Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
No intention of a deramp there…
Ramp deramp etc has no bearing on the outcome of the drill, the clock is now ticking
We will hit hydrocarbons for sure and I am fully expecting a commercial find in excess of our P10 estimates the geological markers and 3D are the best I have ever seen in over 200 wells I have studied in the last 5 years.
I am expecting a single large column at total depth thicker than expectations with high permeability and porosity in play that the logging whilst drilling tools will pick up before flow testing. Data and analysis shows P10 plus 10% could be in play against 3D data…
Hi sustain, we will know more tomorrow morning of that I am almost certain. Drilling should have or will have started, a few days delays are meaningless in the grand scheme of things here.
I don’t expect any hydrocarbon shows until just above total depth, due to excellent 3D we can see that the oil migration channels are nicely sealed at depth. Additional drills locally also show that this is the case as well. So don’t be disappointed if there are non until after day 20 or so…
For those that wish to know…
https://youtu.be/nRyVchdZzlo
CLN’s done ;)
Mikey, What results?
Sustain, I agree with you that the gas itself on the books could be underpinning the current share value. The proof will be in the details of the GSA and then hopefully we hit the oil and get the results the market will need to pay attention…
Swingy, I put those full figures in merely as a figure to show what the oil value is based against a $50 profit margin. Over 30-50 years I think everyone would expect the price to be far higher.
When I say I am after £5 a share as an example many will say it’s never getting there. In reality we have a potential value into self production far greater than £5 a share…
Sonic, I have put Mean as well as P10 figures. Wells around us have hit P10 plus between 10 - 20% oil in place figures at Liuhua field. Our geology is analogous with that field and has a potential second feeder system so oil in place given the rock in place could well provide a better than P10 result.
Rafauo look at Cove Energy, they had gas back in 2012 and went from a few pence a share to £2.40. This is oil in place with a barrel cost far in excess of their gas, near to an energy reliant country nearby, the locations of Jade and Topaz are as close as possible and offer lower cost to recover the oil against others in the South China Sea.
The value is wholly based against the deal that is done. If you consider the flow rate at 10mn cubic feet a day /6000 is 1,666 barrels a net of 141 barrels to EME Daily, add in the ground value into production at a conservative £50mn then it underpins the immediate share price. The devil will be in the detail. Assume $50 a barrel equivalent cost at over 50,000 barrels a year at NPV20 that is circa £2.5mn a year. I would like to see a multitude of production wells drilled this year off the back of the deal, 10 wells would be £25mn a year income...
I hope to see a deal done at around $70 profit per barrel equivalent to save import costs with the need to drill several more production wells, with a cost increase based against increased production. I.e. 1 well $70 per barrel equivalent, an additional $2 per barrel per production well up to a max of $90. Based against $100 barrel cost, on a ratchet system, so if the oil price drops below to say 80 per barrel we will get a 20% tracker cost...
You are more than welcome :)
As we all know the GSA is due on the Mako gas field of which EME holds a 7.5% interest in the 495Bcf. The Gas Sales Agreement has been hinted at by several parties to be immanent at any time now. To put a value on the asset to try and work this out is an interesting one.
With every 6,000 cubic feet of natural gas being equal (or equivalent) to one barrel of oil. We can guesstimate therefore…
495,000,000,000 / 6000 = 82,500,000 barrels of oil equivalent of which EME has a 8.5% interest. As the asset is nearby to pipelines it is easy to get into production with minimal capex. So at circa 7mn barrels of oil equivalent to EME and assigning a value of circa £5 a barrel it could be worth 35mn at present or 5.4p per share. Upon a direction going forwards with a viable GSA this should add potentially another £35mn onto the mcap or $10 in the ground value. This is before sales and is only an in the ground value. Once sales and the concept have been seen to be in place with sales than a Nav percentage can be applied to the sales. Dependant upon the terms of this then this is a conservative value.
This reiterates the underpinning of the share price at 10p or so with potential of 12p based against nav if production is in short term.
The Mako prospect has flowed an amazing 10.9mn cubic feet a day stable and at nearly 100% methane with excellent proven source rocks should be a welcome asset to bring online in an area that current imports over 95% of its gas and oil. That puts a firm expectation of a high gain for the asset and those involved.
Production of Jade and Topaz
As above if we take our percentages into production with a 49% ownership at 10,000 barrels a day per asset at $50 a barrel profit is £500,000 a day in profit to EME. Plus in the ground values. If going into production on both assets we can assume a market cap, at mean values of 731mmbls in the ground 365mmbls to EME at $10 in the ground value minimum and into production is circa £3bn mcap
At P10 figures on Jade and Topaz combined 1.28bn barrels, our 49% stake 640mmbls and at $10 in the ground figures plus NPV assigned could be a mcap of 5bn +
Full production figures
At mean figures and a value of sale at $50 over the life of Jade and Topaz 49% holding would net 365mmbls x $50 = £13,931,593,750 / shares =£22.81 per share.
At P10 figures assuming the same $50 per barrel over the life and 49% holding would net 640mmbls x $50 =£24,428,000,000 /shares = £40 per share…
Assuming that CNOOC has their 51% they might be seen as a primary mover. I would also ask you to look at Roc oil as a possible company to become involved. Gaz has history with them as well as them buying out multiple companies in the area to build on their reserves in the area and they have a solid working relationship and often get documents and licenses etc fast tracked due to their excellent working relationships with all parties in the area for exploration and production of gas and oil.
If we assign a value against a possible takeover at $85 dollars a barrel as a cost against Brent crude. Operational expenditure of around $20 a barrel inc taxes.
This will leave a potential upside of over $50 a barrel.
If we assign a flow of 10,000 barrels a day (possibly add in a hand full of production wells) break even against upside potential at circa $50 a barrel most companies will want to break even within a year or two against Capex. If we assume recovery at around 50% of the oil in place ( there are multiple feeder channels so will repressurise and re-fill the trap so this could be a much better figure than normally found, this is also an expectation based against other producers in the area)
112,500,000/50% = 56,250,000 barrels at $50 =
£2,143,757,812.50
If we assume capex on Jade into production is circa £20mn taken into account the figures and production etc around 10,000 barrels a day… £20mn ($26mn / $50 profit per barrel =520,000 barrels of oil to be sold to breakeven divided by 10,000 a day, we could be looking at a break even within two months of the start of production so as these are minimal intrusions they cannot be a major concern or part of any takeover bid. If we assign the expected life of Jade at mean levels 225mn and 50% recovery 112.5mn barrels/10,000 a day is around 30 years life.
At P10 values the figure is 100mmbls net to EME after CNOOC and recoverable figures are accounted for. So assuming the same figures the well life will be 54 years.
Takeover value. If we assign a value at today’s prices against recovery values and 1/6th worth of profits at $50 a barrel profit. At mean figures We come with a value of £695,676,312.50/shares =87p
At P10 values the figure is £1,252,217,362/shares = £2.05
Topaz takeover.
At mean figures 506mmbls @50% recoverable and our 49% share. We have a well life of 70 years. If we assume a 1/6th as a takeover value £1,607,235,208/shares or £2 a share.
At P10 figures 891mmbls @50% recoverable 50% ownership, 10,000 barrels a day is a life of 122 years (I would expect multiple production wells to be drilled here). If we assigned a value against this as a takeover £8,490,394,687/ 1/6th /shares = £10.60 a share.
So to summarise at mean values Jade and Topaz could be worth circa £3 a share.
At P10 values £12 a share.
With no value assigned to any other assets.
Potential figures for near term Post Jade, post Topaz and sell off and into production.
I am going to use the mean figures for all drills as anything additional will be a bonus, I will also include a figure for P10 lest we forget the majority of drills in the region have hit their P10 targets plus. This also assumes that the drills hit commercially viable oil.
Realistically we are looking at in the ground figures to assign a value to EME pre production. There is also an overlap of derisking against Topaz to consider. The independent analysis done by Gaffney Cline associates puts in place 506mmbls at Topaz. I will assign again a buy out of 51% and add a 5% derisked value against Topaz post Jade drill.
shares in place assuming all warrants exercised and a small placing for on going administrative costs I will use 800mn I was going to use 888,888,888 ;)
I will also assume costs back from Jade will be used to cover Topaz drill plus income from other assets.
The other consideration is what value to assign to the oil in the ground figure, EME themselves have put figures to $5 and then $10 per barrel post flow testing. I am going to use a conservative $7 per barrel. The $10 is in line with recent discoveries but again I am always conservative.
Jade Mean
So with Jade mean figures in place of 225mmbls. Let’s assume a 51% buyout so circa 112,500,000 barrels to EME x $7 = £601,102,687 /800mn shares = 75p per share for Jade. If we add 5% of derisked quantity of Topaz at their mean figures we will be circa 85p per share. Again that is at mean oil figures.
Topaz mean
So with Topaz mean figures in place of 506mmbls Let’s assume a 51% buyout so circa 253,000,000 barrels to EME.
253,000,000 x $7 = £1,350,000,000 /shares. = £2.21p per share for Topaz.
Combined valuation circa £3 a share against Mean targets for our 49%. That is oil in the ground figures.
Jade and Topaz P10 figures valuation
Assuming the above figures but based against P10 estimates.
Jade P10
So with Jade P10 figures in place of 395mmbls, Let’s assume a 51% buyout so circa 197,500,000 barrels to EME x $7 = £1,050,000,000 /shares = 131p per share for Jade. If we add 5% of derisked quantity of Topaz at their mean figures we will be circa 145p per share.
Topaz P10
So with Topaz P10 figures in place of 891mmbls Let’s assume a 51% buyout so circa 445,500,000 barrels to EME x $7 = £2,377,000,000 /sshares = £3 per share for Topaz.
Post Jade discovery
Two scenarios are a total buy out before production of Jade or into production.
Buy out scenarios. With oil in demand from China and near term production being a very realistic scenario based against nearby commercial discoveries Jade could be productive in under 18months. This is very attractive to any major that can see the potential value from setting up the field and into a relatively low risk and capex project.
Hi Cristopher, My most humblest and sincere apologies on getting a word incorrect. If I did say geographical chance of success instead of geological. It was not scripted or rehearsed in anyway… I have indeed been studying this for years having covered it on TipTv in 2017 at circa 3p mentioning the Jade and Topaz drills there!
The wording of a failed share reviewer is a little harsh considering the successes of my picks in the realms of the AIM over the years. There is a vast difference between failed and moving on to enjoy life and better yourself as a person to help others and enjoy life.
In regards to the pebbles on the beach to help people out with a visual aid to the Block 29/11 licence area (not the Jade field as you called it) Sticks and stones may break my bones but EME should not fail us topographically.
Use twitter there is a group set up... dm me at slarratt1 if you want adding... after highlighting this 3 years ago it is at last time for more positive news to come and if they strike oil it should be economical in the current climate... good luck to all holders lets see if we can see the highs again on an oil strike, not a gas one...
Align are paid for tipsters who also get paid in shares etc... shares to promote carries no risk...!
For a break even in admin costs they need circa 30,000 additional restaurants and considering most of the current pick of the crop are below par restaurants with below average reviews I cannot see anything but a high turnover of businesses as well, how many companies will fold/disappear or plainly not again sign up to them whilst trying to gain 30,000 so may as well add 40-50,000 new unique businesses how many non chain restaurants are there in the uk that are in need of this type of get bums on seats desperately deal?
When they have between 20-30% losses across the board on the figures it is a flat set of figures, those using it for pensions etc will look at this as a halving of the dividend payment and more risk going forward so there might not be further growth in the share price until next year when they can put a firm cost against the losses of the 737 max aircraft and a firm set of figures looking at the future... it’s a positive spin on what is realistically speaking very poor figures across the board... true value is sadly lower than current share price so it may fall back slowly as a market correction...