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One point that stood out to me in that presentation was that one drill had hit 2gm per tonne at a depth of 4,000mtr and he inferred that it could be economical to mine it. So if our hits are anything up to one third of that depth and considerably better grades, it does give a warm feeling of satisfaction.
This board does appear to be one of the most civilised of all those on this site.
I second Mommur's comments and as a LTH of over ten years, at varying amounts, I am now belted in for the ride.
Just thought that I should add to the hopes of Rowallon's success, is the Rhum3 well which should be re-entered in the early part of the second quarter. We already are aware of what that contains and will add to this year's production figures, so fortunately the figures calculated are on the conservative side.
I'll second that JAdam, a brilliant link.
In the Serica article Mitch Flegg says that Rhum 3 is likely to be re-entered early in the second quarter, they already have much of the equipment that was purchased by BP to do that. If that is so and all goes well, then we could be seeing production from there in the second half of the year. He also reiterated that they are looking for further opportunities.
I notice that in today's finals from BP, they state that during the past year they divested 3.5 billion $ of assets (which would have included our BKR purchase) More interestingly they say that they will be divesting a further $10 billion over the next two years. With the relationship that SQZ has with them I feel sure that we shall be in a strong position to do yet another deal there if one is compatable with our future plans.
I notice that in today's finals from BP, they state that during the past year they divested 3.5 billion $ of assets (which would have included our BKR purchase) More interestingly they say that they will be divesting a further $10 billion over the next two years. With the relationship that SQZ has with them I feel sure that we shall be in a strong position to do yet another deal there if one is compatable with our future plans.
I notice that in today's finals from BP, they state that during the past year they divested 3.5 billion $ of assets (which would have included our BKR purchase) More interestingly they say that they will be divesting a further $10 billion over the next two years. With the relationship that SQZ has with them I feel sure that we shall be in a strong position to do yet another deal there if one is compatable with our future plans.
Hi chinch, I did email SQZ about Rhum 3 and the answer effectively confirmed that even though it was a re-entry, it was technically not a straight forward operation. They intended to study all the details once the takeover was complete and all detailed paperwork received, I assume they are now doing that. The impression I got was that once they were happy how to proceed, they would book a suitable rig.
I also asked your question about the share of production and was told that the split was as with the other production ie 50/50 this year etc. I also asked who would be paying for the re-entry as BP had initially proposed to have it completed and in production prior to the takeover being completed, however I didn't receive an answer to that.
Hi sasa, I think that you already know that I too am also "overweight" here, but am completely relaxed with the situation. Gas price holding up and now funds rolling in daily at very healthy amounts. Even if Rowallon isn't a success, we have Rhum 3 to look forward to, which we know is a producer.
My personal view is that it is very undervalued at this price, if it was on the main market as opposed to AIM, then I believe it would be closer to £2.00. Patience is all that is needed.
NorthernMagic, I believe that you've summed SQZ up quite nicely, it has taken many years to get to this point. This BOD have always been wary of dilution and have built, and still are building on a consolidated range of assets. From here on, I believe that you are correct in that we shall a steadily growing company that I also believe has not yet reached the radar of many.
It will be interesting to see whether any time and expense is spent on the Keith field as that is classed as a very late field life and was planned to cease production in 2019 by BP. The other newly aquired assets however do offer potential upgrades in production which could outweigh the loss of that field, especially when Rhum 3 comes into production.
Good point D220, it may have something to do with SQZ wanting the flexibility of having a large cash balance as the conditions for repaying the loan are tied to Rhum 3 producing at a specified level for 90 days. As this was intended to have been re entered by BP and in production now, it may be our BOD see it as an opportunity to have some extra funding without any dilution. It looks as though it will be months hence before it has to be repaid, there was no mention of interest being paid on it, although don't take that as gospel.
Another point that I have thought about is the lower cash that we received. must surely be connected to the fact that we hedged 60% of gas production at 35p per therm. Whereas this may have seemed a secure way of guaranteeing income at the time of the deal, it was a gamble that didn't pay off for us as no one expected gas to rise to 59p/therm. As sasa said, it is now incumbent on SQZ to sweat these assets and reduce the overall cost of production.
Also all of our current income will go straight onto the bottom line as we can now start to offset our tax allowances, which from memory are around £150million.
Just had a thought in that as SQZ have hedged some of the production from BKR, the income will be a tad lower than the half million dollars that I mentioned. Also having just read my post, I am aware what the cash balance was at the end of June, should have explained that I meant that we aren't aware of what it was up to last night.
Hi sasa, I was going to leave it until the end of trading before making a comment, however I don't want to be rude and ignore your question.
To be honest, I too was disappointed with the amount of cash, as you and others have commented. However, to put some spin on it, it has more than doubled our bank balance even without the drawdown from BP. We don't know just what our cash was prior to today, but I'm guessing that it had depleted with no income from Erskine, our share to pay for the new pipeline, overheads with the new office and staff costs etc. Also if production from BKR at 40% and Erskine producing 3,500boepd continue for the next month, we should add around half a million $s a day before year end.
It is looking now, with today's damp reaction, that the SP will have to be driven by news, Rowallon obviously first and hopefully successful, then hoping for positive news on Rhum 3, plus whatever may come in that may blindside us all.
I despite being disappointed with the cash input, will not be selling a single share in the near future. Another positive I see is that we aren't likely to be hit with a lowball offer from somewhere looking at a large cash deposit, just hoping that our BOD have earmarked what we have for furure projects.