George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Continued;
These plays, along with some of the newer blocks yet to be in the portfolio, gives TXP great opportunities in the longer term and in my view give a very rounded valuation for the company and where the shortest of term worries about production should be put firmly in context. A solid banker for the new Bucket list.
I met with Paul Baay, CEO and James Shipka, COO this week as they were in London meeting investors. They kindly gave me a couple of hours of their time, they knew that I was keen for an update and that I had a few questions from Blog readers to ask them and nothing was off limits.
TXP achieved Q1 production of 33,521 Mcf/d plus some liquids giving 7,015 boe/d against the facility capacity of 21,250 boe/d so scope for an increase which is where most of my questions had appeared. It is however a significant y/y increase in production and that fed through to an increase in operating netbacks and cash flow.
This created sufficient cash flow for an ambitious drilling campaign and further investment in Cascadura where a large number of locations have been identified and are already being drilled. The company is now a leading presence in Trinidad and its portfolio ensures a good long term supply of opportunities for the company.
Cascadura coming onstream in September added to the legacy production and that of Coho which had also recently got underway. The wells that initially came onstream have indeed showed a bigger initial decline than originally expected although payback is still excellent and of course reserves are not affected. What it does do is mean that the company might drill as many as 10 wells against the projected 6.
The wells in question that saw the decline have already flattened out and with such porosities and fractures exhibited a likeness to matrix formations and against expectations of 7/- b/d achieved 6/- b/d. But the good news is that having drilled these wells already they will have been drilled and thus coming on production in Q3.
I found that the map of the Cascadura development was fascinating as the CAS-2 and CAS-3 wells have been drilled further away from the facility and will pipe the hydrocarbons back to the facility. The advantage here is that they save $2m to test the wells, now they can spend that money on the pipeline and test when putting the hydrocarbons in and of course in Q3.
As for CAS-4 it will drill away from the 2 and 3 wells and head towards the Rio Claro block and the fault where 900′ of sand has been spotted and with pay likely on the other side of the fault as well could significantly add to reserves. This makes for good news and whilst the wells have not delivered quite as quickly as expected underlying value has not been affected.
Going forward, with its finances in good order TXP has a fully funded production and development programme in what is an asset portfolio laden with opportunities. The company has been working away behind the scenes getting away from the smaller, lower value ends of the portfolio and looking at new, added value and bigger plays in asset swaps and deals with the Government. Some of these have been previously drilled by the majors and some are considered to be adjacent to the play with significant success in Guyana.
Well lets face it, the company no longer needs share holders. We have funded the development of this comany and the placing providers have made their money too, which is the whole purpose of these markets (share holders fund it and take the risk) but they are now self funding. We are now not needed and a thorn in their side that costs them time and money to placate. I see the next stage of this comany as either selling it to make a wedge or them taking control of "their company". If the SP was high the former would be more likely but at this SP i think the later will happen?! And if that is the case it would make sense to do it before any major increase in production. It is just a matter of how much to offer the share holders? I had always dreamed of a buy out happening here in the same vein as Carrapal ridge, there is hope yet! One way or another i am convinced we will see an SP much higher than it is today sometime this year and i will sit tight for that.
You would think with an inevitable rise in production and reserves in the not too distant that people would be piling in here for what would normally be considered a nailed on SP increase. Yet here we are again sold down to a ridiculously low SP after good news! I am thinking we are being controlled in a concious effort to pee off the share holders so they will ultimately accept a lower offer in a buy out. I would'nt be surprised to even see a maganement takeover here at these prices with what is coming in the near term?!
I know if i had access to half a bil i would try it!
I fear we are never going see true value here as share holders and will get shafted maybe some time later this year?
I hope i am wrong but thats the feeling my gut is giving me!
When PB mentioned the gas price in that previous interview we were at the time recieving less than the market price for our gas on our fixed price contract. However the Henry Hub price today is below what we are recieving so it makes absolute sense to maximise production now while we are getting above market price. We have less amunition in negotiations on gas prices than we would have had a few months ago.
And for those not familiar with TXP's well naming system Cas 4 will be the 5th well sunk into this huge gas field giving us 5 producing wells. Looks like the processing facility will be maxed out this year!
Excelent news this morning! With the increased access to credit both of the drills can keep turning and keep on moving to development well after development well. This will lead to huge income before year end and a truly sell funded profitable future! The only way is up!
A B C 1 2 3
I am getting confused with all the Cascadura wells there are that many of them!!
So the first 2 producing wells are at Cas A site which is where the processing plant is and Cas 2 and 3 are the third and fourth wells which have been and are being drilled from the Cas C site about 1 mile away from Cas A, is that right?
If the fourth well Cas 3 hits gas too then the plant may be maxed out at 200mmcfd when connected, thats a BCF every 5 days!!
Only 4 weeks to wait now untill the annual reserves update (expetcted 3rd week March) along with a production and progress report. Hopefully showing increased production from the reperforations ongoing at Cas 1, update on the pipeline to Cas 2, maybe even some news of Cas2 performance? (we know it's good enough to warrant a pipeline!!) Spudding of Cas 3, possibly spudding of an additional well at Coho. Possible increase in reserves. The increased production should equate to an increased SP!
I am sure new people visiting this board are put off by this board being dead. The advent of the chat group over on Discord has been a two edged sword in my opinion. While it has enabled people to share pictures and documents etc that are not possible to share on here it has also resulted in an huge reduction in the posting here which is not good for attacting new investors. I am certain it would raise sentiment if a lot of the positivity and excitement about the progress concerning the currently underway recompletion/increased perforation of one of the producing Cas wells and the progress of the currently half drilled well at Cas 3 and it's potential were talked about more on this board. These are very exciting times for a small exploration company transforming into a self funding production company with massive development potential (drill to fill) that still has so much exploration acreage too!
I have been doing some sums! :-) I have probably made loads of errors, please point them out if i have!
We have just been told Cascadura is producing 48 MMcf a day allthough the previous production update on 18th Sept said the wells were producing 60MMcf. We have also been told the wells and the processing plant can produce 90MMcf so i have done some figures based on these 3 volumes and the associated NGL's which they quoted as 1400 barrels per day at 60MMcf gas flow which eqauals 23.33 barrels per million cubic feet.
All figures are US dollars after the 20% deduction for Heritage. Quarter = 91 days, annual 4x quarter.
Prices of $2.4Mcf and $78.12/b for the oil and NGL,s.
At 48MMcf quarterly income would be $14,756,123. Annual = $59,024,492.
At 60MMcf quarterly income would be $18,445,190. Annual = $73,780,760.
At 90MMcf quarterly income would be $27,667,785. Annual = $110,671,140.
Non of these figures count anything for Coho.
Also nothing is included for the 1000 ish barrels a day of oil from other wells. They would also add $22,750,000 per year after the Heritage 20% has been deducted. So it would be quite fair to add $24m (a bit for Coho on top of the oil) to each of the 3 Cascudura volume totals;
Oil + Coho + Casc annual after Heritage 20%
@48MMcf = $83m
@60MMcf = $97m
@90MMcf = $134m
The market cap is getting dangerously close to the possible annual production. Now imagine if we were to be bought out and the new owners negotiated a gas price of $4 which they now know is entirely plausible. That would add 66% to all the Casc figures.
At this share price we must be very attractive for a take over??!!
Yes he did say other gas price negotiations had taken place so there is hope on that front, and he is clearly holding the production expansion to 90mmcfd from the 60mmcfd he antisipates by year end back as a carrot to aid in those negotiations. If you want more gas you can have it by paying a fair price!
Todays SP is silly low considering where TXP have got too! The only way is up!
"This gives management the space to consider the best use of additional funds, which could include more capex, dividends, buybacks, or acquisitions."
I would like to see them use a third of the increased revenue for share buy backs! I am sure buying 5 million shares a month would soon see this rerate to where it should be? With the number of shares bought each month increasing as production/revenue increased. Or alternatively dividends, that would increase demand for shares!