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Also consider that the development is being derisked as time goes by. Our NPV is currently based on NPV10 as the standard O&G metric. However Sound have advised that the value would be approximately 20% higher on an NPV8 basis.

Thanks for posting Dixie. I think this shows just how conservative our initial calculations were regarding the economics of the Horst. Great news.

Ponkey- If you're not already, I'd be aware that if there is any contingent part to the deal, IG probably won't be able to compensate for it.

The RNS shows that we've been working on the concession, reducing risk. We are currently valued on an NPV10 basis, but there may be an argument for NPV8, which would increase the value by approximately 20%. Clearly it's not that straightforward and would be a point of negotiation with any buyer.

Most definitely Shpunken. Fewer wells, reduced time costs, reduced uncertainty, recovery rates etc.

Interesting. That affects the economics significantly. The production concession was as follows:

'The production concession award covers an area of 133.5 Km2 and follows an application by the Company and its partners in June 2018. The field development plan underpinning this award includes:

the drilling, pre first gas, of up to 5 new horizontal development wells, in addition to recompletion of the existing TE-6 and TE-7 wells.

the construction of a gas treatment plant and compression station ("CPF") and a 120 km 20 inch Tendrara Gas Export Pipeline ("TGEP") connecting the CPF and the delivery point to the Gazoduc Maghreb Europe pipeline. As already announced, front end engineering and design ("FEED") is underway for both the CPF and TGEP.

the achievement of first gas in approximately two years at an expected mid case production rate of around 60 million standard cubic feet per day over a minimum period of 10 years during which it is currently estimated, subject to optimisation of drilling plans, that an additional 10 to 13 wells will be drilled to maintain this production rate.'

Thanks for the info and thoughts Blade. Commercial flow rates on TE10 will certainly change the game and will allow a purchaser to make more concrete plans on development.

The message from the BB event was the SM will be insignificant IF TE10 flows commercially. Try and pay attention at the back ;)

Staff, overheads, office etc. Those are our operating costs and the drilling is separate. It's just showing that we are funded beyond drilling for anyone concerned.

Looking further at the accounts, taking into account debtors, cash, creditors, TE11 and cash burn of £1m per month, we are funded for TE11 and running costs to around the end of the Summer.

Around 12 months from now based on JJ's figures at the BB event.

Yes, that comment hasn't really been discussed much, but I found it an odd one. It could mean nothing, but it's certainly a valid theory. I tried to prise similar info out of John, but got nowhere.

I'm not going to guess at a value, but we need to consider the potential on offer here. A successful TE10 will presumably add a great deal to our basin commerciality. There are very few opportunities out there for Majors to materially improve their balance sheet. That is their objective for shareholders and when the time is right, they need to take opportunities that allow them to achieve it.

Shell paid out close to $16 billion in dividends last year. As an example, if they were to purchase Sound for £1 per share, they could probably spend another $0.5 billion drilling everything there. I would expect a very health return. This would only equate to just over 40 days of dividend payments for Shell.

The reality is they wouldn't go down the drilling route and would spend more time on the data (as advised by Sound employees at the latest event), but the point remains. Paying a premium for potential is relatively easy for the Majors.

Despite a few questions (some repeated) the Palaeozoic was artfully dodged. Which raises a few questions. I'm fairly certain we'll get comprehensive answers to those questions after the TE10 flow testing.

There are many questions that would need answers, and we're not going to know them until after the event. We have been given guidelines but they still leave much open to interpretation.

It would appear our base valuation is skewed towards the production concession rather than the direct economics of the TE5 horst. This is at 60 mmscf. However JJ mentioned 66 mmscf at BB. Recovery is estimated at 50%, rather than 58% per our modelling. There are a number of other conservative assumptions such as the number of wells required. However the big question for me is how do the economics change if TE10 is also commercial. The change to the metrics of a production concession could be huge.

ps- That's a fair point and you are right that you are confirming JP's words in that instance. But that then contradicts his next point that they chose three different drill targets to prove up the basin. If the basin (undrilled prospects) is not important, why are we so interested in it and have focused most of our effort over the last year? We have had comments that tell us the seismic is worthless and also the opposite. The other discussions I had at the event suggest it's our discoveries PLUS associated targets that have the real value. Still based on seismic, but more of a relationship to the drills.

'Of course they have the flexibility to change the drilling programme. But they have an obligation to provide that information to all holders through official channels - especially when the original news of the drilling programme was put out via RNS - not to tell people down the pub!'

This is where people need to think about the situation we are in. All in my opinion, but we are clearly in the midst of negotiations. Officially we have to leave our stated strategy open and be flexible. Unofficially we do not. The only way to get that across to investors is to hold these events.

ps- The volume has dropped because they have mapped the seismic to the drill results.

'If you listen to Balls Bros, JP reiterates that the valuation of the company will mainly depend on proved-up resources. To paraphrase him, there is: 1) a certain value attached to proven resources, and 2) a certain value attached to discovered resources for which no appraisal wells have been drilled. And then there is 3) a value for undrilled prospects.'

I wouldn't agree with your first sentence. JP is stating in simple terms the three types of value we have on the license. Without knowing the makeup of our inventory, it's very hard to ascertain our value. And I cannot see how he implies the undrilled prospects may not be worth much. That is your assumption IMO.

Per the other part of your post:

"When TE10 flows it will prove up other similar trap structures on the licence ( a few at least). They will be in addition to 12 other prospects they had identified, they were all closures, according to Brian."

The key word is prove up. Now we all know these aren't proven resources, but as we have been told in the past, the COS on these targets will increase, and so does the value. Add up enough of these, and even a small increase in COS will be valuable to us. The question is how valuable.

T10Boom- I meant how TE10 affects the basin model.

I think it's fair to say TE9 probably added focus to the basin study. And of course at this stage, all data is useful, good or bad. John Argent explained how TE9 could have ended up a lot worse than it did- a reservoir full of water for example.

And TE10 for that matter.