Granby Oil & Gas Share Discussion Threads

[rapier686] 07/3/2008 09:23

Re the second part of your question - is this Anglesey?

Granby have 33.34% carrying own costs.Fox Energy have an option which would reduce this to 20%, paying 10% of well cost.

Fox Enery however aren't that well endowed and may well not be in a position to take up the option in which case Granby would be looking to do a similar farm out elsewhere before drilling.

Anglesey is around 140mmbbl P50 prospective resources - so 46 or 28mmbbl to Granby depending on Fox's option. Really quite material! Risked around 20% again.

[rapier686] 07/3/2008 09:12

Nice to see you interested, GHH.

The short answer is 7.75mmbbl P50 prospective resources net to Granby. Risking a tad over 20%.

The long answer is:



9/22 and Globe in particular is addressed on pp16 and following.
Economic evaluation on p 141, though note Roebuck will probably not be tested with this well.

[ghhghh] 07/3/2008 08:40

What is the target size re the free carry well in April (GOIL has 25%).

And does anyone have any info re terms/target for the part carried well.

Thanks

Paul

[deswalker] 06/3/2008 17:50

Anyone want to offer reassuring noises

Currently its Enterprise Value is about £11 mill. For this you get three development projects, one of which is about to start producing with an NPV > £16 mill, a fully carried explo well in April, all the other explo projects and a quality management team.

That's the best I can manage for now. The chart is depressing though :-/

[gbrownings2] 06/3/2008 16:31

Am getting a little nervous about this share. Have a reasonably number in terms of percentage in my relatively small portfolio at an average holding on 62p - originally bought on recommendation of a friend who used to work with the guys who set up the company. Anyone want to offer reassuring noises!

[dreggspicker] 06/3/2008 08:41

Oh deary me, not more delays and more importantly, money.

[dreggspicker] 05/3/2008 14:49

Des,
sorry I can't do posts on the technical stuff, as I am just an amateur, but with Granby I just have to go on my gut feelings, the management, and of course your excellent postings !!

[deswalker] 05/3/2008 14:42

cheers for making the call dreggs.

[dreggspicker] 05/3/2008 14:37

Des & all,

Rang the company up this morning, obviously they can't tell me too much, but I was told like you they envisage about the same gas output, and when I said, but could the amount be down say 20%, that was flatly refutered, it would be "nothing like that".
Not sure if it has been said before, but Tristain Main was mentioned, as being exhausted a while ago, but now has built up a gas pressure again, but when I asked if our gas has leaked, they are confident the two structures are not connected. Let's hope our well has the same behaviour!!
So with that and the fact gas futures are at 57p ish per therm, and look like they could go higher rather than fall, I remain calm about Granbys future.

Regards, dreggs

[kim_clay] 05/3/2008 10:16

stop bickering and let the management get on with it.

[deswalker] 05/3/2008 08:33

I've answered your questions to the best of my ability. Are you willing to answer my single question ? If not then it's a poor show IMO. I'm long by the way, what about you ?

[normannumpty] 05/3/2008 08:12

Why does this matter?
The FACTS speak for themselves.
Me holding shares or not has no impact on the FACTS as presented by them.

[deswalker] 05/3/2008 07:51

Norm,

The discount rate and assumptions on pricing are on the presentation which is post the well results. Fair enough if you wish to use the Tracs P90 pre-drill figures but that's not what the company are using post drilling. Strictly speaking, by your logic, you ought to use a linear interpolation between P90 and P50 based on the actual pressure reading of 2300psia versus the 2145psia assumed for the P90 case. This should immediately take you to closer to 23bcf gross recoverables.

The P90 numbers were based on the lower end of the expected pressure levels:

"This has been included in the TRACS evaluation by considering the gas in place at the end of the Tristan Main field life, and that the pressure in the NW area may be in the range of 2145-3025-3679 psia with corresponding gas expansion factors of 130-182-213 scf/rcf." Tracs report page 8.

The P90 reserves are 28.9 (GIIP) and 21.9 Recoverable (Tracs page 10). This is a 75% recovery factor. (Simple Maths)

However Tracs state (page 9) "The recovery factor was based on the reservoir pressure at the start of the field development,
which could result in a recovery factor range from 67 to 85%."
Given that we have a reservoir pressure at the bottom of the range the recovery factor will be closer to 70% (ie 20bcf.)

You are double counting here IMO. On the one hand Tracs explicitly uses a recovery factor in the P90 (2145psia case) of 21.9/28.3 = 77% but then you're saying "the pressure came in above this level but I'm still going to reduce the recovery factor even more".

However I'll go along with your thinking some more (even though I don't agree with it). Linear interpolating the Tracs GIIP figures one gets about 30bcf at 2300psia. Then interpolating the recovery factor at 2300psia one gets a factor of about 69% yielding about 20.7bcf gross recoverables.

This is 6bcf gross lower than the P50 estimate which will not be recovered at the end of the project. But by then all finance etc will be long paid off. The NPV will obviously take a hit but it certainly won't go negative as you seem to be implying.

I stress that I really believe we are looking at worst case scenarios here which conflict with what the company is actually saying post the test results.

I appreciate your thoughts on this share. Answer me one question please. What is your position in GOIL shares ?

Des

[normannumpty] 04/3/2008 22:47

"He gave no indication at all that there was a problem"..hardly likely to say otherwise on an email to a PI is he, Nigels too smart for that.

How about some hard facts (theirs not mine) rather than 'speculation and presumption'.

The P50 reserves (14.7bcf net) were booked before the well was drilled: See RNS 19-Oct-07. And therefore based on pre drill P50 expectations.

The P50 Reserves of 27.4bcf were based on a P50 GIIP of 35bcf (Tracs report pg 8)
These P50 numbers were based on an estimated 3025psi (Tracs report page 7.)

The P90 numbers were based on the lower end of the expected pressure levels:

"This has been included in the TRACS evaluation by considering the gas in place at the end of the Tristan Main field life, and that the pressure in the NW area may be in the range of 2145-3025-3679 psia with corresponding gas expansion factors of 130-182-213 scf/rcf." Tracs report page 8.

The P90 reserves are 28.9 (GIIP) and 21.9 Recoverable (Tracs page 10). This is a 75% recovery factor. (Simple Maths)

However Tracs state (page 9) "The recovery factor was based on the reservoir pressure at the start of the field development,
which could result in a recovery factor range from 67 to 85%."
Given that we have a reservoir pressure at the bottom of the range the recovery factor will be closer to 70% (ie 20bcf.)

All this also assumed the following (Tracs page 9):

"A new well in the structure, with a horizontal length of 2000 ft and a skin of zero should be achievable, and could deliver initial rates of 50 to 80 MMscfpd through 5" tubing."

Granby have already stated that it flowed at 30mm/day from a 778 ft hole. January 28th. press release. This seems not to be within the Tracs 'anticipated' well delivery parameters.

In Summary the well delivered at the bottom end of expectations and at the bottom end of the reserve range. However you could still truthfully say it was within the expected range. Granby have already booked 14.7, so they cannot change this without Tracs reevaluating the field results..something I expect they will be doing now, until then the number is 14.7, they cannot say anything else.

So based on Tracs own numbers they have 20-21.9 bcf recoverable, thats 10.8-11.8 bcf net.


According to the latest post well presentation: The development costs are estimated at £68mm. And the loan is close enough £30mm. Therefore Granby should have spent(or will have spent) 54% of the difference between the loan and their final cost. Goil cost is 54% of £68mm = £37mm, loan is £30mm. i.e ~£7mm

The RNS on 28th Jan stated that GOILS costs were an original 2.5mm plus an additional 3.0mm, and that they would hav £11mm by the end of March. The latest 29th Feb presentation states that this is now expected to be £8mm at end of March. Thus an additional £3mm has been spent above the £5.5mm, totalling £8.5mm.

Goils sunk cost is therefore approx £8mm +/- £1mm.

If we assume 30mmscf/day flat and 350 days/year of production at 50p, 45p and 40p /therm. Then it will take 420/470 or 530 days to pay back the loan (assuming its £32mm including interest). This will take 12.7, 14.1 and 15.8 BCF of production.

Of course this does not include opex or tariff so these are underestimates. So lets add 10% to these times/volumes to cover those (Thats less than 5p/therm). That gives us 14, 15.4 and 16.4 BCF of gross field production to repay GOILS debt at 50/45/40p per therm before 10% opex and tariff.

As we have seen the reserves are now seen by the Tracs evaluation as 20-22BCF (See above), That leaves between 4 BCF worst case and 8BCF best case (2BCF to 4BCF net to GOIL) to repay their £8mm investment.

Assuming 50/45/40p per them and 10% Tariff/opex then that would give GOIL a gross revenue of between £3.7 and £4.6mm per BCF. ie a range of £7.4mm (assuming 2bcf) and £18.4 (assuming 4bcf). The bottom end will not even repay the original investment let alone the time value of money. Of course there is the Royalty and we are only guessing at opex/tariff.

Burton states the NPV is >£16mm. but at what discount rate, what assumptions on reserves and what assumptions on pricing? and does it include sunk costs or is this 'go forward' economics, without this information it is meaningless.

Norm

[deswalker] 04/3/2008 17:52

I've had an email from Nigel Burton. Apparently the 1 million share trade was simply RAB Capital transferring stock from one fund to another.

Other than that he says there is no news and that altho the share price performance has been disappointing he sees it as being broadly in line with other small AIM listed E&Ps over the last few weeks. The next announcement will probably be when the weather improves sufficiently to allow for the rig to depart.

He gave no indication at all that there was a problem.

[deswalker] 04/3/2008 16:36

There's a new presentation available on the website post the test RNS. The good news is that they don't give any indication of being downbeat and indeed the NPV has increased to £16.1 mill using 27 Jan fwd curve. This compares to £13.4 mill using the same fwd curve (IMO) in the 28 Jan RNS. Why this increase you may ask ...

Well IMO the reason is that the uncommitted cash at 31/3/08 is now expected to be £8 mill instead of the £11 mill given in the RNS. So adding the Cash and NPV together we get £24.1 mill as of Friday instead of £24.4 mill back on Jan 28. Reading between the lines, and I'm guessing here, it appears that they were hoping to cover the cost overrun by extending the non-recourse loan and accounting for it via a reduction of the NPV (the £13.4 mill included it in the NPV on 28 Jan). However, this now appears not to be the case and so they've had to fund the cost overrun directly from so-called "uncommitted cash".

On the good side, it appears that they still expect to get out the full 27.3 bcf but against this they've had to stump up cash directly for the over-run. But if one is to believe the Feb presentation (dated 29/2/08) then the total of Cash plus Tristan NPV has taken a hit to the tune of £300k. Hardly a disaster.

Norm, check out the fwd curve on the presentation. As of 27 Jan it equates to a flat price of 57p per Therm hence my use of this figure last night.

Cash is going to be a bit tighter this year but the value of the company hasn't changed markedly. I've still got a core NAV of 90p.

Comments welcome. DYOR.

Des

[chelseapaul] 04/3/2008 16:01

I was going to offload a few of these today but the
Market makers are refusing to deal even in 5k shares!
You know something is up when the price is dropping everyday and the.mm's are running for the hills.

[normannumpty] 04/3/2008 10:35

A better calculation (although we are missing vital information) is this.

How much do we have to produce to payback the loan at 35/40/45/50p /therm?

What is the total amount repayable.
What is the Tariff/Transportation costs per therm to the beach.
What % is the Royalty, and when is it payable.
What is the expected Opex/therm
What are Graby's sunk costs to date?, do we expect a return on anything other than a go forward (i.e. Ignore past costs) basis?

Norm

[deswalker] 03/3/2008 20:43

chelsea,

Suppose Tristan produces 30mmscf per day. That is 308400 Therms. Suppose they get an average of 57p per Therm (current day ahead level), then this gives a gross revenue of £175,788 per day (GOIL gets 54% of this).

Now suppose the project has to pay back £68 mill plus 6% interest = £72.1 mill. They achieve this in 72.1/.1758 days = 410 days. This ignores the opex for that year but hopefully you get the drift. A higher flow rate and/or price and they quickly get it down to less than a year.

After 410 days they've produced 12.3 bcf (assuming no downtime etc) and so assuming they're still targetting 27.3 bcf gross (which I believe they are) then the next 15 bcf minus the necessary operating and decommisioning costs is taxable profit. At 57p a Therm this is a total undiscounted revenue of £87.9 mill (GOIL gets 54% of this). Ofcourse there's all sorts of costs, taxes and discounting to take into account which would take this £47.47 mill down to an NPV of about £16 mill net to GOIL at this flat 57p per Therm rate.

Cash plus Tristan = 66p per share IMO FWIW.

Everything else is free including 10% of Kerloch with two discovery wells drilled and paid for, 20% of Monkwell with three discovery wells drilled and paid for and another planned, 25% of Globe/Roebuck for which Valliant paid £3.5 mill for 25% and all the other explo prospects.

HTH,

Des

[deswalker] 03/3/2008 20:02

Rapier,

I've a general question for you and have emailed you off board. You have mail.

Des