Madagascar Oil Share Discussion Threads

[comedy] 24/2/2016 10:47

bought some more...sold irg at profit..and shoved some in here.;) lets see what happens over coming months:)

[rapide35] 24/2/2016 10:18

Control1, it's precisely because this is a difficult company to analyse that I've offered my thoughts. I don't claim to be an authority, as the issues are complex and there will always be people with a contrary view. Perhaps my halving and halving again concept was too broad brush, but the aim was to bring some perspective to a project that combines heavy oil, low average production rates and significant initial capital cost in a period of low oil price.

First let me deal with your second point, the 20,000 barrels additional oil in storage in the last 4.5 months, or 143 days. Average daily volume is 140 barrels from 16 production wells, just under 9 bopd per well of net sales oil, compared with the average gross production rate in H1 2015 of 20 bopd. Roughly half. However, this was during a period of "managed reduction of production" and "shut down of steam injection" so it's difficult to draw conclusions from this period.

Instead we can take the cumulative production and storage figures from the 1H 2015 interim report. As of 28 September 2015 the field had produced in total 239,695 barrels of oil, of which "over 130,000" were in storage. This gives an average sales to production ratio of >54%, or just over half. The rest of the production was used as fuel.

My second "halving" doesn't apply to the current pilot phase of the project, where there are 16 production wells and 9 injection wells. In a full development there would be an equal number of injection wells and production wells and each of these wells has to have the facilities both for oil production and for steam injection. So compared to a conventional oil field, which at the start usually has only production wells, each Tsimiroro production well must also carry the cost of a second well, an injection well. Therefore, on a total well count basis you can roughly halve the production rate twice, once for the oil used as fuel and again for the non-producing injection wells. It may sound dramatic, but it gives you a sense of perspective when comparing Tsimiroro with a conventional field.

I won't say much more regarding the "partner process" as you can all draw your own conclusions. However, I didn't say that "no big concerns are interested", I said that "No mainstream E&P company appears to be still involved". Perhaps you have some reason to think that the South Korean LG or KNOC may be the "Asian E&P" mentioned by MOIL. Any interest would be very good news, but we aren't going to find out for several months unfortunately.

[comedy] 24/2/2016 06:58

Lol...what did I say control...I'm waiting to see if hh rns out today and profits will shove in here. Too many good smaritans here!@@...

[control1] 23/2/2016 22:45

rapide, your post 2392 refers. You were kind enough to compliment me on my research the other day but I don't think that I can return the favour. Why..? Because:-

1) your "take the number of barrels and half it, and then half it again" theory means that using the last set of figures I could find, the daily production rate of 317bopd reduces to, call it 80bopd net production. This would then equate to circa 27,000bopd net per year which means that they would have to have been pumping, full steam (no pun intended) for approximately 6 years to achieve the current amount in storage (over 150,000 barrels). How does that work then seeing as they have been at it for probably half that...?

The actuality is that since a previous operational update stated that:

- as at 28/09/15, the company had 130,000 barrels in storage and now
- as at 18/02/16, the company had 150,000 barrels in storage

So, that is 20,000 barrels in 4 and a half months so your estimate of net production is way off.


2). Also, MOIL have NOT been turned down by 140 companies and it is just PLAIN WRONG to say that no big concerns are interested. The highlights of the report to lenders 6th January 2016 stated that the proposition had been presented to over 140 companies both large and small and that a number of leads were being pursued and were undertaking due diligence including:

- An Asian consortium, which was undertaking formal technical due diligence which it hoped to complete within 2-3 months.

- A southern African Investment firm, which had undertaken initial internal due diligence and wished to continue with more in depth due diligence which it estimated would take around 2 months.

- An Asian E&P company, which was potentially interested in an asset farm-in deal and had amassed a significant due diligence team but expected that the due diligence process would take between 2-4 months to complete. (FWIW, my guess is LG or KNOC)

ALSO - various large multinational oil and gas services companies, who were at various stages of due diligence and were potentially interested in arrangements to provide services to the Tsimiroro Block 3104.

As at the date of this announcement, the Company understands that these companies are still interested in the project and can confirm that due diligence is continuing.


You have no idea what the potential services to the block are, you are just guessing so, pretty much all of what you said was wrong and I am back to thinking that you are a subtle stooge...

[comedy] 23/2/2016 22:35

Lol aim is full of high risk.

[bounty k] 23/2/2016 17:18

Why is anyone topping up here? That suggests your already exposed to a level of risk and your prepared to take more in the expectation of a high risk pay off. I can see very in the way of risk management that suggests such risks are worth it. It might be hard especially if you jumped in last month on all the nonsense about 20p and billions worth of oil, without stopping to think a) how much to get out the ground b) the commercials around refining and selling heavy oil.

Ignoring the insolvency and de-listing issue

Think about your own risk appetite and how your managing that, even if you like high punts

[librag] 23/2/2016 15:35

thanks rapide.
Seems to me that this is a bet on whether minority shareholders' interests are protected. Clearly the IIs think there's something worth keeping here.

For me, it's a long term play on the end-result post privatisation. Clearly there's a good chance of manipulation but it's worth a shot. Caveat emptor as always. GL.

[comedy] 23/2/2016 15:18

wel if 2 lenders are prepared to give us $2mill each...then that means we will be bale to carry on for the parties doing due diligence...plus longer we stay the course the more likely oil is going to be shown as having turned on being on upphase...that will be stimulant to those with vison to seal deal quickly. think we have a few more twists and turns to come yet:)

[rapide35] 23/2/2016 13:49

LibraG, patient research on an interesting project.

Under the present loan agreement there is $8m more that the four lenders could provide if they wanted to ($2m each). That might keep the lights on until September, when the loan is due for repayment.

In a June 2015 presentation the company estimated a capital requirement of $200-400m for the first phase, in which oil is taken for sale locally by truck. Anyone putting up that much cash would want to buy the company and clear out the board - and the PIs!

If there was a local sales contract in place and some trial truckloads of crude oil had been used as fuel in the power station without any issues, that could give an investor enough confidence to give the project a shot, even if the local sales were at a loss. However...

Symbion took over the Mandroseza power station from the state company Jirama last September and is in a seven month programme to rehabilitate the four 10MW generators. Those generators are in poor condition (frequent power outages in the capital) and it is unlikely that Symbion would want to risk testing an unknown new fuel in one of the generators until all four were working and stable. The original interest shown by Jirama in Tsimiroro crude was probably driven by the high cost of imported fuel oil, but that driver has gone away for now and Symbion will initially be focussed on reliability rather than fuel cost. It seems that local sales are unlikely to take place in the short term.

[librag] 23/2/2016 11:15

Thanks rapide. You clearly have some insight here. Seems to me there is significant risk and significant return if successful.

</=2% of shares have been traded on this drop so far. I guess there's plenty more action to come. Do you have any idea how much money we need?

[rapide35] 23/2/2016 11:06

LibraG, on drag-along rights I don't know whether Bermuda company law would prevent the scenario I outlined previously, but there are other ways in which a private company can reduce the proportion of small shareholders. However, I don't see this as a current priority for the major investors.

[rapide35] 23/2/2016 10:56

Granting of the ep was a formality. Madagascar is desperate for oil production and negotiating the ep was never going to be that difficult. If there really were industry partners queueing up to invest they would have made an offer subject to the ep being granted, but no-one did. Commercially the project is still immature and the number of barrels in the ground is immaterial if you might make a loss on each barrel you sell.

Based on MOIL's statements, average production is around 20 barrels per day per well. Up to half of that is used to make steam, leaving 10 barrels per day per well for sales. But the project requires an equal number of production wells and injection wells, so the average sales per well drilled amounts to perhaps 5 barrels per day. In a remote location such as Tsimiroro it's tough to make this attractive to an oil company.

The project has been turned down by around 140 companies, any of which could have bought control for a very low price in the present circumstances. No mainstream E&P company appears to be still involved in the "Partner Process". Of the companies that are still involved, the service companies will not provide significant equity finance to a project that is not yet proven and the others will take at least two months to make a decision, by which time the company would be in administration. Therefore MOIL is firmly in the hands of its controlling shareholders, who may not all agree on the size of the prize and whether they are going to continue to invest.

[librag] 23/2/2016 10:55

comedy; exactly. I'm topping up too and with some in reserve to cover any future RI.

[comedy] 23/2/2016 10:52

libra ive been topping up...my first top of 100k was at just over 2p...but think this is a hold till the fight ends....got quite a bit in the horse hill escapde stocks...and if they deliver on next zone...then may have some more cash to buy here. Bear in mind they have covered themselves here by showing all the positives but covered them with bitter pill that some major shareholders want to delist or they wont give further funds... nothing stopping them coming back to say they have agreed a new loan agreement???and the big boys get a bigger slice of the cake...and what helsp them out is share price cracked down through 1p...so instead of people thinking 3p or 6p...they can now argue sub 1p to give more cash???? and those of us left will just agree...so we will get diluted down but argument is we could buy in market at same sp???

[librag] 23/2/2016 10:46

If rapide is around I'd appreciate his thoughts.
I'm no expert but have checked out drag-along rights. It appears that your scenario of possible forced sale to a 3rd party is illegal IF that firm is related to current shareholders. Something about bonafide / honest buyer rules. Essentially current shareholders aren't allowed to use drag-along to ensure 100% buyout of minority shareholders.

GL.

[comedy] 23/2/2016 08:42

small fry selling big guys buying 500k...was worth £30k 2 weeks back??? worth £15k last week???

[librag] 22/2/2016 22:12

comedy; I fully agree and saw similar with ICS a few years back.

[comedy] 22/2/2016 20:50

Lol..sat through vmp for 4 years and 2 suspensions...had put all my eggs in it...and from suspension to return went from 0.07p to over 0.9p...only got 1 think 1 mill away at 0.9p...rest sold in 0.8p..0.7p and 0.4p zone...had over 70 odd mill and banked £500k...
Seen the above games played in 4 years..ie poster appears who sounds novice and concerned that he may lose his investment...then another poster appears who has all the answers

[cuttingman2] 22/2/2016 19:25

Guys on this one just flip a coin!!!

[saturn5] 22/2/2016 18:58

Control1


whats your future position as a PI if it gets delisted..
Some private shares are difficult to sell

[control1] 22/2/2016 18:48

Anyone got any personal emails for the directors...?

[control1] 22/2/2016 18:47

BUST never...

It's worth hundreds of millions if not billions. You must be pretty dim if you don't understand what is occurring here i.e. that they are trying to screw over PI's and take it private to keep all the profit for themselves....

[saturn5] 22/2/2016 18:29

comedy

if it is delisted it becomes private

you might have wait a long time to get any money for your shares.

Also if they bring out a rights issue to get funding you will be deeper involved.

Is this correct?