sell it for a gazillion dollars afterwards as some are "promising" on social media then please do be forewarned that the industry doesn't work like that, and nor do equity markets.

By all means trade the hype surrounding 88E, knock yourself out. However, I have seen zero evidence that Peregrine/Umiat will be viewed as anything more than an extension of an existing ***stranded asset*** (for the last 70 years) by the sector. Those selling all the nonsense about it being worth billions of dollars, or even hundreds of millions, are fantasists or nefarious rampers hoping to attract innocents to the slaughter of a SP spike.

More simply for you, chrisev1? Even if Merlin-2 is a cracking success, its value in real life away from Twitter will not even be enough to justify the current 88E market cap IMHO. That simple enough for you? The value of 88E currently is majority hype. I know some on this forum are happy to say that part out loud. Please listen to them and those like them when they say "Enjoy the party but dance close to the exit". Do not listen to the quasi-criminal clowns on Twitter because they're telling you lies in order to profit out of your gullibility.

Part 2
I know I’ve stipulated, as if by magic, that Peregrine/Umiat contains 750mmbo of reserves but let’s be realistic here. That journey of collecting the required empirical data alone, even if every single barrel is there, is going to take a minimum of another 3-4 winter seasons to delineate the resource such that a reserves classification can be made. So, net net net, we’re looking at about a decade before first commercial oil can be sold by the existing or future owner of Peregrine/Umiat.

Now I’m ready to pose my next question to you, marlbs. What effect will a 10 year preparation period prior to first positive cashflow have on the NPV per barrel of a project? Bear in mind such a project will require capital investment of $4-6bn (capital costs as outlined above plus the cost of another three winter seasons of simultaneous multi-drills) within that same period, admittedly most of the capital costs to be incurred in the latter 5 years.

FWIW, there is undoubtedly logic in your contention that adding newly discovered resources from Peregrine on to Umiat’s 100mmbo does aid the journey towards the combined project becoming a more serious commercial consideration. I am happy to admit that’s the case. But let’s be brutally honest, we’re miles away from being anywhere near to even saying that it’s a viable possibility never mind a probability.

Here’s where I’m at. I hope Merlin-2 is a success and it reveals oodles of crude oil. That would be brilliant, really would. But the real world will intrude more swiftly than you can imagine. Sector experts and equity analysts will be asked by journalists what their view of the ***value*** of Peregrine/Umiat is going to be for 88E. It’s at that point I fear there are going to be thousands of disbelieving punters, mostly the US OTC crowd but sadly there’ll be UK and Aussie shareholders too, who have swallowed uncritically Kate from Jersey’s uneducated, made up fantasies and who will look askance when told that far from Oil Search’s $3.10 per barrel in the ground figure, they’ll be lucky if the market values any Peregrine barrels at more than a few cents per barrel.

But you don’t need to believe me. Just ask Brom, the author of close to 26k posts on 88E. marlbs – have you noted Brom hasn’t answered my direct question posed to him? “What is the ***earliest*** year you have in your 88E model which sees them paying the Umiat vendor its first royalty payment?”

The reason Brom refuses to engage with me is simple. If he answers honestly he would be forced to unveil 88E is over-valued on all fundamental and industry-accepted metrics and norms. He knows it, I know it, 88E management know it (ref. potential Texan acquisition), Erik Opstad knows it (sold all his shares from last season, wonder what he’s done this season?!), Dave Wall knows it (sold >60% of his holding) and, I’ll warrant, a rather large proportion of the *traders* who post on this forum know it too.

The question, marlbs, is do you now kno

Tue 20:17
Hi again marlbs - yes, I've read the content to which you kindly refer, and plenty more besides. I'd encourage all 88E "investors" to read the passages referred to by marlbs and GS in the post immediately following marlbs'.

marlbs wrote the following: "Although being an exploration company, they wouldn't be building a pipeline anyway would they?" Very logical view IMHO. Going back to the Dave Wall model of ".....prove as far up the value creation curve as possible, then cream that curve by extracting the maximum value for shareholders when selling the asset on, etc." There's nothing whatsoever wrong with that strategy, absolutely nothing. Ironically, that's exactly what I have been doing with my scenario analysis in the last couple of days.

Let's re-examine this forward-looking scenario again, ok? I start by stipulating for the purposes of this exercise that Merlin-2 is a roaring success and all 652mmbo being targeted by the drill are proven up. In fact, let's go further and I snap my fingers and the combined Umiat/Peregrine reserves figure is now 750mmbo (652+100). Ok?

The rational investor must surely then ponder the value of all this oil under the ground or what's known as Net Present Value, agreed? How do we do that? Well, we must assess the capital cost to bring the combined oilfield to first production; the time taken to build said infrastructure; the cost of extraction; the cost of transferring the crude to market. These would all seem to be the most pertinent considerations, fair?

Let's start with the capital costs of installing and constructing the necessary infrastructure. A new road to Peregrine/Umiat, the treatment facilities required for an oilfield of this scale, a pipeline north to Willow or a pipeline east to TAPS. Sounds expensive for the future owner of 88E's peregrine/Umiat asset? Willow is going to need c.$4bn of capital before first production (happy to be corrected). A similar sized Peregrine/Umiat oilfield would likely cost around that figure, fair? Perhaps even more because of the extra pipeline infrastructure if the “pipeline east to TAPS” option is chosen?
Next, let’s examine objectively how many years it will take for first commercial oil to be produced from Peregrine/Umiat? I’ll start with a minimum of two years for legal permits. I say two years because that is the duration of just the *delay* Willow faces, never mind the start to finish of the legal process. In practice, it would be more like 4 years in my experience but let’s be generous and stipulate 2 years, ok? Then the time taken to construct and install the infrastructure? Pikka/Horseshoe, despite its easier location (ie. closer to existing roads and pipeline), is going to take a minimum of 4 years to construct the required infrastructure. So that’s six years at an absolute minimum.

(Part 1)