The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
GeowitzâŚ. the strategy is stated in the update from 10th August 2021. The 3D will be wrapped up in the farm out agreement. My view is that, following the discovery at Graff, there will now be multiple interested farm out partners. Iâd be worried if there was just one interested party ( or none, obviously) but so long as there is competition for the farm out, I think a deal will be done. Discoveries at Venus (fingers crossed) will seal the deal so to speak.
Geowitz;
I) to gain access to 4 years worth of GBPs data & seismic info
Ii) because, GBP are expecting confirmation of a further extension ( if they want itâŚ. which I assume they do)
Iii) the Namib govmt, when on the brink of launching a huge nee oil industry, will not wish to âdumpâ one of their partners by not allowing the extension. This would stop other offshore Namibia explorers, all of whom have to renew/extend licences at some point, dead in their tracks due to a lack of confidence / trust.
Given the discussions today about the source rock, farm-outs etc. I thought it was worth posting this extract from the Year End Results RNS back in October. It may help recent investors understanding of why the discoveries at Shell Graff are so significant for Global ;
âMuch of the interest by super-majors and other oil companies is driven by the perception that the Barremian-Aptian source rock in Namibia is of excellent quality, regionally developed and so capable of generating substantial volumes of hydrocarbons. The source rock has been proven by previous drilling in southern Namibia where the Orange Basin is located. The same Barremian-Aptian source rock is also proven by two previous wells in the Walvis Basin in the north (where PEL0094 is situated). Global has used part of the proceeds raised over the last year to map the source rock from those wells into its licence, using the latest technology, and has now started a study to calculate the volume of oil likely generated and available to migrate into Global's prospects and leads.
In the general Namibia context, it is to be expected that a drilling success by any company would lead to other companies wishing to acquire acreage, as was seen in recent years after the major discoveries offshore Ghana, Senegal, Guyana and Surinam, which in turn we would expect to be beneficial to the farm-out process for PEL0094.â
GenghisâŚ. I completely agree with your observations about the things that WE (as PIâs) donât know. However, some people eg. Namibian Petroleum Commissioners etc. know a lot more than others. Whatever Maggy Shino ( she know⌠ha ha !) knows about volumes, flow rates etc was enough for her to tell Reuters that âNamibia aims for first-ever oil output by 2026 after Shell discoveryâ. Iâm only quoting from the article itself and, of course, I am wishful too but she seems to have gone a lot further than either Shell, Qatar or NAMCOR went with their own announcements on Friday. Good luck :)
Yes grantedâŚ..this new article from the Namibia Energy Minister still mentions the data analysis & possibility of a second exploration drill. However, it is extremely upbeat and more or less says that Shell Graff WILL go into productionâŚ. itâs just a matter of how much they can get extract and whether Graff will be a standalone project or if others will be added. This definitely has a ring of âwhenâ not âifâ. Sheâs given the game away⌠thank you Maggy !!
https://www.devdiscourse.com/article/headlines/1913466-namibia-aims-for-first-ever-oil-output-by-2026-after-shell-discovery
Not what I wanted to see, but Ensco-10 has now left Graff and is heading back to Walvis Bay. Perhaps wishful thinking on my part that it may have gone straight into a second drill. Who knows, it might head back to Graff very quickly. Drill 1 had an very positive outcome in my view so my investment seems safer than it was a week ago.
Next up⌠results from Venus which must surely be very close to completion now. Good luck all.
One of the reasons I ask is that, for the first time since 6th December, the drill ship has movedâŚ. about 250 metres at the moment. I guess my question will be answered soon enough anyway, it will either settle on a new spot⌠or it will bugger off completely !
On 25th Jan this was said (Reuters);
âThe Ministry of Energy and Mines said it was in the final leg of a process to collect quality data for the Graff-1 well, enabling a "thorough assessment of the prospect potential".
"As soon as all the data have been analysed, the Ministry will issue a full results announcement," a statement said.
Today NAMCOR said;
âIn the coming months, we will perform extensive laboratory analyses to gain a better understanding of the reservoir quality and potential flow rates achievable. Whilst we can learn a great deal from the results of Graff-1, we anticipate that further exploration activity, including a second exploration well, will be required to determine the size and recoverable potential of the identified hydrocarbonsâ
So then, data has already been collected and will be analysed over the coming months. However, they also suggest that a 2nd drill will be needed. What are the views hereâŚ. the drill ship is still at Graff and I know it is booked out on another drill immediately after Graff. However, do you think that Shell / Qatar would just leave the drill ship there and begin drilling the second hole immediately thus supplying the further data required for the analysis in about 6 weeks from now ?
Geowitz⌠you make some good points. However, based on what weâve heard today, Shell need to pull out 300mbs to make Graff worthwhile.
In shallower waters ( generally) Globals licence are sitting on;
7 prospects totalling 2048 mbs (so average 293mbs)
2 prospects totalling 881 mbs (average 440mbs)
These are gross estimates (Global at 78%) but I assume that this is an apples-v-apples comparison with the figures coming out of Shell regarding Graff.
I donât see why a farm- out partner would be put off by having to carry out multiple drills if they were all at least as potentially viable as Shell Graff ?
AgreeâŚ. Venus may be the game-changer. Iâd expected that good news from Graff would have propelled the SP forward today but it looks like further reassurances are needed by some people before they buy & hold longer than a few days. Each to their own⌠nothing goes up in a straight line.
As for Venus, there were some strange goings on the other day when it swung position by about 80 metres and stayed there, moving back to its original position this morning. I can see that there were quite high winds at the time so maybe there was a slight interruption ? Anyway, with Pacific Gull on its way back to Venus, arriving on Sunday with more equipment, the drill continues. Youâd have thought completion next week thoughâŚ. another NAMCOR announcement the following week if there are discoveries made ? Anyway, if Venus is also a gusher I donât think weâll be waiting till end of March for a significant SP rise. Go Total⌠Go Venus !!!
Yes & NoâŚ.. some discoveries are known to be non-commercial right from the off. So we were hoping that the announcement was NOT going to say this. As things stand we are in the game, with our investments looking stronger than they were yesterday. Deep water drills are extremely expensive, we now know that whatever information they have at the minute, itâs worth spending a lot more money on. If you stand back and wait until all of the unknowns have answers you will miss out on the huge potential SP gains. Yes, still a gamble, but much less risky when you know that Shell & Qatar, with all of their inside information, are prepared to take the same bet :)
ErebusâŚ. I think you may be over analysing those words. The very fact that the statement was ended in that bold, âwe told you soâ manner, says it all to me. I mean why would they have set themselves up for a spectacular fall. I think it shows great confidence in the information they already have so far. Just my thoughts
Further confirmation from Shellâs main partner (45% each);
https://www.oedigital.com/news/494051-shell-s-partner-confirms-oil-discovery-at-graff-1-well-offshore-namibia
ApplebeeâŚ.. doesnât this bit offer you more encouragement?
âWe hope that this discovery puts to rest doubts about the hydrocarbon potential of Namibia and opens a new dawn in the countryâs future prosperityâ said Managing Director, Immanuel Mulunga of NAMCOR.â
Yes⌠but the statement was from NAMCOR who also have a 10% stake in the adjoining licence, Venus ie. the second exploration well. Currently in Day 67 of an estimated 60 - 70 day drilling program. Latest satellite imagery/ supply vessel activity suggests that drilling is not yet finishedâŚ.. but it must be oh so close now !!!