Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
Https://youtu.be/U4VV0Lag0ig
Of interest to Predator, from 24m20s:
Eytan:
“You mentioned Cory Moruga. My FRIEND (!) Paul, here, they have expertise in CO2 EOR techniques that would be perfect for Cory Moruga. So what we’ve done is a deal where we’re selling him the asset, he’s going to do some work on it that he’s more qualified than I ever will be to do, and we’ve retained a right to participate in that asset in the future if that all works out. Good for them, good for us, win-win for everybody…”
Sarah:
“… how would you describe your relationship with Predator Oil and Gas?”
[much laughter from audience, and Eytan!]
Paul: (in background)
“We had a very good coffee this morning!”
Eytan:
“We’ve had our ups and downs but everyone is grown-ups and we’re all friends now. And genuinely, we’ve found common ground on things that make sense and we’re WORKING TOGETHER now, so that’s good.”
Sarah:
“Who paid for the coffee this morning?”
Eytan:
“Paul did, actually!”
All joking aside, it does seem like PRD and CEG now have a good working relationship which can only be positive. As well as the Cory Moruga deal, I’d still like to see the companies collaborating on CO2 EOR back at I-T, and hopefully that might happen. As was mentioned, it'd be a “win-win for everybody”.
Thanks, Keith – really appreciate your reply. It does appear that June and July are going to be extremely hectic in terms of (hopefully positive) newsflow!
(BTW, I’m not sure what ‘other product’ you’re referring to… perhaps Nico (our resident narcotics expert) might have a few ideas!😆)
Hi Keith,
Really interesting posts as always – thanks.
After the release of the presentation the other day, I’d been pondering the question of whether MOU-NE / Titanosaurus* was gas, or oil, or both.
(* BTW, I’d love to know whether it was Paul or Lonny who came up with the name ‘Titanosaurus’… and how many beers they’d had when that name popped into their heads!🤣)
In one of your previous posts, you mentioned that MOU-NE was likely to be complex structure and a combination of gas and oil. Is it just that the proposed location of MOU-4 is targeting a more gas-prone part of the structure and there’ll be oil elsewhere (as suggested by the micro-seepage studies)? It looks to me from slide 13 that there are 2 separate Jurassic reservoirs to be targeted by MOU-4 (as well as the edge of the Moulouya fan) – could the upper be gas and the lower oil? (And I realise that, without a geological background, I could be talking utter twaddle here so any clarification would be greatly appreciated!)
I also thought it was a bit odd for Paul to reference the Galp Trident well as the TAO-1 well was unsuccessful “and did not encounter reservoir facies at the main target, Trident.” I’m assuming there’s more significance to this comparison than I’m realising?
https://www.galp.com/corp/en/investors/publications-and-announcements/investor-announcements/investor-announcement/id/527/results-of-exploration-well-tao-1-in-morocco
Just a final thought….
I thought this line from slide 13 re TAFR-1X was noteworthy, and presumably is hinting that there may well be very significant accumulations of oil in MOU-NE:
“Pre-drill Phillips estimated one billion barrels recoverable for 30km² structure”
At 126km2, the recoverable resources estimate in the CPR for MOU-NE (whether gas, or oil, or both) could be ridiculously huge – I’m looking forward to your “Shock and Awe”!!
Thanks again,
BRV
Just a thought (and I realise I may be reading too much into this, but….)
Today’s presentation is clearly focused on Morocco. However, looking at left hand side table on slide 6, it caught my attention that the 2P resources for Ireland (1.3Tcf) have been specifically added for Q2 2025.
As we know, the next Irish general election has to happen before March 2025. So is this chart perhaps suggesting that Paul is confident that SA’s will be granted by the new government at that time (presumably a government that won’t include the Greens)? From the Irish energy conference last year, I seem to remember that Paul was having chats with Mary Lou McDonald and SF is still well ahead in the polls:
https://www.politico.eu/europe-poll-of-polls/ireland/
As per slide 21 re Ireland:
“PRD playing the long game and will wait for a possible acquisition of our position by a Corrib gas field owner and an international LNG player”
So it's a long-game… but it’s actually only less than 2 years away.
MOU-NE is now called.... TITANOSAURUS prospect!!!!!🤣
Really interesting geology chat, as ever – thanks all.
On the subject of thin sands and a comparison with historical drillholes, p31 of the annual report makes specific mention to what I presume is the LAM-1 well (based on the drilling dates):
“A scoping comparison of MOU-1 reservoir and potential production characteristics was undertaken by geological comparison with an analogous reference well in the Rharb Basin drilled in 2015. The well test data for the offset reference well confirmed that thinly bedded reservoir sands with poor conventional wireline log resolution and very low apparent gas saturations (35%) based only on conventional log analysis could flow gas at COMMERCIAL RATES for a CNG development.”
LAM-1 had been previously mentioned by the company in the 2021 Proactive presentation (slide 16) and flowed at a stabilised rate of 1.9mmcfgpd and 2.1mmcfgpd on an 18/64” choke:
https://wp-predatoroilandgas-2020.s3.eu-west-2.amazonaws.com/media/2021/09/19204501/PRD-Proactive-Presentation-Final-09.09.2021-1.pdf
And we know from Methodology’s flow rate analysis, that LAM-1 had only 1m of net pay (See table ‘SDX Rharb Basin Wells’):
https://www.reddit.com/r/PredatorOilandGasPRD/comments/t8ssg0/mou1_the_rharb_basin_net_pay_vs_well_flow_rate/
Of note, of all the well data provided by Methodology, the LAM-1 well has the least net pay. And yet Paul keeps specifically referring to it… presumably because, despite the extremely thin sands, it was still able to produce what would be commercial flow rates for a CNG development (minimum flow rate of 2mmcfgpd).
As we know, the Nutech data we’ve been given for MOU-1 gave net pay of 22m (main fan + shallower section) and then last week’s RNS stated that the Sandjet system would now be testing “an interval of 45m”. So, somewhere in there, and even taking into account the chance of reduced lateral extent from very thin sands, we have to be *pretty confident* that we can find at least a metre or two of reservoir that will provide the necessary flow rates in order to reach the minimum threshold for FID. With lots of upside potential too, of course.
"With the Sandjet perforating option an additional zone in MOU-1 can now be added to the MOU-1 rigless testing programme. This will test an interval of 45 metres with good background gas readings and low gas saturations based on NuTech log analysis within a gross interval of at least 300 metres. Any flow of gas from this interval would be significant as it would establish the potential for a new unconventional gas play covering an area of at least 30 km² tested by MOU-1."
Have we just doubled the potential net pay at the MOU-1 location?? (or have I mis-read this?!)
ps - Very happy we'll be drilling MOU-NE :-)
Fordy, interesting that you suspect T&T might be a focus of next week’s presentation as I’d be certainly intrigued to hear a bit more about Cory Moruga, particularly after the Annual Report has, I think, given us a very positive sneak preview of the upcoming CPR and the sheer scale of the opportunity.
For those who may not have had the opportunity to read the AR yet, the top of p11 is worth a read, IMO.
In essence, Paul has done a deal where he’s paid $3m net cash for P50 of ~1.8Mbbls (gross) from one sand only (Herrera #8).
However, “the Company recognised considerable upside in Cory Moruga” and there are also 7 other confirmed sands, totalling p50 18.5Mbbls (gross).
And there’s potentially even more valuation upside:
• Better RF - “well delivery rates and ultimately recoverable oil could be significantly increased through the application
of CO2 EOR” (so perhaps pushing us nearer the P10?)
• “tax losses of at least USD45 million within PAREX and their acquirer TRex are available for offset against future
Petroleum Profit Tax applicable to all production from the Cory Moruga.”
Also, of note, from p9 of the AR and the RNS 20/12/22, CEG has back in rights that include paying $2.25M upfront and “100% of costs incurred if the P50 resource exceeds 10 Mbbls.”
From what’s in the AR, it sounds like the P50 is likely to be significantly >10Mbbls so, should CEG wish to buy back into Cory Moruga (even if they can even afford to, which has to be doubtful?) then they’ll be paying for most of the initial cash consideration paid by PRD and ALL of PRD’s capex costs to develop the asset.
The more I read on Cory Moruga, the more I think Paul has done an absolutely fantastic deal for PRD shareholders. It’s no wonder Paul stated in the Sunday Roast podcast that Cory Moruga is “going to be on a par potentially with Morocco”, and the formal CPR should be a cracker!
Hopefully we’ll have more details next week.
From the 4th April RNS:
“Separately we are working to secure the acquisition of TRex Holdings Trinidad Ltd. and the Cory Moruga asset, subject to the Ministry of Energy and Energy Industries consent, AFTER the completion of the MOU-3 drilling programme.”
And from the 2022 Annual Report:
“Upon consent being granted by MEEI and completion of the Transaction with CEG, the Company will have a commitment to pay CEG USD1,000,000 on Completion. The Directors have a reasonable expectation that the Consideration will be subject to new funding either at the project level via a farm-in or other form of financial arrangement for project equity or from an additional placing in the equity markets.”
So there are plenty of options for CM funding. And should an equity raise be necessary, then it’s clear that it’ll happen AFTER the MOU-3 drill (and presumably also the MOU-1 test) when, on a success case, it’s likely that the share price will be considerably higher so any placing will result in minimal dilution.
Keel1,
I think you might be right on the location of MOU-3. There's a new image (no cloud) from yesterday and the pad looks about the same size as MOU-2 with an access road from the highway, about 1.5km directly due west of MOU-2.
Previously, we'd been looking further west with changes that occurred around 10th April but the site you suggest looks much more likely IMO. Comparing images (at 300m scale) from 25th April and 8th May, there's a clear difference.
https://apps.sentinel-hub.com/sentinel-playground/?source=S2&lat=34.317334904920116&lng=-3.3921146392822266&zoom=15&preset=1-NATURAL-COLOR&layers=B01,B02,B03&maxcc=20&gain=1.0&gamma=1.0&time=2022-11-01%7C2023-05-08&atmFilter=&showDates=false
Looks like we now have competition! But PRD should be quicker to first gas....
https://www.londonstockexchange.com/news-article/CHAR/partnership-agreement-chariot-and-vivo-energy/15938167
(3/3)
As a final thought, I also hold a decent amount of KIST in my Dad’s SIPP and Andrew Austin (Exec Chair) did an interview with Malcy this week. Previously, AA has said that he would only look for M&A in the North Sea (UK; Netherlands; Norway) but, due to WFTs, stated this week that “We are already looking and reviewing other acquisition targets in all 3 jurisdictions that we’re currently represented in, AND A COUPLE OF OTHERS” which is a clear change of direction for KIST to move outside the NS.
Post its current deal completing (Mime), KIST will have around €300M in cash which AA has stated is too much for his liking. So I did just wonder if he might be casting his eye over Morocco with its excellent fiscal regime? He’s previously stated that prefers producing assets (with development and exploration upside thrown in) but may consider PRD’s CNG development a worthwhile option as first gas could easily be within 12 months of FID (so sometime within 2024). AA reminds me a lot of PG (large shareholding and hence has an ‘owner’s eye’; dynamic; doesn’t suffer fools; and is an independent thinker etc) so this might make for KIST being an interesting partner? Probably a long shot I realise and a major/super major / NOC is probably more likely, but a PRD/KIST team-up certainly wouldn’t be hanging around with regard to exploring and developing all the other prospects, which might be a concern with a larger company perhaps.
But this is all just pure speculation… please take with a large pinch of salt!
(2/3)
I also mentioned SKI as a possibility in a subsequent post.
(Interestingly, I noticed Paul didn’t mention SKI in the SR podcast when talking about his offshore Foum Assaka drill, though he did mention the other partners BP and Kosmos – I just wondered if this omission was on purpose so as to not let on that SKI are currently in the frame for Guercif? (Though equally, I could be reading too much into this!))
Specifically in relation to the RNS of 8/3/22 mentioning “an Asian exploration and production company” Paul did previously say that he’d made ‘targeted’ approaches to companies with regard to farm-outs for Guercif, so presumably companies that he already had connections with.
So I've been wondering who this Asian company may be and this has taken me back to the days of FAST when Paul did a farm-out of the Foum Assaka licence offshore Morocco with SK Innovation (South Korea):
https://www.petroleumafrica.com/fastnet-farms-down-foum-assaka/
So maybe Paul still has contacts there? And SKI was previously keen to invest in Morocco (and gained govt approval for the farm-in) so may be looking to do so again?
SKI is a very large company involved in, amongst many other things, HC exploration and production (and also a has trading arm) and, looking at its website, seems to be very focused on green energy including ‘green high-performance gas…’. It would also clearly have the fire-power for a deal for Guercif as its parent company, SK Group, is, according to Wiki “the second largest South Korean chaebol [conglomerate] behind Samsung Group”.
https://www.skinnovation.com/
https://en.wikipedia.org/wiki/SK_Innovation
Morning donalb,
I put forward a few of my ideas of potential purchasers back in December so, for brevity, will just re-post with a few additional updated thoughts as well:
From our RNS 8th March:
“The Company is pleased to announced that it has signed Confidentiality Agreements with a company based in the United Arab Emirates and an Asian exploration and production company to evaluate the exploration, appraisal and development opportunities in the area covered by the Guercif Petroleum Agreement.”
So both could very likely still be in the picture. The UAE were guests of honour at the Moroccan Energy conference earlier this year, so are likely to be a popular option with the Moroccan govt:
http://wam.ae/en/details/1395303029639
ConocoPhillips – it's likely our next door neighbours are keeping a very close eye on what’s happening with PRD.
XOM – recently sued the EU about the WFT so may be looking to reduce EU spending there and add N African assets?
https://www.bbc.co.uk/news/business-64113398
(Subsequently, this article was released on XOM in the WSJ:
https://www.wsj.com/articles/exxon-mobil-eyes-potential-mega-deal-with-shale-driller-pioneer-c48a4747?st=g8aews7nwpgzmkj
As the article says “Exxon is flush with cash” and considering deals in the $10’s of billions so $200M isn’t likely to be a problem)
Repsol – we know Morocco and Spain are collaborating on energy already and Spain recently changed its stance on the Western Sahara region in favour of Morocco’s viewpoint (against Algeria). So aligning with Spain on gas exports would be a shrewd move.
I think I then remember GRH also tweeting that we shouldn’t forget the Israelis who we know are familiar with similar assets (Leviathan) and business relations with the Arab world are much more positive these days.
(1/3)
MMR,
You mention possible court action re Ireland, and there was this section on p41 which suggest Paul may be considering just that:
“However during 2023 the Company will review the prospect of any progress in Ireland in the near-term, an outcome of which may be to seek to investigate the potential for redress given the irregularities and anticompetitive nature of the regulatory process surrounding the applications for successor authorisations.”
As for proving solvency, I’m sure you’re right here and Donal has also mentioned this issue previously. But we also happen to have very deep-pocketed partners for Mag Mell (p.49) who may well be able to stump up some cash for us:
“Confidentiality agreements have been signed with the provider of re-gasification vessels (“FSRU”) and a downstream gas trading company…” (p49)
We know from Paul’s previous comments (Proactive presentation, Sept 22) that the LNG FRSU provider is Hoegh Capital and the gas off-taker is Flogas whose parent company is DCC (currently in FTSE 100 with a Mcap of nearly £5Bn). So hopefully our well-funded and established partners will be able to make up for PRD’s lack of cash in the bank?
Re point 3 from Jimmy's post earlier today re funding for Cory Moruga deal:
p53:
“Upon consent being granted by MEEI and completion of the Transaction with CEG, the Company will have a commitment to pay CEG USD1,000,000 on Completion. The Directors have a reasonable expectation that the Consideration will be subject to new funding either at the project level via a farm-in or other form of financial arrangement for project equity or from an additional placing in the equity markets.
On this basis the Directors have a reasonable expectation that in the currently unforeseen worst case scenario that the Cory Moruga project cannot be funded, then the Company will have an opportunity to sell POGT to an existing indigenous operator in Trinidad on the basis of transactions that are regularly executed for assets onshore Trinidad, an example post the reporting period being the recent sale of the South Erin onshore field, by Caribbean Rex Trinidad Ltd for a cash consideration of USD1.5 million as announced on 14 February 2023. The Cory Moruga opportunity combined with POGT’s CO2 EOR equipment and database may be a potentially attractive proposition for indigenous Trinidadian companies.”
From p38, the section on Ireland reads as though it’s written primarily for the benefit of the Green Party and Minster Ryan in particular. In fact, you can almost imagine him, upon sanctioning Mag Mell, reading a statement to the Irish Parliament… and basically cutting and pasting from PRD’s Annual Report!
• the FSRU will be completely invisible from land
• The design for the project has focused on ensuring minimal impact on the environment relative to other energy infrastructure projects and reducing CO2 emissions. Compared to any other energy supply solution the environmental impact of this operational arrangement is minimal.
• By using the existing pipeline, terminal and entry point the Mag Mell project’s environmental impact will be minimal.
• LNG provides a substitution for carbon-intensive fuels - an energy option to exercise now.
• LNG is a bridging fuel; its use will be reduced and the energy supply diversified.
• The Mag Mell project offers near term and safe solution to Ireland’s energy requirements and security of supply, all year round.
• It will deliver energy independence for Ireland and provide a backup for renewables when the Eirgrid capacity is not met by renewables.
• The Mag Mell project is committed to delivering on the Irish Government’s Climate Action Plan objectives.
• Using existing infrastructure to accelerate the energy transition, Mag Mell provides energy with a low environmental footprint.
• In alignment with the Irish government’s policy pledge not to allow the import of LNG produced from shale gas, the Mag Mell project will source LNG from a transparent certified origin where there is no reliance on fracked gas feedstock.
• Working in collaboration the Mag Mell project will create opportunities for CO2 and hydrogen storage.
Apologies for the overlap in messages!!
Hi affc21,
Bottom of p32 with a seismic section pic on p33
Cheers
BRV
p33:
"Successful drilling and testing results would facilitate a Gas Sales Agreement with end-users in the Moroccan industrial sector based on an accelerated Compressed Natural Gas development scenario. At this point the Company may seek, if market conditions are attractive, to monetise all or part of its Moroccan asset through a trade sale of equity in the Group’s subsidiary company Predator Gas Ventures Ltd. If this scenario were to occur, and subject to independent tax advice, the Company would consider a return of value to shareholders in the form of a dividend payment."
Note: "if market conditions are attractive" - clearly Paul won't be giving it away on the cheap.
From p8:
"During the year the Company has continued to engage with potential end-users in the industrial sector in Morocco in terms of negotiating a Gas Sales Agreement immediately after a programme of rigless well testing for MOU-1 and new drilling has been completed."
So the key to testing MOU-1 (which Paul said on the SR podcast wasn't absolutely necessary) seems to be to allow for the signing of the GSA immediately after.