Member Info for SimonT

Cautious, I suspect you have more chance of teaching Kryton to say Smeg head than getting one of the resident rampers to admit some Georgian wells have historically suffered decline due to silting. This could be the problem with the Norio wells?
https://youtu.be/RXKlC8ph7mM

BigBench, what makes you think the spud of 38 would be good news?
I wouldn't see the spud of 38 as positive news at the moment!
The company needs to learn from 16az and get the gas infrastructure in place before drilling 38 to keep 16 flowing and prevent the need to shut 38 in possibly causing the same issues all over again. If they do announce the spud of 38 before having made provisions for any gas it may produce shows that they have not learnt anything which would be quite worrying!!
I would rather see cash spent on the gas take off and further drilling delayed until gas is flowing. With the low oil flows at the moment the gas from 16az has the ability to bring in more cash then the oil.

I have just re-read the psa and think the correct interpretation is that Bloe get to keep 50% of oil revenue, then the remaining 50% is split 50/50 until the costs are recovered and then reverts to 60/40, So Bloe get 75% of the total revenue until cost are recovered and then 70% from then onwards. This would also explain why the netbacks quoted by Bloe in their RNS equate to more than half of the price of Brent.

Lb, yes dated 2018 and valid until 2043.

We dont own it but Yes we have a 100% working interest in West Rustavi, but everything produced is still subject to the PSA with the Georgian government.

Profit LoL, stupid computer!!

The prophet sharing agreement is explained on page 74 of the admission document.
http://www.blockenergy.co.uk/wp-content/uploads/2018/06/4-June-2018-CL.pdf

Jrlomax, how do you work that out? With a 50/50 split during the cost recovery period only half the oil is ours to sell and at $35 per barrel net back I get it at $150k a month, and that cant be considered profit as it will take a year to recover the drill cost at that rate! Once the costs have been recovered the split becomes 60/40 with Bloe only getting to keep 40% of the oil.
The market rarely gets it wrong, I don't see this as undervalued at the moment! Shutting this well in for a couple of months has caused all sorts of issues, the company needs to learn from this as it could have been so much better!

I would imagine so Rob, if they have the foresight to build enough flow capacity into the system to cope with the gas output of multiple wells.
More wells drilled at this stage would scream inexperience and bad management to me but I don't think they are either, I would expect they are adjusting their priorities and forward work plan right now.

"Should be sorted by then" Being presumptuous has got a lot of people with your attitude into a sticky situation.

I wouldn't see the spud of 38 as good news at the moment, they need to get 16 connected to take the gas away so it can be flowed continuously first then 38 could be connected to that system if it also has associated gas. If they drill another well that has gas with no take off deal and system in place it too would have to be shut in possibly causing similar issues as they are experiencing at 16.
If they have learnt anything from this it would hopefully be that spending more on drilling would be foolish without having the gas deal sorted! That is the news that I would like to see next and what I expect the market would see as positive progress.

Spike, I think you are totally right and in the right mind set for this investment at this time. The rose tinted are easily led and still blinded by the promising smiles nods and winks which are often danger signs to others!
Some of them were insisting we were earning £1m a month a while back so clearly fall into the unresearched presumptuous ramptard camp, they wont come out, it requires using their own mind when they prefer to follow!!

390mcf (11mcm) is 11x the minimum daily amount Bago required to go ahead with the deal. We have had no indication from the company that anything beyond an MOU has occurred. The minimum of 1000cmd that Bago required was estimated to be worth £1m per year so the gas coming from 16az is now worth multiples of the oil. Bloe should fund the take off infrastructure themselves so the well can stay in production which can only be a good thing for improving the flow and cash generation. With no gas take off deal or infrastructure in place the well will have to be shut in again after the 60 day flaring licence exprires and drilling more wells with no systems in place to accommodate the gas will just cause a repetition of the problems they are experiencing now. They have to focus on the gas right now!

I read a lot of worried posts about the flow rates and drilling fluids that have entered the fractures etc, but that is not the real problem as i see it! What they should really be worrying about is the gas take off deal and infrastructure as without this in place once the 60 day testing licence to flare is up the well will have to be shut in again! With an expected 8 weeks to construct and no RNS to say a deal has been signed it is inevitable that the well will be shut in again sometime during September, maybe causing more flow problems the next time they are allowed to flow it? The company needs to drop what ever they are doing and spend some share holder provided cash on constructing this themselves if they dont already have a deal with anyone to fund it as without it they have no business!!

A lot of uncertainty here right now, drilling fluids are heavy and dense enough to hold the oil pressure back during drilling, is it these that have sunk into the formation restricting flow? and can the oil push them out? or is the well silting up? as has been the problem other companies have experienced with Georgian geology, only time will tell. Maybe shutting the well in because of not having the gas take off infrastructure in place has done a lot of harm? They should get this in place before drilling any more wells or get them fully cleaned before shutting in?! I am sure they have learnt a lot about how not to do it from this first well!
Todays news does highlight the dangers of believing what is said in interviews when only RNS'd info should be considered actual fact. All the rampers making presumptions on the high side and preaching best case scenario like it were nailed on has shown their inexperience and cost themselves and many of those who believed them quite a price.

So it has been established that there is no L in Miton, and trading will return to normal when there is no F in Miton!! :-)

Taken from page 74 of the admission document which can be found here:
http://www.blockenergy.co.uk/wp-content/uploads/2018/06/4-June-2018-CL.pdf

4.3.2 PSA Contract Terms
The West Rustavi PSA is effective for 25 years from the date on which it becomes effective with
an optional renewal. The West Rustavi PSA will become effective following the satisfaction of
routine conditions precedent. This asset will be held by GNV (Georgian New Ventures) which is
a wholly owned subsidiary of Block Energy. The Minimum Work Program is described in Table
4-1 below. The provisions of the agreement include that cost recovery of both capital and
operating costs is limited to 50% of the revenue from sales of hydrocarbons before sharing with
the government. The government pays all taxes from their share of Profit Oil. Profit Oil is split
50/50 until payout, defined as the time when all cumulative revenues from Cost Recovery and Profit Oil exceed cumulative capital expenditure, including the historic cost recovery pool. After payout, the Profit Oil split is 60% for the Government and 40% for the Contractor.

Hillbilly you may well be right, the well may be capable of 1400 bod but the long term sustainable rates will depend on how well the oil migrates within the geology and could take several weeks or longer to determine. The 60 day extended test permit duration may all be needed to establish this.

Exmex, no I couldn't find any details regarding production sharing agreements relating specifically to the gas.

Hillbilly, don't tell me you believe men went to the moon?!! do you believe every you are told?? :-)

That reads to me like they value the new wells at 55p on top of the current sp which is underpinned by the current production? That would be a result!!