Member Info for Soundingoff

I can promise you there will be new info at the deep dive. Whether it's deemed to need an RNS is another matter. JP said he didn't think we'd see an updated basin model now, so really we'll just be seeing TE9/10 and the aerial/grad data in more detail. Key info for me as we enter this final stage of our journey.

It's just the TE5 horst. So that's up to TE7. As JP has commented, it's also important in terms of future negotiations for gas sales and of course the sale of Sound Energy.

The GSA is an interesting one. On reflection, I'm more relaxed about it than previously. Let's face it, gas is required, both in/out of country. And looking at the current state of the market, I don't think the figures that have been talked about are too onerous to achieve. But we'll see.

If we do spud pre-GSA, we still the drilling phase in which to complete. Which of course we would all like for stability depending on results.

Ignoring any positive effect on analogous structures or the basin model (which clearly is incorrect), the value for TE9 at $8 per scuff NPV10 (as advised by the company) ranges between NIL (as a duster) and just over £2 per share (TAGI and Palaezoic (assumed same as TAGI based on previous advice) high case).

More likely outcomes of the TAGI mid case only is just over 60p per share and both zones mid case is £1.20 per share.

This give us risked values ( full value multiplied by the drill COS) of roughly 20p for the TAGI and the same for the Palaeozoic.

Of course, on failure we'd have to move on to TE10 with an NPV of between £1 and £4.50 per share. On success we would rerate similar structures and the seismic in general. The risked value of further drills would also increase and any offer would have to give consideration to this.

Roll on that drill ;)

If volumes are just a fraction of those on previous rig-up/spud/drilling, then the holdings you're talking about will be eaten up in a matter of days. It'll be interesting to see how the share price reacts though, as this is a new set of circumstances for Sound.

Of course we could get other news or that elusive GSA which may complicate matters.

Spud asap, or timed for the site visit?

I'm sorry 250, but that makes no sense whatsoever. This drill is quite clearly a high risk exploration drill. However to suggest we know nothing is an absurd game of semantics.

Your implied statement suggests that the aerial gradiometry and seismic is of very little use across the field. Given that you thought we could be sold off without drilling (when nothing else has changed other than JP trading plan), that's quite a change in viewpoint.

I would suggest you give John Argent a call and set aside an hour to talk about TE9. If that amounts to nothing then so be it, but having taken up 30 minutes of his time on it over two events, I can assure you that your assertion is somewhat wide of the mark.

From Schlumberger's website:

Wildcat

1. n. [Drilling]
An exploration well. The significance of this type of well to the drilling crew and well planners is that by definition, little if anything about the subsurface geology is known with certainty, especially the pressure regime. This higher degree of uncertainty necessitates that the drilling crews be appropriately skilled, experienced and aware of what various well parameters are telling them about the formations they drill. The crews must operate top-quality equipment, especially the blowout preventers, since a kick could occur at virtually any time. If a wildcat is especially far from another wellbore, it may be described as a "rank wildcat."

With a COS of 30%+ and much of the components of that risk well known, I would suggest the term wildcat would be misleading for TE9.

It was Robbie. Below is the extract from the June RNS re the Basin Study:

The total potential ("Total Potential") of the acreage is an estimated range of unrisked gross GOIP derived from the Basin Model. The Total Potential represents the total amount of hydrocarbon (gas plus the gas equivalent volume of oil) that could be available for trapping, across the whole licence area of approximately 23,432 km2. The Total Potential is a stochastic range, based on estimates of the total generated and expelled hydrocarbon from three source rocks (Silurian, Devonian and Lower Carboniferous), since the Mid Permian (approximate age of the end of the Hercynian orogeny at 268 million years ago). The total expelled hydrocarbon estimates are converted into Total Potential estimates by assuming only 1%, 3% and 5% of the expelled hydrocarbon is available to be trapped. This assumption is consistent with the assumptions used for the preliminary basin model, announced on 1 February 2017.

Whatever happens, we'll all be keeping a close eye on it...

Del- Just to be clear, we know nothing about C4 yet. We have no idea if there is any cash in it, Sound shares or otherwise. I appreciate you are only surmising, but if you glance at the post, it looks like fact.

I would guess it's just another case of unfortunate timing (C4 setup and OGIF sale), but you never know. JP said at Durham that he didn't expect it to be hived off and farmed in with a Major, as the buyer of Eastern Morocco would not want ex-Sound staff/owners as competition in-country.

That's correct ozzie.

Frank's post describes the massive geological activity that happened during that period in time. And yet we have to compress it down and explain it in a few numbers in a simulation...

What pleases me is that when we look at what we already have on the CPRS and include other assumed amounts for drilling targets (and others) for both the TAGI and Palaeozoic, it really does show that those percentages are 100% conservative.

Agreed PAAA. I don't think you could get a bigger signpost that Stage 2 progression is very well developed. This could be one of the best times to invest with reference to risk vs reward.

As Brian has said previously, the 1/3/5% is conservative, but that's the way they want (and should) play it right now.

'As a sense check from the BP Statistical Review shows proven reserves for Norway are about 60 tcf and Canada is about 66 tcf. These numbers are for whole countries – not just a small area like Tendrara.'

That's interesting to know if it is correct, and puts what we may have into context given we know these countries are energy rich.

I'll have my calculator ready at the Deep Dive, as it could provide a bit more evidence towards our basin study being rather 'light'.

Boderisimus- After attending Durham, I don't think this update is there to show the new data they've found re the 'Veyron zone'. They advised that the data was only a few weeks old and they were working on it. There are a few differences in the presentation vs the slides at Durham, so I expect some great detail at the Deep Dive and some new slides to 'take away'.

You're right in the placement of it in the NW.

As Riddlers has posted, it's quite normal for individuals working at a high level to want to 'go again'. You cannot apply your own standards to those individuals. I have clients who has setup or bought and sold businesses many times over. After the first one, the second, third, fourth etc were not required financially, but they choose to do it anyway.

We're all hanging onto the coattails here.

n4a- Just picking up on this. Sound won’t have been hacked, as that makes it sound serious. She will have been spoofed (someone pretending to be her) and sending out ‘contract docs’ are a standard scam. So there’s no access to internal data.

I've sent you a message. It suggests it's sent, so maybe premium members can send basic members messages?

Agreed jacklevi, I think that's why JP wanted them on board.

OGIF are a commercial outfit, essentially an institutional investor. They have more information than us and clearly more knowledge and ability to assess that information. As a commercial enterprise, they want the best return possible (vs risk) and so my view is they are more likely to respond better to a hostile takeover than us PIs. Given where we are now, I'm very happy to have OGIF on board.

'Anyone ask JP why the ten year prodn plan on the horst only implies a total 68% of the recoverable reserves as notified to us by RNS? Another niggle and discrepancy. And they’re always against us, highlighting how reality is less rosy than we’ve been told, always always the same. Don’t get me started on timelines.'

The production horizon is not meant to be over a 10 year period. I'm not that knowledgeable on depletion rates etc but I do know that there are optimal 'drawdown' rates over the field and this is in line with my understanding. Production rates/decline per well has to be accounted for. Remember this is only 133km2 or roughly 11.5km x 11.5km.

I reviewed the latest RNS and was pleased to see that it's broadly in line with previous estimates on BCF per drill.

If you are relying on this is your calculations, then I really think they are going to be massively off?

'Secondly, despite all the Npv and other finger in the air calcs people post and purport to believe in here, I’ll tell you two things 100% certain, the current share price has a decent premium in it for unproven opportunity on our licence (10-15p per my calcs and the company’s guidance - btw everyone on here has failed to LISTEN to the significant change in valuation metric on the last fsc, sneaky Jp and JJ tried to hide a material change in metric, GO AND REVIEW AND YOU’LL SPOT IT HOPEFULLY ) and the sp will drop to 20p imo on te9 being a duster. So I see huge risk still in the sp at 40p, it’s certsinly not under pinned at the level imo. So as you’d expect there is certainly sp risk here unless gsa comes in at $12 per my calls.'

As above, I can understand if you are factoring my first point into your calcs you will end up with $12 per scuff...
You'll have to spell out the metric change, as I can't see any reference to metrics in the latest FSC? As per Durham, the £1.50 per recoverable TCF at $8 per scuff is still relevant and broadly agrees to my own calculations. Sound have a full time financial modeller and I'm sure his calculations have a bit more detail than my own.

You are assuming that we will still be at 40p when TE9 reaches TD. I expect to see a significant rise up to spud. How much, we do not know. But any potential drop needs to be based on that figure and not our current SP. And of course the GSA will have some bearing on the figures (pre/post drilling).

Anyway, as you know the detailed calculations are an important part of my investment strategy, so if you have any more detail it would be appreciated.

Because the first rule of dealmaking is that you don't change your plans in the slightest. We've had trips before so we continue to do so. To change now would be a bad move.