focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
ZPHR news this week on cornerstone investor was significant. See details on Sam Rose.
Williston update in next 2 weeks - maybe $10m cash from Q1
36-2R drilling now - news on next 2 or 3 weeks. It's a redrill of a blowout so very high chance success.
Proving up Paradox basin opens up possibilities of a grid layout 100-200 wells.
Salt Wash drill in Jun for known helium prospect that has additional o&g remaining from previous vertical drill - should see modern horizontal
Infrastructure in place to get gas away by year end.
CPR update later this year
Farm-in to accelerate plans?
more here:
https://twitter.com/tima441/status/1786623626642362705?t=kvQNAyZeOz2uXilXdoB4Ig&s=19
Really interesting summary & investment case. Focus on potential for game changing tailings projects using Extrakt Process technology
hxxps://investingstrategy.co.uk/stock-tips/fulcrum-metals-everything-you-need-to-know/
Lets be clear.. we've had 2 awesome pieces of news - culmination of over 20 years work and objectives from IPO.
1. FDA approval - even more so due to previous unexpected CRL (28Dec)
2. Hatch-Waxman protection for 5 years (1Feb)
and since then 2 significant research papers - neither via RNS Reach even
1. Imaging potential in brain tissue, kidney and other organs (previously mentioned by RH as objectives) 6Feb paper
2. Long Covid paper 7Feb
The board are not amateur or fools. They will have a reason for lack of comms....
My personal belief is talks with Bracco (and/or others) for a major partnership or full bid. I continue to add
PERMITS
1. The federal drilling PERMITS are not in doubt... only exact timing. Which was delayed by changes to plans following land acquisition (for good reasons). They are all based on existing leases.
2. New Federal LEASES are an issue. But ZPHR is not needing any.
3. The Federal BLM website is not updated very frequently. So more likely we will see RNS before website update.
CASH
Based on the figures we had with HY report it looks like our income is around $3m per month which is used:
$2m repays debt
$1m adds to cash pile
We've had some expenditure on land, infrastructure, drilling preparations... but probably not huge? But might mean no net increase in cash over last 2 months?
As at end Oct we might estimate that
Debt $20.7m (24.7m 3rd Sep)
Cash $12.8m (12.8m 3rd Sep)
Net debt say $8m at end Oct - down from $18m at end Jun and $12m on 3rd Sep
One consequence of delays to permits & drilling is that our cash position has of course improved. I'm sure we would all prefer to see the drilling asap... but just pointing out it's not all bad!
DRILL COSTS
Total guess on well costs... pls feel free to offer other views.
36-2 & 36-3 maybe 75% owned ZPHR?
Wesco/Kirkwood well 50% owned ZPHR
Are well costs between $3m & $6m depending on depth, infrastructure etc?
So 3 well programme likely to cost sub $10m to ZPHR. In other words very easily affordable within current resources.
Further success in Paradox plus non-op income will also fund 2023 drill programme
Yes, Des.
I've was in the pre-IPO and IPO.... Bought in mkt... and also bought in Placing!
Hugely successful placing particularly supported by Regal as key shareholders but also many existing shareholders - as well as new. Over £12m raised in generally difficult mkt when £10m would have been seen as a great outcome. Minimal discount to VWAP. Many requests were scaled back.
Looking forward to the newsflow in coming weeks and months.
- LV rig started on site already
- FB rig next few weeks
- Llamara rig awaits final licences but matter of few weeks?
All leading towards further resource upgrades. I will not be surprised if LV & FB are 4mt together... with complete unknown for Llamara (could be enormous! Beauty is... nothing in the price!).
For those that missed the presentation last pm I think it will be on the website later today.
Scoping study next year will give the ammo for serious discussions on offtake
couple of comments....
1. afaik the BP connection is simply they are the counterparty for the hedge contract. I don't think too much should be read into that.
2. Whiting did not sell the well participations to ZPHR. Almost certainly they are connected to original landowners and/or holders of leases. They would have had a contractual right to participate but would have had to stump up their share of capex. In some case (for any number of reasons) they don't want to do that and the participation comes up for sale. I suspect Whiting would happily have bought them if offered but Colin & team have great contacts to do these deals. Hopefully we can see similar bolt-ons in coming year
pls forgive duplication but thought worth re-posting so people can perhaps use to correct or ask questions:
Short term (to year end):
Completion of pipeline deal & acreage by 7th Oct
webinar update & updates on plans for 2022/23 25th Oct 17.30
36-2-LNW-CC
Federal licence (by mid Oct)
Rig contract (by end Oct)
Mobilisation/spud (end Oct?)
Initial test results (end Nov?)
36-3-LN-C9
Federal licence (by mid Oct)
Rig contract (follow on 36-2)
Mobilisation/spud (end Nov - mid Dec?)
Initial test results (end Jan?)
16-2LN-CC
Extended test update plans (with interims)
Extended test start (Q4 2022?)
Updates on flows (end Dec?)
Connection to gas pipeline (Q1)
3rd planned well
State & Federal licences (by end Oct?)
Rig contract (follow on 36-3?)
Mobilisation/spud (Jan?)
Initial test results (end Feb?)
Non-ops update
Q3 update (Mid Nov)
Infrastructure
Update on pipeline & plant recommissioning (Q4)
Website
Update (Q4)
2023
Multiple updates (may result in monthly operational update?) on 10 wells programme + updates on reutilisation of 5 wells added Sep 2022...inc:
Licences
Rig contracts
Mobilisation/spud
Drill outcomes, tests, flows
Seismics & 3D additions on new acreage where none exists.
further re-use of 16-2? e.g. extra lateral into CC or C9 etc?
Infrastructure updates
On pipeline tieins & plant etc
Physical operation (Q2?)
Production updates
Non-ops (Feb, May, Aug, Nov)
Paradox (from Q2 may see monthly updates?)
Valuation & reserves
Updated CPR (Q2?)
Cashflow
Cashflow from Williston expected to self fund all plans?
Success in Paradox should result in very significant excess cashflow.
With predictable cashflow there is no reason why some level of debt could not be used to support Paradox development?
Leaving excess cash. If SP is not reflecting a "fair" value I would suggest it could be utilised for share buybacks- ahead of dividends
Decent buys yesterday
27-Sep-22
16:19:16
5.40
1,475,000
£79.65k
27-Sep-22
15:08:04
5.375
2,000,000
£107.50k
27-Sep-22
11:58:26
5.40
1,000,000
£54.00k
Almost £250k... single buyer?
with 1,560,746,001 shs it needs over 45m to get to TR1 3%. Over £2.5m value at 5.5p.
so could be institutions willing to invest under that threshold and stay under radar?
11m vol yesterday.
4th over 10m vol in last 10 days
7 out of last 9 were over 8m vol
They've chosen the 3 wells carefully with 2 key objectives
1. Increase production
2. Increase proven & probable reserves in 2 ways:
a) directly associated with the drilled well
b) indirectly as it helps delineation of entire reservoirs and added potential from future wells.
A reminder of the 3 wells:
1. 36-2-LNW-CC targets Cane Creek that has already produced 10m boe over many years for multiple operators. CC has nominal potential for up to 1 bil boe so chance of success should be considered high. 10k ft lateral could see initial rates as high as 5k boepd? Do the maths! That's ~$130m revenues (75% ZPHR? = ~$100m)
2) 36-3-LN-C9. Drilled from same pad as 36-2-LNW-CC targets Clastic 9 overlying layer so will follow in rapid succession with same rig & at lower cost. Significant data from seismics, 3D & from drilling 16-2LN-CC means good chance of success. Probably nil value currently ascribed in sp. But success will focus potential on the multiple overlying layers. 10k ft lateral. I guess would be seen as commercially viable with any flows around 1k boepd? But maybe fair to hope for 2.5k boepd? So net ~$50m to ZPHR.
3. I don't think we know exact location but believe it's based in one of the 1 mile blocks and will be jointly drilled with another leaseholder. Costs & revenues shared 50/50? Targets Cane Creek (as 1. above) good chance of success. Perhaps up to net 2.5k boepd & $50m revs due to ZPHR
These 3 wells could see revenues up to $200m in the first year of production plus another $50m from 16-2. Dropoff rates of course significant but a long tail of production for many years.
Let that sink in .. $250m production revenues.
Successes will also transform proven and probable reserves that can have a CPR based value put on them. Recoverability rates are currently based on low 10 to 15% but that too will get upgraded on success. Perhaps 20% initially?
The current sp can virtually be justified by non-ops alone. So reflects huge degree of potential failure as built in.
Yet, the upside scenario, if realised would probably justify a sp many times the current price.
The real question is what degree of potential success should be built in prior to drilling vs a cautious recognition of risks?
Its important to recognise that's why this huge basin has gone, for the most part, undeveloped for so long despite it being clear there are significant resources here.
Cometh the time... cometh the man, company & technology!
It seems very likely that the combination of seismics, 3D together with technology (in particular hydraulic fracking & lateral, directional drilling) is allowing the jigsaw to come together with the "Great Unlocking"
Stifel broker note makes clear this is about manufacturing questions etc at Linde (biggest gas manufacturer in the world).
All parties will be very keen to overcome.
Stifel expect approval & have current sp target 100p
pic of broker note in Telegram group
I've bought this am. Many buys showing as sells - of course!
you're right.. prod from the acquisition in Dec 2021 was circa 34,255 boe perhaps ave $70 = nearer $2.4m (I was thinking entire non ops and had not double checked split).
i'm sure we'll see revenues higher than forecast - will be a nice little RNS in due course to raise the forecast!
As we know... drop-off rates are quite high from initial production but a long tail of continuing at lower rates. Plus new wells to help offset.
there are a couple of factors to be noted... H1 included FX gain of $5.4m and the Williston deal that closed in Feb included prod from Dec 2021 and that might be around $5m
So I think $15m for H2 is both realistic and likely to be exceeded.
Nice to see early tone is firm.
I don't think we've had any clues on date for interims? Afaik
17.9.20
30.9.21
So no clues there! I guess they would ideally like the Federal permits as well? So may leave as long as possible if that's still a possibility for Sep
pre-drilling 16-2 they were expecting to use natural fractures on 16-2.
Even after first drilling they took a bit of time to decide whether natural or hydraulic was the way forward.
As I understand it hydraulic is going to be used across the whole project with significant advantages including:
1. wells can be planned on a simple grid format as used in other basins
2. Drilling is easier if they don't need to find & follow natural fractures
3. They have great seismics & 3D over the majority of the acreage (presumably they will be ordering infil seismics/3D work next year?)
4. Hydraulic allows longer laterals - afaik most will be circa 10k ft but will be interesting to see if some are longer. 15k possibly?
5. costs can be higher due to the chemicals etc used but offset by the very significant advantages.
6. I'm not sure if it would be expected that a hydraulic lateral would necessarily produce for a longer period? Probably case by case?