Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
FYI:
Non recourse finance leases
are VERY different to what is bandied about on LSE
The clue : NON RECOURSE
Non recourse operational leases are very different again
And WET leases are very different again...
THE basis of most aircraft and ship leases
ROB
view from a random old boy:
get to the stadium
do so at all costs
crawl over broken glass if necessary
when in the stadium
stick your **** on that seat...
(use of superglue might help)
do not leave the stadium
yes
Drilling programme to start at nearby licence
A farm-out of the Anchois project is not the only newsflow on the horizon. Early next year, Chariot plans to commence a four-well drilling programme on a new onshore Moroccan licence, Loukos.
Located in a conventional, shallow gas play in a basin with a high historic success rate of 80 to 85 per cent and low development costs, it has geological similarities to Chariot's offshore licences, close to existing infrastructure, processing facilities and onshore pipelines for the Anchois gas project. Loukos is well located to supply the industrial offtake market, too, thus offering rapid monetisation of production through Chariot’s recently announced gas-to-industry partnership with Vivo Energy.
Targeting high-graded prospects ranging from 8-18bn cubic feet (Bcf) of best estimate prospective resource potential (Chariot preliminary internal estimates), each well will cost $3mn to drill. A $19mn equity raise in July provides the funding and one that advised supporting at the time (‘A fundraise worth backing’, 12 July 2023). It could be money well spent as McCormack at Cavendish estimates that a 10bcf onshore prospect at an industrial gas price of $11-$12 per million British thermal units could generate gas revenue of $100mn.
Although Chariot’s share price has flatlined since my last article – albeit the holding is showing a 390 per cent gain in my 2017 Bargain Shares Portfolio – it could easily double on a successful Anchois farm-out. Buy.
I mull on is how akin are Paul and Eitan Aizenberg? Levantine and Guercif... I would be happy to see them mentioned in the same sentence over the coming years.
More importantly, I suspect Yossi will also be watching, much the same as when Delek took the reigns in Haifa 2010/11.
RE: Repost of Keith Oz11 Sep 2023 05:28
Curious that several recent posts have been re-posted by bots posing as new board members. Not sure what the objective is, but the programme they are using is rubbish, having somehow managed to mangle the original posts in the process. To save our newly joined bots the trouble, I have Chat-GPT3.5'd the post originally by me, re-posted yesterday by SmartBeds.
"The author analyzed data from a presentation dated September 8, 2022, using a 12% discount rate to account for increased costs of money over the past year. They employed the Net Present Value (NPV) approach to assess the current value of future cash flows. In this analysis, they considered two scenarios with a 50% inflated capital expenditure: one involving a production rate of 10 million cubic feet per day (mmcfgd) with a net profit of $10.28 per mmcf, and another with 50mmcfgd and a net profit of $9.79 per mmcf. The 10-year NPV12 for the 10mmcfgd operation was estimated at $177 million (£138 million), while for the 50mmcfgd operation, it was $795 million (£619 million).
The author also discussed the possibility of using excess gas for power generation or exporting to Europe at a lower price of $10 per mmcf. They estimated a NPV12 of $3,225 million (£2,511 million) for this scenario, requiring 900 billion cubic feet (BCF) of gas.
When applying these calculations to the company's shares, factoring in a 75% ownership share, and assuming 450 million shares outstanding, they arrived at a current value per share of 23p for 10mmcfgd, £1.03p for 50mmcfgd, and £4.18p for 250mmcfgd. Combining 50mmcfgd and 250mmcfgd resulted in a total value of over £5 per share.
The author further speculated that if the entire estimated recoverable gas volume of 1.8 trillion cubic feet (TCF) were utilized over ten years, the NPV12 would increase to $6,450 million (£5,023 million or £11.16p per share). They noted that extracting the gas more quickly would yield higher value due to reduced discounting effects.
Finally, the analysis only considered the output from the MOU-Fan & Ma sands at specific boreholes, without factoring in other potential resources across the license area."
RE: Repost of Keith Oz11 Sep 2023 05:33
...and these are the new numbers, thanks to our AI friend:
"Let's recalculate the values using 526.5 million shares in issue and summarize the results:
10mmcfgd Operation:
Original NPV12: $177 million (£138 million)
Current value per share: (£138 million / 526.5 million shares) = £0.26 per share
50mmcfgd Operation:
Original NPV12: $795 million (£619 million)
Current value per share: (£619 million / 526.5 million shares) = £1.18 per share
Excess Gas Utilization:
Original NPV12: $3,225 million (£2,511 million)
Current value per share: (£2,511 million / 526.5 million shares) = £4.76 per share
Combined Value of 50mmcfgd and Excess Gas Utilization:
Total value per share: (£1.18 per share + £4.76 per share) = £5.94 per share
Entire Estimated Recoverable Gas Volume (1.8 TCF):
NPV12: $6,450 million (£5,023 million)
Current value per share: (£5,023 million / 526.5 million shares) = £9.54 per share
So, when considering 526.5 million shares in issue, the current value per share for the different scenarios are as follows:
10mmcfgd: £0.26 per share
50mmcfgd: £1.18 per share
Excess Gas Utilization: £4.76 per share
Combined 50mmcfgd and Excess Gas Utilization: £5.94 per share
Entire Estimated Recoverable Gas Volume (1.8 TCF): £9.54 per share
It's worth noting that these calculations are based on the provided data and assumptions and may not account for all factors influencing the company's share value. Additionally, the author's analysis did not consider other potential resources across the license area, which could impact the overall value."
I have just started playing with Chat-GPT 4.0, which still has a few bugs, but should be even better.
@Ibiza, @SamLawrence. A little over a month ago I posted this. I repeat it to help you, and to enrage the trolls.
I have run the numbers from p.6 of the 8th September 2022 presentation through an NPV spreadsheet – the key difference is I have applied a 12% discount rate to reflect that the cost of money has increased considerably over the last year. For those not familiar with an NPV, this assumes that money has a cost, so is like reverse compounded interest, in that future value of income is decreased each year - in this model by 12% each year, compounded – so income by year 10 is not worth very much! So the NPV is the value TODAY of the future cash flows (profits).
We will initially look at two of the possibilities, both with the 50% inflated capex as per the above presentation: 10mmcfgd giving net profit of $10.28 per mmcf, and 50mmcfgd giving $9.79 per mmcf. Production ramp up assumptions, capex (now increased by 50%) as per the above RNS. The 10-yr NPV12 for the 10mmcfgd operation is $177M (£138M), and for the 50mmcfgd is $795M (£619M), both assuming 360 days per year operation.
Now that isn't the whole story – 10mmcfgd only uses 34 BCF over a 10-year period, 50mmcfgd uses 171 BCF over 10 years. As Paul said “what the hell do we do with all the gas?” The answer is gas to power or to Europe. For G2P & G2EU, I am assuming a price of only $10 per mmcf, giving a net profit of just $7 per mmcf, and capital expenditure of $100M, which is generous for a short connection to the Trans Maghreb Pipeline. This gives a NPV12 of $3225M (£2511M), and requires 900 BCF. There have been a number of suggestions that PRD will achieve the CPR P10 figure of 1.8 TCF just for drilling so far, given the thicknesses of reservoir sands.
Multiply the above by 75% to get nett to PRD, then assume 450M shares, this gives a current value per share of 23p for 10mmcfgd, £1.03p for 50mmcfgd (both G2I) and £4.18p for 250mmcfgd G2P/G2EU. 50 G2I + 250 G2P/G2EU gives over £5 per share.
We have seen that utilising 250mmcfgd for 10 years provides an NPV12 of $3225M. That works out at $3.58M per BCF, after discounting over a 10-year period. Were PRD to achieve a recoverable volume of 1.8 TCF, that still leaves 900BCF unused. If you were to additionally extract that remaining 900 Bcf, so that the entire P10 resource was used up in 10 years, then the NPV12 moves up to $6450M (£5023M / £11.16p per share). If you could extract it faster, then the money comes in sooner, and the negative effects of discounting at a compound rate of 12% are reduced, so the value is correspondingly higher.
This is just for 10-year output from the MOU-Fan & Ma sands at the current drilled boreholes MOU-1, -3 & -4. Nothing for any residual MOU-Fan gas. Nothing for anything else – not Jurassic at MOU-4, or -5, nor for any of the many Neogene, Jurassic or Triassic prospects already identified across the licence area equivalent to 60 North Sea Blocks. Nothing for Ireland, n
Where is Michael Caine when you need him?...PART TWO
Morning all
Matt... you have hit the nail on the head...with a very big hammer
The figures you mention are for the EXAMPLE (my word) volumes only
As I posted, that represents 13% of the LOW CASE volumetrics
If you apply it to the FULL LOW case volumetrics...
you get over £1BN enterprise value
IE you come back to the £4 per share figure ... of course I then chose to HALVE that for sake of sanity
Now scale it up to reflect just the PMEAN figure...
((((yes...please widen the SS columns or check your calculators!))))
THAT is why I hold volume
Of course...unlike SO MANY E&Ps... PRD HAS NETT CASH...NO DEBT!!!
As I keep saying... Always focus on Enterprise Values!
As to valuations of other E&Ps... I would ask folk to do the NETT math...look at the nett of INFRASTRUCTURE cost figures...
Even the much vaunted Cove ... nice price that we received on takeover (Dr Staley again!) was massively penalised as to price... because of the enormous costs of sub surface and infrastructure...
I have not looked of late but...last time I did, the purchasers of Cove had taken well over 10 years from purchase to flowing ... and had more than doubled the purchase price on build out works the old NPV has an effect
BUT the purchasers had money to do the build out for small outfits ...infrastructure build out requirements are value killers... funders have such companies by the nuts and act accordingly
PRD can pump gas and GENERATE GOOD CASF FLOW ASAP... and PG told me across the table...face to face... that that was his firm intention and belief
There are few pieces of real work in E&P I happen to consider PG one of them...the fact that he has others on his tiny BoD is quite remarkable the fact they all have skin in the game...well make up your own minds
The nett to PRD position is the best I have ever found in E&P (and yes I track such stuff)
BTW...the running room at PRD is 'none too shabby'... the residual 7200 sq kms might not be barren... LOL other E&Ps will recognise that very quickly...if not already
ATB
Where is Michael Caine when you need him?...PART ONE
Afternoon all...
I said the other day that I would have a go at making the recent RNS a bit more ‘accessible’
Well....this is it...FWIW:
That RNS (18th March) is the FIRST time we have seen PRD give us more detailed information about what Guercif could really be worth to shareholders.
The RNS fills in many of the missing piece of the jigsaw for PRD/Morocco.
We knew how much gas the company is targeting and now we know the value to PRD of much smaller example volumes of gas.
NB: It is really important to stress that these are EXAMPLE volumes
If we put the two together, we get a giant sized clue ... And we can estimate the value of the type of large discoveries that PRD are actually expecting (remember Paul’s grin!).
The following is my own back of an envelope ‘try’ (timing?) at valuing Guercif using the PRD supplied data...
I hope it starts a conversation here ... as I am sure that others will be able to improve on this.
Here we go...
So, we start with the value to PRD of a smallish EXAMPLE gas volume
That would result in the extraction of 3.65 BCF per year over 10 years... again, that is an illustrative period
This value (nett of operating and capital costs ...Opex and Capex) is given as $19.7m per year and that is AFTER deducting ONHYM’s 25% share.
That is £14.17m per year (at FX: $1.39/£1).
You can express that as a figure of £3.88m for every ONE BCF (I am not making this stuff up)
That equates to 1.51 pence PER SHARE ...PER ONE BCF (with 257m shares in issue).
Now ...take the target figures we have been given as the estimates of ‘gross recoverable prospective resources’ in Guercif:
Low estimate ...279 BCF (RNS of 7th December 2020)
Best estimate ...819 BCF (RNS of 7th December 2020 and 20th January 2021)
High estimate ...1,823 BCF (RNS of 20th January 2021)
Now ...apply the 1.51 pence per share per BCF (which already has a deduction for ONHYM’s 25% share) and we get:
Low estimate discovery: £4.21 per share
Best estimate discovery: £12.37 per share
High estimate discovery: £27.52 per share
Decent figures ...but hang on
This is not the likely end valuation
Of course, downwards adjustments have to be made for:
NPV (the time value of money...it takes several years to extract the gas)
A super large find may mean some international exports where prices could be lower than Moroccan industrial gas prices. (the way things are going... post Biden... I am revising my gas price assumptions...upwards)
The possibility that not all of the “recoverable resources” can be recovered during the licence period or extensions thereof.
Tax in Morocco will have to be paid eventually.
Cost of Reserves Based Lending ... (or a partnering/farm deal) to finance further wells.
PRD will need to leave something worthwhile for the buyer.
But ... on the upside...
Where is Michael Caine wh
Part 2️⃣.
FINANCIAL
💥 Profitability
“The SLR CPR (January 2022) gives an unrisked NPV per BCF of discovered gas of US$1.99 million. This is based on a large-scale gas-to-power development using a gas price of US$9/mcf and results in a low net-back of just US$1.99/mcf.” and
“The SLR CPR gave an unrisked NPV of US$592 million for the net Best Estimate resources of 295 BCF” (CNG, for just one reservoir structure)
www.lse.co.uk/rns/PRD/drilling-and-operations-update-3dby10znl7nldot.html
and see ranges for multiple scenarios:
pp. 6 & 7, https://wp-predatoroilandgas-2020.s3.eu-west-2.amazonaws.com/media/2021/09/19204501/PRD-Proactive-Presentation-Final-09.09.2021-1.pdf
💥 Tax environment.
“Fiscal terms in Morocco are attractive. The state royalty for gas production is only 5% and is applied after the first 10.6 BCF of net production to the operator. Corporation tax is levied at a rate of 31%. However, the Moroccan government also applies a 10-year ‘holiday’ before corporation tax is payable and any unused tax losses can be offset against the tax due.”
https://wp-predatoroilandgas-2020.s3.eu-west-2.amazonaws.com/media/2022/03/Predator-Oil-Gas-Corporate-update-7-March-2022-1.pdf
💥 Business environment & stability.
“Not only is Morocco an important market in its own right, it is also becoming the premier commercial gateway to Africa, as well as Africa’s bridge to Europe. Africa presents the single largest growth opportunity in the world”
https://www.gov.uk/government/publications/overseas-business-risk-morocco/overseas-business-risk-morocco
💥 Regulatory.
Part 1️⃣.
This bulletin board provides an environment for sensible adult discussion on all matters relating to Predator Oil & Gas. All views should be considered – it should not become an “echo chamber”. Nursery school one-line posts calling other posters liars, cheats & charlatans provide nothing, except perhaps to advertise the personality of the poster.
I do my best to present factual information, usually referenced, and if I speculate based on that, I try to give my reasoning for doing so. I reconfirm I would be delighted to consider alternative views, and would ask some of the folks here who disagree with me to post in detail their opinions, with the reasonable proviso that they also present the facts on which they base their views, and how they have extrapolated from those facts.
In particular, I would ask you to include the following in your conclusions:
RESOURCE
💥 Areal extent.
MOU turbidites 30+km², Ma sands extent of 58km²:
https://www.lse.co.uk/rns/PRD/completion-of-mou-3-drilling-and-logging-77nekzdof9lxnu8.html and
MOU-NE (Titanosaurus) 102km²
https://www.lse.co.uk/rns/PRD/operations-update-and-directorate-changes-m4pn1ml6h9x10pl.html
💥 Porosity & permeability.
“At deposition the independent studies indicated that these sediments were likely to have 35 - 40% porosity and permeabilities between 2000 and 5000 Md. Lack of compaction and consolidation suggests that poroperm conditions would not have been significantly impacted through burial and therefore good reservoir quality would potentially be retained, as supported by the post-well NuTech log analysis.“
https://www.lse.co.uk/rns/PRD/drilling-and-operations-update-3dby10znl7nldot.html
💥 Reservoir thickness.
MOU-1 testing of 22 reservoir intervals:
https://www.lse.co.uk/rns/PRD/operations-update-covzavfrw2aj6tq.html
43m in MOU-3:
https://www.lse.co.uk/rns/PRD/completion-of-mou-3-drilling-and-logging-77nekzdof9lxnu8.html
64m in MOU-4, plus Jurassic
https://www.lse.co.uk/rns/PRD/mou-4-update-41ps08lleqbs03n.html
💥 Overpressure
Significant overpressure in Ma sands MOU-4.
https://www.lse.co.uk/rns/PRD/interim-drilling-update-mou-3-a1ahzbsju1a49lu.html
and MOU-1 - chart, right side of p.13
https://wp-predatoroilandgas-2020.s3.eu-west-2.amazonaws.com/media/2021/09/19204501/PRD-Proactive-Presentation-Final-09.09.2021-1.pdf
💥 Flow per metre
In the Rharb basin (continuous with Guercif) reservoir sands of only 1m thickness flowed at more than 1mm cfgd, thicker reservoirs at higher flow rates:
https://www.reddit.com/r/PredatorOilandGasPRD/comments/t8ssg0/mou1_the_rharb_basin_net_pay_vs_well_flow_rate/