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GP - I am wondering what type of application (and to whom) would be needed to develop Wingfield Flags. If you recall in a broker note predrill early last year (or 2020) it was said that the Ashover Grit and the Wingfield Flags would be accessed at the same time and “commingled”. This clearly didn’t then happen, but to appear in the note it was presumably a plan at one point. Suggests to me that perhaps no additional application was/is needed for this? I think PStone Flags are different as they have always said they would need to drill again to access the reservoir optimally.

Should read 1216 bopd not 2116 - that would be greedy!

Just sinking in why Simon was so excited by these measurements. If Wressle does finally deliver something close to 2116 bopd - and of course there is no guarantee that it will although these are no longer blue sky figures but based on pressure analysis - then that is 365 bopd to EOG.

Back of an envelope calculations:
Non Wressle production is c75 bopd and brings in revenue of about £1.7m with oil at $80.
Wressle production of 365 bopd is roughly 5 times larger, so would bring in almost £8.5m.
So total annual revenue for EOG would be £10m!!

In other words you could buy us for 4p a share, pay this off from revenue in about 2 years and be left with all future Wressle development revenue, Morocco, Ireland and Causeway opportunities for free.

Sure there are lots of unknowns such as OP, depletion rates, recovery rates, handling the gas etc, but the bottom line is that Wressle could now be seriously offering a different level of valuation for EOG.

Minor correction: the figure was 1216 bopd which works out at 365 bopd to EOG.

Just had a listen - he is extremely upbeat in a Simonesque sort of way - “most important announcement on Wressle yet” etc. Sounds like 1211bopd was the optimum production rate to target with the 1500 bopd rate possible being more an indication of the quality of the reservoir. That’s still 363 bopd to EOG - not bad when you consider the original best target was only 150 bopd! EDR also going actively after the other 2 reservoirs and it seemed to me that Simon was confident that they can get these to produce better than perhaps originally expected. Hope we get to see that CPR soon.

Wressle seems to be turning out to be a very valuable asset and certainly more than a handy funding stop gap,

Another positive element in the RNS was the mention of the Wingfield Flags as a target reservoir - these hadn’t been mentioned for a while. Although a smaller reservoir it should be easy to access from the current well and therefore potentially a quick win.

I think that’s a great point GP. If recovery increases and we get an updated positive CPR on the size of the reservoir we could be on to a double win there! While speed of flowrate is exciting, combine this with increasing the size of the pie available and there is a much bigger impact on EOGs profitability and value.

Hearing from partners first - why’s that? The procedure so far has been coordinated rns’s as you would expect.

Timescales given all seem to say “early this year” once the new gas handling arrangements have been installed. The bespoke separator was supposed to go in by end of December with the implication that this would enable the testing to go ahead shortly afterwards. The limitation seems to be rules about how much gas can be (or it is desireable) to flare off. Presumably the gas to power unit could help with that, but unclear where we are with that. The FinnCap note actually said early January for testing and deciding optimum production rates, but I think we are there already. Based on what has been said, I would expect to hear any time over the next few weeks - and nothing to say it couldn’t be as soon as this week coming.

Yes your right! FCA rules for main market listings are very similar in this case.

I think I was referring to the oil price not the share price. If 1.4p was a 5 year high I suspect many investors here might be a bit happier!

@Kenny. AIM rules grant 6 months for a suspension although further extension can be granted. The Covid extended timescale on returning accounts is separate and only for 2 months. UPL used this up prior to suspension - see previous RNS.

The best strategies and plans are at the mercy of events, so sometimes it’s nice to be on the right end of the stick. Such as oil hitting mid $80s just as Wressle has started to deliver (and exceed expectations). Looks like a 5 year high and will be giving our finances a leg up. Can’t beat a bit of luck!

Nice of Malcy to back me up!!

Hi Tac, I agree with the apparent lack of wider enthusiasm for what now seems a strong investment position, but I think it’s applying to the whole of the AIM O&G sector. Look at the similar recent complaints in RNSs from ANGS and PRD, and low trading volumes across most the relevant companies. There seems to be investment hesitation in the sector which is creating a vacuum between SP valuations and asset valuations. Inevitably this will get resolved Idc one way or another - either investors will reappraise the “level of evil” in fossil fuel investments, or different investors/buyers will move in to snap up cheap companies, or companies will seek to sell off assets more readily to realise their value.

I think this means we should be extra careful in acquiring any new asset to plan for achieving its “value” if necessary through quick sell off rather than expecting the SP to increase during its development phase through investors recognising long term value of an asset. Of course if other companies do start to move in to “snap up” undervalued companies to get at their assets, we could end up in a much more exciting (if unpredictable) ballgame for investors.

@Tovoc. I was only checking I hadn’t missed something on production rates and that we should be adding 75 bopd to any Wressle production figures. As they have shown 200 bopd was readily achieved from Wressle in December, I think we can work on the assumption that total EOG production this year we be at least 275 bopd and hopefully more when final Wressle flow rates are in soon. This is an extremely good support (to say the least!) for our lowly SP, which is why I suspect it’s been slowly creeping up since Christmas. Long may it continue!

Hi Tovoc, just wondering where the 260 bopd figure for total production comes from?

The AGM statement indicates that non-Wressle production was 75 bopd in October with total production being 240 bopd. Since then we had the announcement of a 200 bopd net flowrate from Wressle.

Is there a reason why we wouldn’t now be working on a 275 bopd total production figure - with a clear expectation of course that this may further increase when Wressle is fully tested?

Hi Yanis, the UJO figure is in dollars, I have converted it into £s for EOG, which explains the difference. I am being conservative in cash estimates because as you suggested non-Wressle income may be adding extra profit as well as covering running costs. The unknown is how much Wressle upgrade may be costing, so I am working with rough ballpark figures. A bullish calculation could give us nearer a £2m cash pot.

Based on UJOs announcement of receiving in excess of $2m net revenues from Wressle, this works out in excess of £1.1m net revenues for EOG. Confirmation that despite upgrade works etc, it is providing a great regular income and we should have c£1.5m cash in hand.

I have wondered over past couple of years how we could get past those simplistic mantras about fossil fuels but think there is now a path opening up - and if the German Greens can sign up to natural gas after decades of anti fossil fuel campaigning, then there is hope for anyone!

3 key things have changed over past year that will help. Firstly the true environmental lobby is now a lot more challenging about exporting carbon footprint, and COP demands for real targets/action will lead to much fiercer scrutiny of this. Secondly no one can be left in any doubt that the Russians intend to use Gas as a weapon in their strategy to influence Europe, this can no longer be ignored and viewed as a simple commercial market. Thirdly (and most significantly) Energy prices have soared and will now drive a coach and horses through budgets of countries such as Ireland if they look to rely on imports. This is no longer a small issue, but it will be front and centre for every minister in the Government. Not only will the country be impoverished by having to pay such high and unpredictable costs, but it will be doubly penalised when you think of the tax give away of not using their own gas. It is no longer so easy to be a Green politician being given a ministry to play with!
That said for political reasons I don’t expect movement until the Energy Security review is published - due shortly this year. Then things could move very quickly.

So oil is back to $80 and the German Greens have recognised the need for natural gas until at least 2045 https://oilprice.com/Latest-Energy-News/World-News/Germany-Admits-Need-For-Gas-During-Transition.html - not a bad start to the year for EOGs prospects!