88E (ASX) HRZ Shale Decision Tree

Originally posted by RealJR ↑

"Have you been in the boardroom as an executive cutting deals?"
Short answer, yes. I rose through the ranks of one of the top five and became country manager twice on opposite sides of the world. Which is why I ended up marrying a local gal and eventually retiring relatively young in this great part of the world.

"Caelus have not progressed because they need more support."
That feeds into answer to point 1. Commercial leveraging 100. In a state where more than any other, the oil company executives are front and centre of the local news cycle with local politicians. There are glimpses of this here in Aus every time your PM calls the energy company CEOs to Canberra. Either way Caelus holds the cards there.
Also, having talked to an ole buddy of mine in Fairbanks, he tells me Caelus' crude is very light and they are using the "flow-benefits" of mixing its crude into TAPS with all the heavies. So in that part, I now have less reservations to 88E's mixing argument. It will take more talks and more numbers and agreements being put in place, but it's much more likely than I believed. TAPS has always been used to taking the real thick heavy stuff. Liquid vegemite really. So there, you can teach an old dog new tricks maybe?

"The late Paul Basinski, a shale legend, not conventional did not spend 6 years pursuing his ''vapour phase'' project for a few cents on the barrel"
I absolutely agree. That's why I thought 88E was in it for the long haul. But you now tell me they'll drill and drop. So if they are at the exploration stage now, they'll do extremely well to get 0.50 cents per bbl for the results of two wells in an unproven shale vapour project. The issue here is not so about how much 88E values its reserves, it's about how much a likely buyer is going to discount those barrels at the front end, knowing the technical risks, stratospheric costs and paths to commercialization.

"Do you have direct shale experience ?"
Yes. Considerable. Which is why I am not skeptical of any new extraction techniques or technology. That game changed dramatically in the space of a decade and each time was a "eureka" moment. The problem is, that it came at a cost that has proven to be too much for all but the biggest players. Who then used the opportunity to buy up those relinquished leases in "fire sales". Costs have come down, drilling techniques and laterals have gone to lengths no one would have expected at the turn of the century. But it takes time and a lot of money and those things are very amplified by the location of the 88E permits.

"Have you checked the presentation where the P50 at 30$ first appeared?"
I have not, but I took a glimpse at that link you sent. Thank you. I will have a good look at it this afternoon when I get a chance.

Must admit, I never thought this conversation would have such a back-and-forth, but thank you for keeping it interesting.

JR.

Expand

JR, couple of things stand out for me.

1. Only recently, as in today, you found out different API oils are mixed in the TAPS. But post from a point of great knowledge with regards Alyeska and TAPS

2. Even though you stated that the TAPS is not heated, it is in fact heated, as they have had to since 2011 due to low capacity. See above

Okay 3 things.

3. TAPS has not always been used to taking the real thick heavy stuff , liquid Vegemite. TAPS was built around Prudhoe Bay which is light oil. Heavy oils are a recent addition and only commercial due to the amount of light oil in the system, hence making it potentially a commercially viable addition.

Cheers

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(20min delay)
Last 0.2¢		Change 0.000(0.00%)		Mkt cap ! $57.86M

Open	High	Low	Value	Volume
0.2¢	0.2¢	0.2¢	$101.9K	51.30M

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