Member Info for skittish

Try comparing Google Earth imagery of the area immediately surrounding Tilapia taken in 2017 with that of Digital Globe taken on 26th January 2019 - which coincidentally happens to be the date 103 finished drilling.

https://discover.digitalglobe.com/

On Google Earth most of the imagery in this area is of fairly low resolution (although Tilapia activities, roads and houses can be clearly seen) and appears to have been taken around March 2017.

One area of high resolution taken on April 3rd 2017 shows what appears to be the start of a single drilling pad around 3km immediately east of our Tilapia pad - this is the area in which CNOOC has its licence. An area of forest has been cleared and a couple of trucks and some equipment is visible.

That this area is in high resolution whilst the rest of the area is relatively low may be no coincidence.

The Digital Globe imagery of the area taken 26th January 2019, whilst not of high resolution, clearly shows that there are now at least 6 pads within 3 km to the east and south east of our Tilapia pad, either built or under under construction. A possible 7th and 8th pads (and possibly 9th and 10th pads) are located a little further to the north, east and south.

They are all slightly smaller than the area of AAOG's pad, neatly rectangular, often with a single straight roadway leading to each one.

The layout is typical of a producing oil/gas field.

The closest pad is only around 1km from the AAOG pad.

CNOOC would appear to believe that they can have (or maybe actually do have) a producing field within a couple of km of our Tilapia pad and are very busy at getting the stuff out.

This also raises interesting synergies concerning pipeline construction etc.

The possibility of a producing field adjacent and immediately inland to our licence is not mentioned in the CPR dated October 2016 which accompanied the prospectus at the IPO of March 2017.

It would be interesting to know what these wells are targeting and what they are producing.

But it increases the possibility that AAOG are sitting on a fairly substantial oil producing area.

Maybe it wasn't Total DS went to see last Monday, but CNOOC.

Strongman - so the large trades we are seeing showing are likely the short positions spilling out on to the book as the spread betting firms cannot cover them themselves internally due to low liquidity?

irishmouse - yes seems risky to me also!

Silly (but genuine) question - where do the shorters get all these shares from in order to sell in the first place?

I guess the selling will stop when they are finished. They have 60M in total to get rid of. Clearly not there yet.

They appear to be willing to shift them for a small overall profit. No doubt they made big bucks when the well result came in, and seem willing to break even, or even bag a minute profit on the rest. They do not appear willing to take a significant loss, so 10p appears to be the floor.

That may change of course if they require funds quickly for their next deal.

But in the meantime I guess the thing to do is simply load up whilst you can at these prices.

Once they have finished, it will be obvious to everybody, but 10p will then be history.

How soon does he expect production to come in from

a)101/102 and

b)103

Yes, we seem to get to late morning and the buyers are clearly exhausted.

But one has to be patient, and if one is then one can use that to an advantage.

Steady accumulation, and I'm sure (or at least as sure as one ever can be) that this will be a lot higher than it is now. And I mean a LOT higher.

Simply take advantage or a period at these levels to accumulate.

Once it starts moving, it will be too late for these giveaway prices, and I think people will struggle to buy in any significant quantity.

I think we may need quite a few of those before the overhang is cleared but clear it will.

HNW individual or small fund manager taking an interest?

Not your standard pi, i would have thought.

I'd say jurisdiction refers to a new country - and DS is of course legally trained and familiar with legal language.

I too thought from the wording DS used at the recent presentation that a deal is fairly close, and that the assets he was looking at are good, but he wanted to leave no chance of a rival coming in and snatching it from him. Hence despite prodding from the moderator he would say nothing.

I think the success at Tilapia will have made a few heads turn, and some now will be watching where DS goes and who he might be talking to.

But as for Congo, yes I think the challenge is to tap offshore fields whilst using onshore technology - everything, drilling, pipelines etc can be done so much cheaper. Of course there is a limit how far they can go, but it doesn't look like anyone has joined the dots quite like AAOG.

As an aside have you tried using Google Earth on Tilapai and the surrounding area?

Obviously quite a poor place - the only things which look new are the airport, some new housing developments with pools near the port (possibly for ex pat workers?), and the oil terminal and adjacent gas fired power station - all paid for with oil.

Basically everything new appears to be related to the oil industry. Everything else is close to falling apart.

You can even spot a few battered MiG-21's at the airport - but I'm not sure that any of them look like they might fly.

So whilst the government is in charge, I would think that they would wish to continue to be welcoming to oil companies, small and large, as they have to potential to really transform the economy like nothing else.

The oil industry is a golden goose and they won't want to kill it - hence I think we will get a "fair" deal when it comes to the $10M/30% issue.

I suspect the sellers have a way to go yet, but value will out in the end.

And there will be no mistaking when they have finished, no matter what the trades.

"pay for a lottery ticket only after you know you have won"

I guess that is one of the joys of operating in Congo, but at the end of the day they own the place and SNPC is the government oil company.

Make you think however that had it been a duster they would simply never have paid.

Perhaps also emphasises how well DS and the team have done.

Had SNPC expected success than they would not have allowed themselves get in the position where they could lose 30% of the asset, they only did this as they were probably expecting it to be a duster or at least close to it.

DS seems pretty confident that the $10M drilling costs equate to 30% of the field, so that is presumably included somewhere in the small print of the licence and funding agreement. Which again suggests that the SNPC had no idea what a success DS and Co were going to bring in.

So it is SNPC who are now on the back foot, and scrambling behind the sofa to try to find some cash.

As someone said - Win,Win!

A nice fit for us would be an interest in Block IIIA immediately adjacent to Tilapia.

https://docs.wixstatic.com/ugd/f80303_05e8c0fe54c14f258c7a09dc3862092f.pdf

This is owned by New Age a Jersey registered private company, which was looking to dispose of an interest in a deeper block a few months ago

https://uk.reuters.com/article/newage-sale-congorepublic/africa-focused-energy-producer-newage-to-sell-congo-field-sources-idUKL8N1XU5AH

However I suspect that the value of this very large block has just rocketed!

AAOG may however be privy to important technical information re Tilapai which may just give us a way in.

But DS is looking for undervalued and unappreciated assets, and everything close to Tilapia will have got a lot more expensive in the last week or so, so probably best to look elsewhere for potentially underappreciated assets.

But it is important to keep our feet on the ground at this time.

Get decent production going, decent cashflow, then drill 104 and see where we are at the end of the year.

And it is obvious that the 30% of Tilapia is worth much more than $10M, which is why DS would snap their hand off for it and why SNPC are desperately trying to raise the $10M so as not to have to give it up.

Just to clarify, and fantasise a bit, if 104 comes online by end 2019, and the Djeno is a success, AAOG can probably drill a new well every 6 months or so.

Assuming all the topside is done, and he gets a new 10km pipe to Pointe Indienne, he alone could have used up all the capacity of the refinery at Pointe Noire by mid 2021.

Hence the need for early planning to get rid of the stuff.

I think the point DS was trying to make was that if 104 comes in with the Djeno then the Mengo will be bypassed in production terms for all the future wells.

With Djeno you are talking about 5000bpd per well.

That is why he has got a lot of very excited "Geo's" in the Congo.

That is why he also need to talk to "Total", as if 104 comes in by the end of this year, possibly before, AAOG alone will very soon be pushing up against the capacity of the refinery at Pointe Noire (which is the only refinery in the whole country), and why he needs to start getting rid of the stuff early doors by tanker at Totals Djeno oil terminal a little way down the coast.

Otherwise he can get it out of the ground, but then can't get rid of it because the quantity will simply be too great.

Presumably the pipeline flow can be reversed, from north to south, but some engineering will have to be done.

So you could be looking at income of several (maybe even 5) $M per month from each well if all goes well.

Hence early talks with "Super Major".

As an aside I don't think the majors really properly considered the Tilapia with its 50bpd, and couldn't be bothered with such a tiddler.

So all credit to DS and the team for spotting the potential.

Quite a way to go yet, but you can see fairly easily a road map being laid out to realise the potential.

I thought of heading this "They're gonna need a bigger refinery" - but it wouldn't fit.

The refinery at Pointe Noir had a capacity of 21,000bpd in 2016 and is located around 17km from Tilapia. It may have been expanded slightly since but Congo is only able to refine around 50% of its domestic needs.

https://dlca.logcluster.org/display/public/DLCA/3.1+Republic+of+the+Congo+Fuel;jsessionid=28FACB51C4315642B596FA871E9587FA

This refinery is supplied by pipeline, but all its products are shipped by road/rail.

The pipeline comes from south of Pointe Noir from the Djeno Oil Terminal which is operated by Total.

This

http://www.oilandgasinfrastructure.com/home/oilandgasafrica/congo-brazzaville

and this

http://factbook.eni.com/en/angola

show what appear to be existing oil and gas pipelines in Congo. They all lead to Totals terminal where the majority of the oil is then exported by tanker.

One of the pipelines passes small fields at Pointe Indienne, which is only about 10km from Tilapia, so not too far from us. Capacity is of course another matter.

So I'd say there is a good chance that the "Super Major" was Total, and DS was talking to them as the local refinery would not be able to handle what AAOG may be producing within a couple of years and the surplus would have to be sent to the Total terminal.

The lad went to Oxford - so he ain't dumb.

There is a nice aerial video of the site here - a bit slow today - maybe others are also looking

http://www.aaog.com/content/operations/index.asp

Agree - although I think 50p is somewhat pessimistic.

Multiples thereof possibly, eventually.

Who do you want Barbra Streisand......?

I doubt if he will ever wish to fund via equity ever again - he said himself he doesn't understand the present share price and can't fathom why it is still 10p.

Once the lot who funded the £6M have flipped all their shares and are out this will commence a strong rise.

So its 50/50, but DS says they don't need to raise, so it is the other "50" - private clients