Member Info for SQ320

edgar

"every seismic update has greatly increased the gas in place without much impact on share price (30% up and then drift down)."

Surely the difference this time is that the drill itself is only a few short months away from this seismic.

It'll remain undervalued, but I think following a good seismic result there will be a new trading range, likely between 1p and 1.5p. IMHO.

I think (without wishing to jinx the future sp) that the recent placing and subsequent share trading gives is some indication about Zubair/Ara intentions.

The placing IMHO could have been done at a number of different points in time going forward, but it was done at a price not too far off the one where the share options were awarded to Santos i.e. a relatively low price.

Immediately after the placing the volumes traded have been many multiples of what they have been in preceding months. I'd like to think that the institutions buying in the placing were doing so on behalf of various clients in East Africa and the Middle East who needed to be kept sweet and that before the seismic results this would be the last opportunity to let them have a multi bagger.

And for the avoidance of doubt I am not suggesting there was anything wrong in what happened.

AIMHO

Edgar, in the RNS Santos says this: "We look forward to the completion of the 3D seismic survey and the drilling of the Chikumbi-1 well later this year."

Do you think he's being optimistic and that he HAS to say this at this stage because saying otherwise at the time of a placing would really trash the price?

PoC, "We all know this placing was done before the share price rockets. Seen it so many times where insiders get a chunk of cheap shares. "

Yes, they could have used PrimaryBid to offer shares to retail. This was more about getting some cheap shares into the hands of a select few. The PrimaryBid website makes it clear that it can be used for short notice placings.

Ariel, yes waiting until there was some good news for less dilution makes sense from our pov. But Eclipse have now been handed 40m shares on the cheap and we don't know who else bought in and their connections to the company.

Dropping the 3d seismic soon after the placing would be hugely cynical, but you can't blame people with bigger snouts than us wanting to get in the trough.

Justin Waite has been around the company for a while and knows the history, but still can't bring himself to ask about the debt renegotiation or new Nigerian gas sales agreements.

Could the solution be something like the Zubair's giving SCIR the necessary cash, but getting SCIR warrants in return? It's only when the time comes to exercise them that they need TPDC agreement?

Just speculating.

Also worth noting that there are plenty of other O&G plays that offer nearer-term upside if they strike lucky with the drill bit or indeed because of better exposure to the oil price.

SAVE could pull a rabbit out of the hat any time between now and June, but that seems to involve a bit more in the way of hope than the 2 price drivers above.

Thanks CP, that's really helpful. From your first paragraph, can we assume that the company will release seismic results in stages? CH-1 results and plans first and later on the full field results?

If the company have said that they will drill the first well in Q3, would it be reasonable to expect seismic results by June?

Also the half-yearly statement on 30.9 said that the company committed to acquiring 200mk2 of seismic, but that the tendering had meant that they would actually acquire 338km2.

Would it be reasonable to expect that they may raise GIIP if they are surveying 50%+ more land than they initially said they would?

Back of the envelope (for just one bit of the biz) , we have, say an additional $50 for each barrel to what we were originally expecting ($120-$70). Assuming that goes on from now to June (120 days) and we have 25kbopd, and 1.3bn shares in issue.

So I make it an additional 11p per share we should be getting.

($50*120 days*25000bopd)/1300000000=11p per share

In my experince in the short term all that a share buyback does is to allow institutions to sell without trashing the SP.

In short, if it goes to plan, AK has pulled off a blinder.

And while the £900k is not material the potential upside most certainly is.

You have to read the Lekoil RNS, which has all the gory details. Looks as if SAVE are stumping up £900k, and some management input and not considered material.

In the past Jay B. was quite open about ordering long lead items, when I asked him. Has anyone been in touch about specific long lead items that would indicate Q3 drilling?

The sector is fairly hot right now and it could just be a matter of people preferring to be where there is more prospect of newsflow in the short term and/or investments that are more highly geared to the price of oil.

Thanks for that haggis and blackgold.

It seems to me that the 3D seismic is an order of magnitude different in terms of time/complexity for the two different objectives.

For CH1, the location is known, it's a matter of establishing how far they want to go and what they hope to get. On the other hand, the rest of the seismic is about establishing the optimal locations for subsequent drills, which seems much riskier and complex.

WTFDIK, but it would make sense to do the CH1 seismic first and proceed to drill and while doing the rest of the seismic in parallel. Anyone heard from the company about their plans?

Bearing in mind what haggis has said ... let's say they do the CH1 seismic first and start processing/analysing it while the rest of the acreage is seismiced ...

does that mean they can drill CH1 before the full analysis of the rest of the play is done? And if the latter is the case could they also RNS CH1 seismic results in the next few weeks?

Of course, they will provide an update. They can't keep silent forever. My assessment is that the 'sale' RNS won't lead to immediate riches as many are expecting.

It'll be some kind of can-kicking exercise, a curate's egg that maintains hope for somewhat longer.

One possible scenario is that any payments are contingent on future performance, for example. Or some sort of partnership deal that becomes an excuse for more fund-raising.

So a sale in the broadest possible sense of the word.