As spring rolls in to town, Red Emperor Resources should start to begin to spark in to life as their elephant prospect on the western flank of the Alaska north slope aptly named "Winx" draws closer to it's drill...
RMP entered in to a JV with 88e & Otto Energy to acquire the working interest in 4 leases in Alaska with RMP's working interest being 31.5% with a paying interest of 35%.
The total cost of the well is US15m across the consortium & of this total cost, RMP's share is US$5.25m. With over AU$10m in the bank, the company is well funded to meet their commitments until target depth of the WINX well.
The land itself is in the middle of elephant country - the 'billion barrel highway' in Alaska. Immediately adjacent to WINX, there is the Horseshoe-1/1A oil well which was drilled by the Repsol led JV in 2017 and it hit 1.2Billion barrels of oil over a 150 ft net oil pay in several reservoir zones...
WINX Prospect
The company has had the advantage of utilizing 3D data work which was conducted by Otto energy on the Alaskan acreage. This analysis has resulted in the identification of an oil prospect with a gross estimate of 400 MMbbls and a geological chance of success in the range of 25%-30%.
Note that further de-risking is possible by conducting more analysis on the 3D data and I'd be sure that management will give this every possible chance of success.
The net pay to RMP would be 126 MMbbl which would be a monster discovery and very much a company maker.
With oil prices going bananas, upon a successful drill with good flow rates etc; it would be reasonable to place a value of a couple of dollars / barrel valuation on the in-ground resource. At say $3/bbl in ground value - that places RMP at a mkt cap of 378m with every +/- $1 variance for in-ground value being +/- $126m in mkt cap... So the numbers get very large, very quickly - especially with only 425m shares on issue & no CR requirements pre-drill.
The drilling will take place when the Alaskan winter thaws and they are expecting to put a drill bit in to the ground in February 2019.
The drilling rig contract has been executed and they are well on the way.
Overseas Listing
One of the most appealing factors for this company IMO is the fact that it is dual listed in London.
Like it or not, Aussie investors are often slow to the party and/or do not fully value resource companies for a variety of reasons - perhaps we have too much choice over here...
However given RMP is dual listed, the LSX / ASX prices will often converge & be within tight ranges of each other.
This provides every opportunity for RMP to go on a monster run (probably led by London) similar to that run 88e encountered a couple of years ago.
Furthermore, the fact that 88e is also dual listed in London will provide tailwinds for RMP given both companies will be marketing the WINX prospect independently of each other.
LSX price link -
https://www.londonstockexchange.com...ny-summary/AU000000RMP0AUGBXAMSM.html?lang=en
(Note with the london price, just multiply it by 1.82 to get the equivalent AUD price)
As the spring racing carnival begins to roar to life & the might WINX continues her unbeaten run, there will be another WINX that is also beginning to wind up ...
The closer we get to the commencement of drilling, the higher market cap we can expect. Below is a write up from a well renowned oil & gas expert in the UK who covered 88e & now covers RMP. He is expecting a pre-drill price of around 14p per share (14p is equivalent to 25.5c AUD).
http://share-spot.co.uk/write-ups/red-emperor-resources/
Exciting times!
