The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
The new board is potential going to include Mr Parsons who does not have the best reputation With PI’s. This is mainly through guidance he provided over a three year period that was very speculative as best. Not saying do or don’t invest but (no different to any BOD) pay particular caution with anything JP says.
Hope this Info helps but Please DYOR on what I am referring too.
GLA
They were targeting a number of zones to demonstrate presence of hydrocarbons. Looks like they have proven there is gas down there with the lower zone maxing out the chromatograph! When drilling multiple zones It’s unlikely all will be “gushers” as your hitting the fringe on some.
We are going to testing and mechanically stimulation which is positive. Having a number of shows tells me the area is good.
All coming together just need to find something! Hopefully going to be a good Christmas and news years news flow.....
Santa Cruz Sur Operational Update
Echo Energy plc, the Latin American focused upstream oil and gas company, is pleased to provide an update on its Santa Cruz Sur assets in Argentina.
Integration of the recently acquired interest in the assets is progressing positively. To this end, detailed meetings have been held between the Company and the Operator. Particular focus is on the near term work programme and 2020 activity and budget.
Since 1 November 2019, the effective date of Echo's Santa Cruz Sur transaction, which completed on 13 November, the assets have delivered average gross production of 3,687 boepd (2,581 boepd including 587 bbls of oil per day net production to a 70 per cent. interest). Total production in the period from 1 November to 28 November net to Echo is 16,431 bbls of oil and 335 mmcf of gas.
Echo is also pleased to announce that once the Petreven H-205 rig has completed drilling the Company's Campo La Mata x-1 well ("CLM x-1") on Tapi Aike, it will be mobilised to the Palermo Aike production concession on Santa Cruz Sur to spud the Campo Limite exploration well ("CLix-1001"). Mobilisation of the rig to the drill site is expected to take place by year end.
CLix-1001 will target the conventional Springhill reservoir on a structure located two kilometres from the Chilean border. Technical work across the well location has identified the Springhill target via the characterisation of a negative seismic amplitude at reservoir level.
The well will be drilled to a total measured depth ("TD") of approximately 2,600 metres in two vertical sections. A full suite of wireline logging tests will be conducted over the Springhill reservoir which is expected to be encountered at a true vertical depth ("TVD") of 2,150 metres.
As previously announced the costs of the Campo Limite well that correspond to Echo's interest will be paid for by Petrolera El Trebol SA, a subsidiary of Phoenix Global Resources plc, the previous owner of the interest. Echo will reimburse up to 60% of these costs at a later date in a mixture of cash and ordinary shares. Total reimbursement will not exceed a maximum amount of US$1.1 million.
Martin Hull, Chief Executive Officer, commented:
"Following the successful completion of our acquisition of a 70% interest in the Santa Cruz Sur assets, Echo now has a diversified E&P portfolio in the Austral Basin consisting of significant base production, lower risk, near-term production enhancement opportunities, as well as strong exploration potential in both Tapi Aike and Sant Cruz Sur. We are delighted to be able to confirm the Campo Limite well remains on track to spud before year end, representing the continuing delivery of our growth strategy.
Since being in this share (and following it closely) the price movements have always seems disproportionate to the value/quantity of trades. I have concluded that the spred is that tight (actual not indicated) the trades are often reported incorrectly. To back that up a lot of the trades I have made are reported incorrectly. At the moment the volumes are looking good but starting to slow so I guess there will be a retrace. I just hope it settles above the 4p resistance point ready for well spud / Bolivia news / news acquisition!
Posted as a sell but a 1.500.000 buy went through just before 4pm. Confidence is building!
Jobbinscl,
No problem. I have benefited in the past from others sharing meeting notes so felt it was my turn to return the favor.
Julian said they are using AVO on TA. He spent a few minutes going through the benefits and limitations of it. He said he has completed a serious amount of seismic in the past and from his presentation he seems to be the right man for the job.
Final point from Martin and the team was they are not part of sound energy. Most people in the room had/have shares in SOU and there is, as I’m sure you are aware, a distaste for the way they have conducted themselves from an over hyping perspective (JP & JJ). This was Echo sending the message that they are a separate company working in a different manor. I for one had a long conversation earlier in the year with Martin prior to putting any money into the company. This was something I done to satisfy myself that I was investing in a good CEO (lesson learned). Martin has already demonstrated he is able to make the right choices in a very difficult situation and come out on top. do you own research into Echo but I will suggest that if you’ve staying away because of any association with SOU I would reconsider.
All up I came into Echo for TA and the more I learn about the licence and potential the more I like it. It’s E&P so its high risk but there are some very good signs here to make that high risk worth while. Yes we have less upside with 19% but we can deliver all four drills without risking the entire company’s future (or dilution to the point of no upside). If we see some results there is still good multiples to be made from this level. If your underwater then I understand and feel for you but TA is all about this point forward, the past is history, so hard-reset and look forward to a roller coaster ride over the next 12 months. Let’s hope we all get off this ride with a smile.
GLA
And sorry the posts are in reverse order! Ive never posted such a long post on here before...
So Bolivia I have already mentioned that Martin, early on in the meeting, made a comment about Bolivia potentially having great value for Echo. Martin and Julian talked about the terrain they were dealing with, there being no chance of Echo drilling this (one and a half years to drill so extreme costs) so where is the gain to be made???? Because Shell and Repsol are/have drilled....any positive results from these, being either side of our licence, will increase the potential for there to be recoverable HC in our area. Now picking at the bones of what was discussed I see the options as farm out or extend the licence and sell. Echo has the licence until the end of 2019 so they need to make a move soon and while Martin would not give a hint of time line I thought back to his early comment and take it something is very close (this is again my “feeling” from the discussion so don’t read too deeply). Either way they don’t want to lose any potential gain that would be very good for us at this point in time.
Dilution!!!!! Yes this was a point that kept coming up time and time again.....before you run for the sell button this dilution was in respect to other opportunities that may present themselves. While the team are working on TA Martin is scoping licenses in other countries. He said opportunities had already been passed up due to them not being the perfect risk/reward for Echo. He was convinced there were deals to be had where Echo would get a great licence for a small cost. This would, more than likely, mean dilution but if this is the next TA getting lined up, remembering that TA will be completed either way in 12 months, then I am up for it. They are definitely looking at another country two of which seemed to fit.....Brazil & Columbia. (I am going with Columbia.....but then what do I know!). I questioned Martin on having the resources to take on something at this stage without risking taking their eye off the ball with TA but they were certain that any deal to be made would consider this. I get the feeling this meeting was a little bit to share the concept of dilution while communicating the benefits (could be completely wrong).
The western side of TA is made up of 31 leads that are estimated at 50-300Bcf With the east having 10 leads (we did not cover the estimated sizes but should be on the web site documents). The west side has three wells already drilled the first in 1971 that had gas surges and positive indication on the drill log but didn’t get gas to surface. Now this is not to say that it could or couldn’t have simply that they were looking for oil so did not go beyond logging and plugging the well. The second well, drilled in 1973, was the one that supposedly had a blow-out! There are no drill logs for this drill and when asked about news coverage that could confirm it they simply said in 1973 the political environment was such that this type of news would have been negative so would likely have been unreported. There was another well that was drilled 60m away, this falls inline with a kill drill, so you make up your own mind but I see this as confirmation of the blow-out (for full disclosure the kill drill logs did not show hydrocarbons but it would not have been targeting a formation rather just the original drill hole). The last well didn’t encounter gas surges but also lays outside of any identified leads so to be expected.
Regarding the east side CGC has drilled a well just inside there licence where one of the leads traverses the boundary. This was completed in 2017 and flowed 0.5MMscfd. Due to the close proximity to the pipeline this was put into production which was a point pushed hard early on in the meeting (small gas volumes can still be commercial). CGC also has another well north of this one that targeted the springhill feature but no information was shared about this.
There was some details give about the 35% COS for the up and coming drills. I will not going into the detail (formulae to achieve COS figure) but simply say this figure includes all quantified data and was derived by an external company. There was also some explanations regarding the 3D seismic being completed at night due to the high wind increasing the back ground noise during the day. By using the daytime to located the seismic sensors and the night time to take the readings they improved the data quality by a considerable amount.
These are my notes taken from the Echo energy meeting on 02.07.19. It contains my views and some interpretation (I have tried to make these bits clear). There is no new information that is not public knowledge already but this hopefully fills some gaps and puts the story together.
The first discussion was around the renegotiation made with CGC. Martin explained that he was very pleased with the deal and that during the negotiation there were a number of heated discussions. The positives to Echo where that instead of carrying 65% of costs (50% interest and 15% agreed coverage of CGC costs) this is now 19% inline with our licence interest. Giving CDL back was not a huge loss as the production was shown to be tailing off at a fast rate. Along with the return of £2m this was all positives! I asked if all the positives have gone our way what has motivated CGC to make such a deal. The answer was basically time line. CGC are very keen to get drilling and prove up the reserves. If echo had to fund the previous deal (65% of costs) they would have to farm out or major dilution. Both would have been bad for us (shareholders) and cause delays to the spud dates. I can see that CGC would not have been happy that Echo had taken on the licence and now have difficulty due to funding (my interpretation on the heated discussions comment). Side note: During this discussion (I think close tot he start) Martin made a comment about Bolivia having high value to help echo. There was a definite meaning behind the way he said this but I’m unable to explain this as it was just a feeling. While continuing to discuss the CGC relationship talk moved to who will decide where to drill. There was a lot of disjointed conversations around this that left two unclear answers.....either they are going to decide the location and we have the power to Vito it or we are making the decisions. All up does it matter. The seismic is going to identify a number of locations and a petroleum/geological team will decide so does it matter what badge they wear?
So the drills.....they are planning to spud two before the end of 2019. This does not mean they will both be completed but unless they are going to use two rigs it does mean we will have one completed before Christmas with the second part way through. The locations sound like its going to be one in the east and one in the west. As they are both different plays by doing this they can pause afterwards to consider where the third and four drills will be best located to provide most effectiveness.
So what do they know about the licence with the exception of the 3D seismic that is being processed. The licence has a lot of 2D seismic completed at various line distances from 3.5km to 5.5km spacing so this is pretty good detail and the quality is “good”.
Just got home after the meeting. There was only 10 of us and some arrived late and had to leave before it finished. It lasted about 3 hours though so longer then expected. I will go through my notes tonight and try to post what I have first thing tomorrow.
Just after 11am there appears to have been a sell for 2,400,000 shares at 2.3p I just tried to put a buy through at £10,000 and until I reached £1,000 it would not make the auto offer just kept referring to a managed trade. For me this indicates the 2.4m was a buy. Over this week buys have been difficult and sells easy. What do the MM know......
I appreciate a lot of people on here are underwater and understandably sceptical of the future. I have been watching since the start but only recently taken the plunge. On this basis there is funding required to prove (or disprove) TA’s potential but........there is potential here as much as any other penny O&G share anyway and I think come early 2020 we will be in a good place with respect to the current share price.
The seismic is covered and likely to come in under budget so we should also have enough money for the first drill. In my book that is a decent position to be in. Yes Martin mentioned a raise during his latest interview but that is to be expected. If TA has only a fraction of the gas expected we will be in a good position. Sound is rubbing off on us and no news causes the price to slide. Best thing to do is get rid of JP off the board to show it is a separate company!
Not2sure I think you’re reply was balanced and a fair view. 4 bagger from here would be a great ride and satisfy a lot of people (since looking at 12p not long ago i will be one of those).
My opinion on Slum is they invested a great deal of money (about £70-80m) and at current value have about £80m so anywhere north of say 50p will see acceptable returns. After all they invested on data that has now been superseded (didn’t we all)!
To see a sale price of £2 ish we would need more wells to be drilled which means dilution in one form or another then the risk of them turning out dry ( >70%). In this case it could end up like the brexit that will never happen (joke - before I get hung, drawn and quartered)!
Not2sure he would be walking away from a healthy income with great options even at a “low” sale price. I would not do that and I would not expect him too.
What value do you thinking we could get?
BF interesting post about something I was unaware of.
I see JP’s motivation coming from his and his teams shares but mainly his personal achievement that I think is a big part of his personality. Issue is that he can only sell what he has (amount of proven gas).
My concerns sites with what he though he had to what he now realises he can prove. There is very little chance that this will sell for anywhere near a quid and he now see’s that. The muted communications are not for an interested party but the result of his realisation! On that basis he will probably sell (if he can) for approx valuation of proven recoverable gas purely to get out of a situation that will become increasingly difficult to turn around.
Of course this is all in my personal opinion but has been built through discussions I have had with JP and the team.
80bcf for the structure is what the drill can confirm. The stratigraphic (I do not believe) can be fully confirmed through even a PBU on the well due to the fractures in the formation. This will have to be interpreted through the seismic and additional drills so as for value......work on 80bcf.
A good question to put to Brian and the team on Wednesday to confirm!
The fact is that if JP has sensitive info they would have to put an RNS out. People suggesting the BOD are bent are wrong. They will tell you what you want to hear within the rules and encourage investment but that is there job and they have been good at it over the last three years.
What I am concerned about is why delay the testing until Feb? The equipment wouldn’t take that long to get on site so why the delay. They will only have sensitive info once the well has been tested ....but.....they will have an idea from the very experienced drill team of how good (especially against Previous wells) it is likley to be. Now cynical me says they know it needs stimulating before testing to get anything near commercial with a possibility of non-commercial. If this is the case then delay things so they can share potentially bad news with new info on TE-11 (good news). The hopeful me says they don’t care about delaying news to PI’s so leave them hanging and they will get the results when it suits. To switch back again that does not make sense as they would prefer good news now with another well on its way to push the SP up also removing the negative centiment of the company!
Basically none of us know so these are the two likelyhoods. My confidence is less bullish today (could change Monday) so I fear the worst! GSA also making me very nervous ATM (anything less than $8 and the SP will react badly)!
I didn’t expect all the gathering of info of the years to reach a point where confidence is so changeable. I thought the team had done enough to hit gas it was just going to be a question of how much. Now look at the split across all investors. You call it bad and your an ill informed deramper, call it good and most agree you know what your on about.... but........don’t call it to good coz you’ll be chastised instead of questioned and debated with!
GLA but if your just gonna slag my comments without proper discussion FUA :-)
The pipeline agreement has not been signed and sealed so anything can happen, smaller pipeline chosen, pipeline increased or whole thing cancelled.
Regarding the NPv10 the cost of the pipeline and infrastructure in JJ calculation is not costed just on the TE-5 Horst. It’s set for sound to go into production and the worth of SOU during that period. So for people to be using that to quote LE prices is incorrect. Yes it should be used as a guide but look at it this way. If sound it worth say £1 for discoveries. Then another company buying sound (with no other assets) would be worth the same (same amount of shares in issue etc). So why would you buy something for a value that you are then going to be worth. You would want a discount to allow for you to make some profit!
Now on the other hand you are trying to sell proven reserves and the “potential” of additional gas but you can’t really prove it (the data we will have at LE is very loose) so uplift on proven reserves is minimum. So it’s then all down to the sales pitch of JP. This is somewhat cancelled out by the company completing due diligence (they know what they are on about and know what something is worth to them).
On this basis you add your own boost to the share price if TE-10 is good and if TE-11 comes in. If TE-10/11 is not great then you should now see that we would be in a very poor negotiation position. No one currently knows what’s install so be carful but optimistic and remember until the LE we are priced on centiment but the LE is priced on worth to another.
“GSA will push this over £1”! Get real. The GSA IF it comes in at $8 will underpin the current 27p for TE-5 Horst and what ever is proven when TE-10 results come in Feb. That could be an additional £1.30 ish or 15p ish dependant upon what volume the well proves. Anything above that is speculation on an LE!
No let’s be clear in the last 6 months the oil price has dropped so prospective buyers will have less drive to spend. Yes we have gas but they are linked and anyone that knows what’s what will agree. This could mean that the GSA comes out lower than $8 and let’s face it if JP couldn’t get them to sign for $8 when the oil price was higher we may have to settle for less than $8 once the GSA ends up on JP critical path. That we don’t want!
Let’s hope none of this happens and JP has already got it in the bag and is just waiting.....