Member Info for Soundingoff

I agree that it will validate the seismic to a degree, but I believe only a very small percentage based on the data we already have from previous drills, the Grad and the fact that it only relates to one play and a very small amount of TCFs. 2% of the basin model.. Ergo the majority of the value is seismic generated and value is being built very rapidly as we speak.

What difference is there between TE5-8 and TE9? Nothing in my view other than it's another validation. How many validations do we need. Does TE2 count? How about SBK1 etc etc.

Plus I don't think I've heard the BOD say we need another drill to validate the model? Can anyone confirm.

Agreed jag.

I can definitely see why we'd want to firm up the details of a TE11 drill before drilling TE9, because then we have another fully funded target that has a value on sale. Apparently TE11 would be bigger than TE10 with 2.6TCF mid case...

Although we already have a rather long list of targets, one of six A structures, TE10, TE2, redrill of TE5 and SBK1. Who knows how many more internal targets we have?

In contrast, I don't buy the 'we have to drill before selling' argument. No one has posted any basis for argument and it seems to be based on social/psychological norms and conditioning. I'd rather openly question all options and on that basis remain open to all avenues.

One question to ponder is why does TE9 generate so much value for us? If we take JP's comment of 'we may only need one successful drill', how does it work? We know that each drill proves up different structures, so why do we only need one of them?

How does TE9 prove anything more than itself and similar structures? And why discount previous drills? Seems illogical to me.

What is 'being sold short'? None of us know the range of sale values and so it's very hard to base your view on a pre/post drilling selling price when there is no base for consideration.

Finally we have a drilling programme laid out and fully funded. They have a risked value based on COS. To suggest, as some have that they have no value, is without basis. Everything has a value pre and post drill.

Can someone explain how one small drill multiplies our value by so much?

Looks like Eco is offshore though James, so comparing a net 300m barrels at offshore margins with Sound needs a lot of work to compare. What are their development costs and expected sales after taxes? Morocco offers the highest sale prices and some of the lowest extraction costs. This is not to be underestimated.

Cash is an non-issue if you catch up with your research :)

We will never see the full CPRs and the BOD have confirmed that. They are too valuable to 3rd parties.

A potential buyer has/will have access to these via the confidential data room and so what you see externally has no relevance to the internal/confidential data available.

Agreed Shaun. The SP is static, with little buying and selling. New buyers want hard facts.

However I couldn't disagree more about this update being little more than tinkering with a spreadsheet. This will underpin a huge amount of our value when we sell IMO. And the question of whether we need to prove the model is a different discussion altogether.

A very pleasing update, but also I believe quite significant.

One of the few question marks left to answer was the charge over the license. I think this answers that pretty categorically and is great news for the list of targets we have on the license.

We are also still using the 1%/3%/5% Monte Carlo simulation. As we have been advised previously this is very conservative, like all of Sound's internal calculations.

Oil? That's a bonus, and more importantly separate from the TCFs in our basin study. We'll have to wait to find out about that.

Unlikely to make much difference to the SP, but I believe very significant for advancing the sale of the company.

Andy- Whilst we still have the detailed processing (and resultant CPRs) to work through, in terms of seismic completed by expected TCFs, we are at about 86% based on the Unlocking the Basin potential. Clearly a lot of factors to consider.

TE9 as another drill in the TE5 horst? Not a chance IMO. We have now learnt that Schlum are the reason we pushed the boundaries on TE8 and we wanted something less risky. They are in it for the big find, and based on what we know now, should be very happy with the positioning of this well on the A Structure.

No comment on the GSA, but all information from the BOD is that this is expected shortly and at a rate acceptable to them.

The loan I'm referring to is the $28.8m corporate bond secured on Morocco South Ltd and owing to Greenberry SA (see page 87 of the Annual Report). It isn't anything to do with Schlum.

The charge is for the loan notes and they are the trustees.

I assume from your comments the risk is too much for you and you're not buying in ;) Thanks for warning us all as usual.

On a more useful note, the Mengo is development and not exploration, there's quite a difference... This will have quite a bearing on holdings during the drill.

'Rig and spud are now basically guaranteed. And therefore priced in.'

Very funny IG. We are nowhere near risked value yet and we will get to that given there is plenty of time to spud.

It's one of situations where you can only sit back and wait. For a normal O&G Co proving up and producing, these delays would be unacceptable. However that is not our stated plan. If anyone thinks selling an asset such as this is easy, they are not dealing with the reality of the situation. The potential scale is huge and it brings with it serious geographical and political complications.

We are either in the process of selling the business now, or gearing up to sell it in a number of months. Because of this, it's fairly obvious that outward communication and internal reality are going to be somewhat different. Third party interference could be considerable. I think it was Angela Raynor on Question Time who suggested that the Brexit negotiations should be open and the exact terms known by the public during negotiations. That caused a few laughs.

Personally we either wait or sell; Criticism prior to full knowledge of the facts is premature.

Quick, look now it's blue ;)

Good thanks Davey. We've been managing newsflow/expectations for a long time, but this has gone too far for me right now. Until we get news to the contrary, I expect there's something outside of our control holding this up and some sort of deal is my best guess.

When you are working a deal, you carry on regardless. Whether that is a Sidi farmout or a trading plan, it all adds pressure and says that you will follow the path unless something too good is put in your way. Who would sell 10%+ of their shares to get 25% more overall? I know I would... Without wishing to start the trading plan debate again, if there was some sort of conditional deal (on drilling etc) in the pipeline, the plan would allow him to arrange his affairs in a tax efficient manner and circumvent the PDMR trading rules.

Either way, I'm relaxed and waiting.

I like that Davey, but I don't think we're going to see that one on Twitter...

I wonder if Mr Trump can make a mess of the US energy market? He'll give it a good try going by recent events.

egg- This is just overhang from the recent placing. There will continue to be dumping until it's done and then the SP will rise.

It would be a few months PNE.

Having reread everything, I cannot tie up the value increase from one successful drill. The value created would (based on JP's advice) increase our drill proven reserves by 400bcf recoverable at £1.50, or 60p. Add another 5 targets at 400bcf. However we were advised success increases their probability from say just over 30% (CPR plus extra analysis/seismic) to 50%. So the value created on similar (A) structures is relatively low in percentage terms. This drill also only confirms that structure type and not TE10 etc. Therefore IMO this drill does not increase our value from a suggested 50p-£1 now to say £4/5 afterwards. It simply doesn't compute. So I can only conclude (as JP has stated previously), that the vast majority of the value will, and has been created by the seismic, and distinct from drilling. The seismic/basin model cannot be verified by TE9, otherwise why drill TE10 & 11 or TE2 again (etc etc) if TE9 proves so much? My view is the drill bit adds to the seismic, but it is not a requirement to confirm the basin model/seismic as some suggest. Also we already have many points of reference from 8 (out of 10?) successful drills that will help correlate seismic with geology.

Anyway, idle minds and all that. None of us really know what is going on, but I prefer not to assume we have only one course of action open to us, especially given we have been given enough information and data to help us make reasoned judgements.

Roll on the drill. Or not.

Where's that basin study? Is it still due by the end of May?