The September 2018 Presentation by DW with document was excellent. Then we had an opportunity to chat with DW for three hours following the talk. He left at 10pm precisely.
I had a 20-minute discussion with DW shortly after 9pm to elaborate on P7. This has the 4 Project timelines from now to Q1 2020.
At the Presentation start, DW oversaw a short silence in memory of Paul Basinski. And acknowledged that PB’s loss had made Icewine 2 progress more difficult than expected.
A specialist group of 6 or more people now undertake the work that PB used to do himself. The volume and scope of this work on both conventional and unconventional is substantial and increasing. It is mostly computer based and includes geology and Seismic information going back a decade and more.
This group are also involved in study and analysis of Icewine 2 and unconventional progress plan.
This hi-tech group is part of the shared activities jointly funded 22:78 by Burgundy and 88Energy as our core JV since late 2014.
IMHO the knowledge base asset could have a book value of $1b in value. That is about US 17c/share value (13p SP)! However, 88E does not put (potential) Asset values into its accounts. Investors should realise that the vast land mass that we lease from Alaska Government only has value based on geological knowledge.
A second sub-contract group / company has also been retained and is also funded 22:78. Texas based, its job is to handle the Farm Out negotiations. This includes options for final sub-lease purchase.
The contracts seem simple in principle, but in practice there is a lot of detail. This includes information from our Knowledge Database, payment terms, land size and valuation, timescales, estimated and future oil resource, and scope of Farm Out field project work.
The current priority is to complete contract(s) for Central North Slopes conventional oil within 2018. The 88E/BEX JV may benefit from up to US$ 20m at contract commencement to cover pre-contract exploration costs.
The Conventional Farm Out Project attracted substantial numbers of applicants. This was reduced to 30 several months ago. It is now well underway to be reduced to 5. Then 1 or possibly 2 (I think, maybe) for final contract.
I asked DW why the Conventional Bar on P7 had no obvious milestones for the Farm Out company during 2019. Then followed by 2 oil rig pictures in early 2020.
The answer is, MAJOR OPERATORS (hint) re-do everything again from scratch plus more. Meaning, they will carry out 3D Seismic across the whole of the Central North Slopes region. Then process the data with interpretation of oil resource locations. Surveying for roads, pipes, etc.
Then they plan out how the field will be drilled for production purposes. And the most suitable places for the first batch of wells in 2020. Could be 2, could be many depending on quality of information from 2019 work.
Taking up the option to Buy is likely to occur end Q1 or during Q2 2020.
Will there be any progress payment during 2019? I do not know. The Contract Negotiation company are there to get agreement between parties that are reasonable and fair to both sides, including industry best practice on such matters.
It is worth noting this point. Once the Conventional Farm Out Contract is signed (by end 2018), our work on this project is complete. The Farm Out company is taking over the site for all future conventional work. I am sure we will provide a Support Service through 2019 to avoid unnecessary holdups. This may come with a monthly fee, just my experience says this, not said to me by DW.
I feel that 88E/BEX/AEA etc as a group is maturing and developing along excellent lines.
Phrontist (IMHO, DYOR)
88E Price at posting:
1.9¢ Sentiment: Buy Disclosure: Held
(20min delay)
