FPL past vs future, page-37

From Rat's Rant newsletter...
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• The key is not so much flow rates from this one hole, but rather proving up the field potential. The big prize is to be able to say, the Schlumberger (SLB.NYS $59b Mkt Cap) fracking technique works in the Niobrara formation (537 feet thick for FPL). If proven successful, it will change acreage value to close the gap to the Wattenberg field up north - US$5000/acre lowest prices Vs. US$250/acre FPL current. The acreage there has traded over US$15,000 per acre.

• This is Schlumberger’s gig – make no mistake, there is more for them in this well than FPL. They want to successfully prove the technique works in the Niobrara formation. This opens a lot of acreage for drilling. Big plus for FPL though.

• Announcement confidently worded to suggest that a strong initial IP announcement can be expected.

• Announcement alludes to a further development

“As well as providing more updates on the flow back operations, we look forward to reporting a favourable IP rate for oil & gas for the J.W. Powell well very shortly. We also have many other developments that deliver further upside for shareholders and we will report on these also.”


My guess (only a guess) would be this relates to a commercial agreement for selling their current gas reserve which they have been banging on about for what feels like an eternity.

The history (poor) of this company means there is an abundance of stale holders looking for an exit (used to be Austin Exploration AKK.ASX). It will need to chew through this.

Management have changed, been recapitalised, has cash flow to cover costs, but it is a “boy who cried wolf” company historically but hopefully that is all about to change and quickly.   

That probably is the opportunity though, as the price (From 0.7c 2 days ago to 1.1c today) is being met by selling but not from me that's for sure.

If the follow up IP announcement, which I suspect will have strong technical input from the driller, allows them to market the acreage discount, it could deservedly trade much higher.

They have 21,000 acres 100% with zero debt in the company


Even at a value of US$2,000 per acre, that’s 4.7c/share in A$ (that’s 40% below the low end of the Wattenberg field trades at).

At $0.011 it is a $12.3m mkt cap.


It is early days, but field development potential will be revealed in the near future.

Disclosure – I own shares in FPL and FPLOB and plenty of them​