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Also, I think it's great news that PRD and CEG seem to have put their differences behind them and are now collaborating on future projects in Trinidad. So presumably CCS EOR is also back on the table at Inniss-Trinity.
This is clearly a win-win for both companies if they can move forward together on this. So, IMO, huge credit goes to Paul here for brokering a deal that solved the potential legal log-jam and simply got on with business that was in the best interest of shareholders of both companies. More evidence (as if we needed it!) of our top-quality management team...
From this morning’s RNS, regarding the time-line for the Cory Moruga CPR:
“...the Company has updated the material available for a Competent Persons Report ("CPR") and expects to have this completed well in advance of the required MEEI regulatory consents and Completion.”
So it’s clear that the plan is to have the CPR ready well before the end of May.
Of note, at the IMC presentation last month, Paul was discussing (in the Q&A section) the MOU-NE CPR and stated that they were in discussions with a new CPR provider (since SLR didn’t have the capacity to do the work in the short or medium term) and that it made sense to do a CPR that covered not only MOU-NE but also to include an update on Morocco following the recent (and upcoming) drilling and testing of MOU-1 and MOU-2, as well as for Cory Moruga (i.e. “we’re trying to roll all those CPRs into one new CPR” - from around 39m into the presentation).
So, if Paul expects to have the Cory Moruga CPR “well in advance of” May 30th, I think we can safely assume that the new CPR provider has been chosen and a deal for the work has been agreed, and it also suggests that we’ll have both an updated Moulouya fan(s) CPR AND a new MOU-NE CPR probably within the next couple of months.
The newsflow will be coming in thick and fast...
Thanks Keith, as ever.
There seems to be generally a bit of slippage in the Anchois development. Initially, if I remember correctly, it was touted at $300-500M capex, then around $500M and now, if the rumours you hear are correct, up to $700M. Also, first gas was originally slated for end 2024, but then slipped into early 2025 and this was subsequently clarified as requiring everything to go precisely to plan (which we all know never happens), so I’m betting H2 2025 for first gas from Anchois (and perhaps even later?). As has been mentioned on here before, the chalk and cheese comparison really doesn’t do things justice when comparing PRD to CHAR!
I was also just having a peruse over on the CHAR bb and this, taken from the Auctus note, is interesting:
“The company [CHAR] is currently in detailed discussions with potential farm in partners and we understand the process is competitive”
So considering the comparisons between PRD and CHAR, particularly in regard to the significant differences in capex and time to first gas, if the partnering process for Anchois is ‘competitive’ then I suspect it’ll be nothing less a stampede to Paul’s office to do a deal for Guercif (a situation which I think GRH has already hinted at on numerous occasions).
Fairly straightforward decision for me to add more KLSO at these prices.
KLSO’s holding in THG (5m shares) is worth around £3.6M at today’s THG share price which admittedly leaves a bit of a valuation gap between that and KLSO’s current Mcap (~£11M). But I feel this slight premium is worth paying for the quality of our management (and backers) and the potential for future deals etc. The fact that management holds 20% of KLSO is very reassuring.
It was a bit of a toss up between buying KLSO or THG, but I went for the former. Time will tell if I made the right call...
As Eytan says, a lot of PIs are still focusing on the failed P1 drill in the Bahamas. However, this is now a different company with a clear focus on Uruguay which, IMO, looks to have significant potential.
Saying that, management still has to prove itself as far as I'm concerned. But the re-processing work to be released in the next month or so should be positive and if Eytan can execute a decent farm-out with a major (free carry on 3D +/- a well - which will also provide 3rd party validation for OFF-1) - which he seemed pretty definitive on in today's interview - then the sp should be significantly north of where it is today.
Interesting few months ahead hopefully.
https://youtu.be/XxRXk-dqEI0
The focus is clearly on Uruguay:
“Our asset in Uruguay… [is] one of the most talked about properties in the international oil and gas space”
“Uruguay, super-exciting, lots of global interest, get a farm-out done…”
“Definitely within 12 months we’ll have farmed-out the current area we have, the area OFF-1 and we will be seeing that go forward rapidly towards 3D seismic and other work…”
“We’re in a very good place, we have cash [so] we don’t need to raise money… we’re very excited about the asset we have in Uruguay...”
Worth a read as always:
https://4043042.fs1.hubspotusercontent-na1.net/hubfs/4043042/Content%20Offers/2022.Q4%20Commentary/2022.Q4%20GR%20Market%20Commentary.pdf
In relation to natural gas prices, see pp 17, 23-26:
"Short-term weather trends produce spasms of price weakness, leading to substantial buying opportunities. We believe the significant price pullback experienced in Q4 today presents investors with another very opportunistic
buying opportunity. We are confident that the global natural gas market remains in structural deficit..." (p17)
"The recent weakness should prove temporary. Natural gas equities, meanwhile, represent extreme value in our view."
"The weather has substantially contributed to lower natural gas prices in the US and Europe. We believe the weather-induced price weakness is a short-term anomaly in a longer-term supply deficit story." (p23)
affc21, Keith,
re your discussion on the location of the MOU-2 prospect
(Keith, I’m actually glad to hear you’re a bit unclear on this issue... I certainly was and just thought I was missing something obvious!)
From the 1st Feb IMC presentation, slide 13:
https://wp-predatoroilandgas-2020.s3.eu-west-2.amazonaws.com/media/2023/01/Drilling-Update-MOU-2-01-February-2023-final-29012023.2317pm.pdf
So my reading is that what was once called the MOU-2 prospect is now the ‘TGB-4 prospect’ and it looks like it basically overlies the Moulouya tertiary fan, and that the MOU-A drill will test this.
In terms of size, it looks to be comparable to the Moulouya tertiary fan with high case estimates nearing 1Tcf, so MOU-A will be yet another very significant well.
Happy to be corrected if I’m talking twaddle...?
Redbox,
Just for clarity, the price actually crashed to the mid-3’s. I know this because I bought 100k at 3.5875p a few minutes after the bell on 25th Jan. I won’t be ‘trading’ any of my shares.
I also see that BRK is maintaining its relatively over-weight position in oil and gas, with CVX and OXY making up 11.6% of the holdings:
https://www.cnbc.com/berkshire-hathaway-portfolio/#:~:text=Apple%2C%20Bank%20of%20America%2C%20Chevron,as%20of%20February%203%2C%202023
If Warren and Charlie are bullish on O&G then that’s a pretty good indicator for the future prospects of the industry IMO (certainly a good enough reason for me to remain fully exposed to the sector).
Interestingly, both CVX and OXY are currently hovering around their 200d SMAs, often a good signal to buy in a bull market. And the front page of the FT today is also discussing the current (relatively) low TTF prices (headline: “European gas price hits 18-month low”) – media headlines like this are very frequently contrarian indicators. So perhaps the next leg up for oil and gas prices is not too far away and so it’ll be a perfect time for us to be (hopefully) proving up hefty gas (and oil) reserves in Guercif over the coming weeks and months.
I'm looking at the low of Feb 22 for hopefully a bit of support, around the 320p level.
At that time, AA bought a pretty decent chunk of stock in the market (just shy of £500k-worth) so I wonder if he'll look to do the same again? If so, that'd be a good signal for PI's to add more IMO.
I've always been here for AA so I trust management to make KIST a success over the medium-term.
Bob, it's a pleasure, glad it's of help
Cheers
BRV
Q: Please can you tell us about the re-entry and deepening of MOU-2?
PG: Naturally, it’s disappointing not to get to the objective in the first go because obviously we had problems with the drilling mud through that particular zone that we encountered in this well. However, we’ve already taken steps to rectify that situation and start the process of finding the right mud for the section that we want to drill. We’ve also revisited the geology and the seismic [for] where we are at the well and believe that we’re literally sitting maybe anywhere between 20 or 50 metres off the target. The target is still there, sharp as ever below the current [suspended] TD of the well… and therefore nothing has changed in terms of our desire and our excitement to get to that target. And that’s the next step after MOU-1 testing has been completed.
So we will get there, we just have to be patient unfortunately.
4. (End)
Q: What is the significance of MOU-1 testing?
PG: The significance is that testing the well offers us different forms of financing, basically.
Ideally, you then have more optionality to forward sell gas and even potentially to offer a slice of the project through a shareholding in our subsidiary company, Predator Gas Ventures Ltd. - a small shareholding I would add. So that would address government consents because a small shareholding would not require government consent. And, secondly it would address any materiality issue [because] we would not be divesting of a significant amount of equity in the licence at this stage.
And people may question why you would do this? The alternative is ultimately you can raise money later in the year etc. but it’s all about getting value for that money that you raise. And you have different ways of raising it, you can raise in the market, you can raise it through project finance, you can raise it through the methods I’ve just described. So I don’t think people should get hung up on funding just yet, it’s a little bit early to get hung up on that. We have managed our cash position to allow us to test MOU-1 very effectively and I’m anticipating that we’ll complete that testing no later than March of this year. And we’ve sourced the equipment and put together the programme and the costs for doing this.
So the significance is that it’s something we would have done anyway but we would have preferred to have done it after the current well had reached TD. But now we need to fast-track it to get it done, to demonstrate why our thinking on gas in Guercif has been substantiated by the drilling results to date.
3.
Q: What’s the next step?
PG: The next step is very clearly testing MOU-1. It wouldn’t have been my preferred step a month ago, I wanted to test all the wells together to save money and I wanted to delay the MOU-1 testing until we had additional wells to test. But that hasn’t worked out quite in the time-frame I would have hoped for so we’re going to move ahead and test MOU-1 and gather the data on that. But since last week… we’ve moved to find an offset well very similar to MOU-1 that flowed gas from a reservoir very similar, again, to MOU-1 and we’ll use that well as our analogue for the testing procedures on MOU-1.
What we want to achieve is:
1. A minimum flow rate
2. Calculate an absolute flow rate, and
3. Test the potential for communicating with a minimum 3km2 around the MOU-1 well and, obviously, looking hopefully to see something beyond to reflect the 30 or 40 km2 amplitude anomaly that extends 8km to the east and beneath MOU-2.
2.
Morning all,
I've transcribed Paul's responses to the questions (relating only to Morocco - not including his 'rant' on the energy crisis ;-) ) from the Flagstaff interview this morning, for info:
Q: How would you describe the MOU-2 drilling results so far?
PG: A ‘work in progress’ I think would sum it up initially.
I’d like to put it in context though… it’s important to understand the background… this area of Guercif hasn’t been explored for 50yrs so when we came along in 2021 and drilled our first well and now we’ve drilled MOU-2, we’ve actually changed the goal posts significantly for this part of Morocco…
… A couple of years ago before I drilled the first well I was told this area was nothing like the Rharb basin geology, well surprise, surprise, it’s quite a lot like the Rharb basin geology but you have to drill wells to prove that. And then I was told that I’d never find any thick sands well, wrong again, we found a lot of sand in MOU-2 and there’ll be a lot of sand we anticipate below the current suspended TD of the well. Then I was told it was all volcanics well, surprise, surprise, no volcanics just sand, potential reservoir. So you have to put this in context. A lot of people like to see the glass half empty, I like to see it half full. A lot of people don’t necessarily want to describe this as being successful because it’s been sitting on their doorstep for 50yrs and they’ve done nothing for 50yrs. So I think we’ve broken new ground here and I’m very, very pleased with what we’ve achieved to date. It’s not perfect, no doubt about that, it’s not perfect but that’s the challenge. We move on and we carry on and we get to perfection.
And then another thing I would point out is that we have just proven a reservoir sequence 8km away from MOU-1 with lots of similarities. 8 kilometres. The structures that we see in the Rharb basin, for example, are maybe half a km2, maybe up to 2-3km2 and no doubt you need 3D to find them… however, the emphasis on 3D has probably stopped the Rharb basin developing further potential for deeper, bigger gas plays because everybody went for the easy, tiny 3D targets. Well that’s not us, we’ve going for the big ones based on 2D data and we’re going to drill them. And we’ve been successful to date, believe it or not, and we’re going to continue to be successful over the next year or two.
1.
Q: How do you know that the seal won’t be even thicker than expected and impact the size of the reservoir?
PG: We’re pretty confident… there’s a limit to how thick it’s going to be and we’re pretty confident we’re almost at that limit. So we’re not concerned about that right now and I don’t believe that that’s a serious risk…
Q: How long will it take to correct the mud?
PG: I don’t know for sure. It shouldn’t take that long from the analysis that will be done in the UK. But the bigger issue is that until that analysis is done we don’t how easy it is to get the ingredients if you like for that mud that we need to get in Morocco… there are no services in Morocco… everything has to be imported.
7. (END)
Q: Are we assuming a max 10mmcfgpd from MOU-1 and MOU-2?
PG: No. The 10million is effectively a figure used for our project economics for CNG. Wells can do more than that, wells can do less than that. This is a particularly good reservoir so when you do find gas in it you will get a good flow rate. But you have to get that flow rate initially to get your end users in the market so 10million is what we’re using as the initial ‘step 1’ to get to an initial CNG development. And 10 million is actually 25% more than the Rharb basin was producing at its peak. So it is quite aggressive but the difference is that we’ve got a very big structure here with potentially good gas deliveries from the sands that we have encountered and that we will encounter in MOU-2.
Q: If the original plan was to test MOU-1 then why isn’t the testing equipment already in-country in readiness?
PG: If you mobilise testing equipment then you pay for it from day 1. If you keep it sitting there then you pay stand-by… You don’t mobilise something and bring it in-country just to sit there for one test, the cost of that would be pretty exorbitant. So you only want to mobilise the testing equipment, and you have to get it through customs and do all these other things, when you’re ready to test… in this instance we’re going to by-pass the bigger programme because we’ve waited long enough and move to just test MOU-1. But it all comes down to cost…
(additional comments from 1h0m)… We had two different systems now for testing. One would give us the option to test more sections, which is a very expensive option, and the other gives us the option to test only a limited amount of section. If MOU-2 had reached its objective then we would go for the first system that would allow us to test much more sections and that would be much more cost-effective. So in our business you don’t make premature decisions about testing equipment or services or rigs or anything, because everything you do has a charge, has a cost. And in this climate at present, those costs have escalated both in personnel, labour, transport, freight. So you have to control your costs...
6.
Q: Do we have a programme on MOU-1?
PG: Yes, we’ve always had a programme but that programme for testing has been evolving as we’ve got more information and particularly now from MOU-2. There are a number of zones we could test in MOU-1 and the idea originally was to test as much as possible including everything up to the shallow section. However, there’s a cost in doing that and the idea would be that if you could test two or three wells at the same time then the cost of testing comes down. So that was why we wanted effectively to be able to test all these wells at once… So we can’t afford to wait any longer now so we’re re-looking at the MOU-1 testing programme. But there’s a very specific zone which we want to maximise flow from and, because of that, we’re going to do a little bit more work very quickly to determine what we need to do to do that in the perforating layout. And also, we need to be cost-conscious because we’re going to have to come back and perforate the next well and the next well after that, so we don’t want to be loading up too much cost on just one well. So we might be more selective in the perforating programme but we’re very happy now that we’ve got a prime zone laid out and we’re going to focus on that. We think that can deliver what we want it to deliver, we’re not going to add in anything shallower at this stage.
Q: re a full asset sale…
PG: That’s a good comment, actually. I think we would have loved to have pushed for an asset sale this year but the reality is that we might have to take a step back and do a gradual process, as mentioned before, taking a shareholding interest in the subsidiary and moving the gas along and proving up more volume which is one of the intentions of MOU-A down the road before the asset sale. The danger here… is that if we pursue everything too quickly we might be leaving too much value on the table. So there’s a balance here that we have to look at. But our priority right now is not this, it’s about testing MOU-1 and getting back into MOU-2.
5.
Q: Have the adverse clay reactions damaged the well bore in any way or the ability to get clear wireline log results or ability to potentially flow? If yes, can this be remedied by redrilling the section with the new mud?
PG: We don’t expect to re-drill the section, we expect that the new mud will address the issue. We can’t be 100% certain of that until we’ve done the chemistry on the mud and analysed how the new mud will react…. But certainly, we don’t believe that the well bore is damaged… we can eventually get, I suspect, logs down and perforate…. and the right solution will be found. Lonny is very experienced in drilling in Morocco, knows what we need to do to find a solution. It’s just annoying, it’s always annoying, you know?
Q: re rig being able to say on site at no cost indefinitely
PG: No, it’s not indefinitely. Certainly over the next couple of months we have to be in a position to to move to the next stages of the operation along, but we’re comfortable in terms of where we’re at for the next couple of months with the rig.
Q: re requirement to acquire 3D seismic
PG: Yes, in the next phase we will have to shoot 3D seismic and that’s part of the commitment. However, we’ve got at least 18months to 2 years to do that. We do not see that as being a key objective for us… there are parties that are more interested in the oil potentially, one or two parties at least are more interested in the oil. It would be advantageous to us to allow them to shoot the 3D over that part of the licence for equity in Jurassic oil, basically. And we will initially focus on the gas. We have MOU-NE but we’re developing a number of other prospects on the licence. We have to relinquish 25% of the licence this year but we have plenty of fallow areas to relinquish. So I would prefer that we found a partner to progress the 3D in the Jurassic. We simply don’t have the capacity as a small entity to do both things at the same time and I would prefer to focus on the high value gas initially which is easier to get to market than oil. Morocco doesn’t have a refinery so it’s going to be a bigger company play. Yes, we can kick-start the exploration but we don’t want to do that at the expense of pushing the gas.
4.