Originally posted by Lazarus65
Not sure pointless is fair. They are required, by the ASX, to release a quarterly activities report and cash flow report. If they failed to do this, there would likely be suspensions on ASX and even more likely associated FUD machinations on what could be an unsuspended AIM.
Quite aside from the mandatory nature of the reporting, I did take some new insights from the report. They may not be new to the market, but they were new to me. Or at least my interpretation was new to me. Key points for me (some new and some confirmations of known news):
- While IW conventional farmout discussions are ongoing and potential partners interest and calibre "remained highly encouraging", it dawned on me that the feedback they are getting may be that interest is 'limited' to the Schrader/Topset leads and prospects - as the reservoir quality of the deeper Seabee and Torok formations are "deemed a key risk factor"... "due to depth of burial and compaction". While that is still 763m barrels (net mean unrisked to 88e), it is a far cry short of the 2,211m bbls (net mean unrisked to 88e) of the entire Western Play. This may explain the time it is taking...and is certainly conditioning my expectations as the extent of FO that may be initially delivered for IW conventional. A tempering point for me.
- Reports of the demise of the HRZ shale play (IW unconventional), are plausibly premature. Indeed they may be as erroneous as many have argued, despite market sentiment. Independent validation of the work done so far, in conjunction with collaboration with USGS and newer tests that are now emerging, suggest that we may see a credible plan for a horizontal test flow test in the HRZ to "unlock its considerable value for shareholders". Analysis complete 1H 2019. An encouraging point for me.
- Yukon Gold is really all just about Cascade, and breakeven development price here (due to PT assets nearby) is under $US40/bbl.This sounds high to me as the difference between revenue (POO) and this development breakeven number would need to fund, royalties, opex, transport costs and profit margin...of which only the latter drives any value to this prospect. ANS West Coast on 23/1/19 was $61.12/bbl. Royalties at that price is around $10, and we know from earlier work done by 88e that transport costs are in the order of $6.50 / bbl. Which leaves about $4.50 / bbl for opex and profit margin. We clearly need a much higher POO for Yukon Gold to unlock its value. A sobering point for me.
- Winx-1 remains on target and we all know its potential.....nothing new here today. This is rightly where all the near term interest lies.
A lot of IMO applies to the above, obviously....but the quarterly has helped me calibrate where I believe we are and my associated expectations. I suspect that the current price fairly reflects the risks and uncertainties, as they have been portrayed and implied. The SOI is also a factor in that.
GLTA.
A follow up to yesterday's initial observations....and wrt to my comments on Yukon Gold in particular. Upon reflection, I may have been taking too literally the wording "development" in the description of internal modelling of break-even price. It would not make sense for the 'under USD40' figure to only pertain to 'development' costs...as that would imply a USD3-3.5 billion development cost for what should be a few handfuls of wells and a near distance tie-in to Port Thompson facilities. Doesn't pass the sniff test. So, more than likely it is a modeled breakeven price at which NPV equals zero for full field development and full life-cycle resource extraction.
On that basis (using USD40 b/e)....and with similar assumptions used in past estimates of their NPV factors.... at a POO of USD61 (current approximate), the NPV of full field development and resource extraction is between USD 5 and USD6 per bbl. If POO hits USD70, then the NPV grows a bit to between USD 7 and 8. Obviously the lion's share of this NPV would have to go to the operator that funds this development and extraction....so the question becomes how much of that NPV is 'retained' by 88E by FO or SO. Perhaps USD1 per bbl?? Maybe more?
Each USD per bbl for 80m bbls at Cascade translates to an AUD 'value' of about one and a half cents per share on a fully diluted basis. But more importantly, gives the company a sizeable warchest to unlock value in Icewine.
Of course, a rising POO helps, but not so much as to dictate a waiting game for us as a seller. On these numbers, the time to deal on Yukon is now (i.e this year). A conclusion which is 180 degrees from what I implied yesterday.
Oh well!
All IMO and as always, I may be totally wrong.
(20min delay)
