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My main takeaway from GRH adding more is that the risk-reward at the current share price is better than it has been for some time.
I would imagine a better buy now at 10.5p than at the 1.5p where our Graham started accumulating, give the extent to which Guercif has been derisked.
He did not state that testing would be complete in September. He said it was on schedule, or words to that effect.
There are third party dependencies (item coming from France), the possibility of corporate transaction discussions, it could even be something unexpected going on.
You can only judge PG once we know the reason.
They don't have money allocated to drilling at present. The last raise was primarily for flow testing existing discoveries and CNG project. In the event of successful flow testing, the CNG items can be financed by the alluded-to debt instrument and the money previously committed to CNG is freed up for drilling.
We were explicitly told this in RNS of 30/08/23:
"Subject to rigless testing results, an initial Compressed Natural Gas development can potentially be funded by a debt instrument linked to production thereby freeing up existing cash resources for more high impact drilling."
Testing may not be that important for the ongoing discovery of the basin / potential partners, but if you are financing that drilling with equity placings then you want a higher share price. It's essential to test those discoveries so that the retail muppets (us) can ascribe a value more fitting to what's been found.
Even better - cashflow from CNG to finance drilling would make this share a beast.
I found the comments around commercial vs state-led interesting. When this was mentioned before it seemed an unlikely proposition.
The key drivers behind a state-run LNG appear to be :-
1) An insistence on non-fracked gas
2) it's only there as backup energy source if needed
For 1 - We know PRD have proposed a solution using non-fracked gas (from Morocco and/or Trinidad)
For 2 - Could an agreement be reached for setting up LNG as a backup solution only? I expect minimum service levels would have to be agreed for a commercial entity to engage. I doubt the state has (or can acquire) the expertise to go it alone.
Watching with interest
Back in spring it was deemed lower risk and more cost effective to do a new drill (MOU-3) than to re-enter MOU-2.
It's all about time and money, and realising shareholder value for lowest outlay. I suspect MOU-2 remains down the to-do list for now.
I think priorities are testing MOU-1,-3 and -4; CNG development and planning new drill Jurassic drill.
I don't see them doing anything with MOU-2 short term, but it's there as a future option if time and money allows.
Sound like one month or so to finally get MOU-1 flow rates (after today’s RNS I expect they will release well results individually).
Getting some proven resources will be a major milestone for the company.
Of course, those who have done their research will know the probability of a strong result is much higher that the market would seem to think.
July 11th RNS: “…extensive rigless testing programme details of which will be announced in the coming weeks”
Obviously we are still waiting for any details.
I wonder if our admirers have reopened discussions? There has been significant new information from the two wells, potentially sufficient to force someone’s hand.
Ordinarily I would expect an update next week. If the silence continues I will raise one of my eyebrows even further…
I think you've answered your own question.
The threat of warrants being part-funded by share sale is putting people off buying, lots watching and waiting for October.
I think the actual impact of warrants will be small and it is above psychology preventing the dips being snaffled.
All IMO, etc.
Yes, Lionel Therond at Fox-Davies. His 1 year target is 35p.
https://t.co/fQWcOnhB1L
Investors don’t need to sell, management hold about 10% and are focussed on monetisation of the assets.
Build and sell; special dividends mentioned in the past.
Buying and holding is a perfectly good strategy, indeed with the right share it is the best way to make the most money. I believe long term investors will do very well here.
There is also money to be made trading the volatility of this share. The frequent discounted and leaked placings are a necessity evil to progress and offer opportunities for both traders (and investors). It is regrettable that the state of the London small cap market means that so much value is extracted from these, I like the idea of suspending price while raise is negotiated.
Once PRD is able to self-finance the picture changes dramatically. We have been told in previous RNS announcements that forward gas sale agreements are ready to be triggered by a successful flow test.
We have also been told that flow testing is expected to be finished by end of September.
In summary, current price is great entry point for everyone. Investors don’t need to sell, traders can sell end of Sept before results come (risk event). I think investors will make much more than traders in the end here.
Excellent work Keith. Explains the RNS, I didn't realise 23rd of August was the headroom anniversary.
It sounds like there is nigh-on zero risk of placing not happening.
It is also proof that certain fud posters have no clue what they're talking about, which we knew anyway.