Bowleven Share Discussion Threads

[jordaggy] 19/9/2018 13:20

Interesting and pragmatic reasoning applied there RM. I would give that about a 10% chance of coming to fruition.

[rm137] 19/9/2018 12:52

warbaby43. Thanks ; tying into an existing facility, whether Hilli or through Chevron’s Alba and onto Bioko is completely logical...LNG process costs are then covered by a tariff, so OPEX rather than upfront CAPEX. There’s some engineering design needed for the pipeline and route, and a decision on whether a multi-phase line or separation at Etinde. This is doable from the engineering perspective; would need a decent FEED study, but with a willing operator, could deliver FID next year. This also shifts the Reserves risk back to the JV, rather than the FLNG company, so may be better for Etinde.

The challenge is probably commercial and political on several levels. NewAge have a stated FLNG agenda for themselves, so potentially unwilling to give that up and in the process pay tariff rather than receiving tariff to fund their own barge. Politically, Cameroon want the local power scheme, so there will be some negotiating to do. And the gas sales agreements, whatever the point of sale, will take some haggling.

Still, if all parties had an eye on a mutually beneficial prize, rather than holding out exclusively for their own agenda, and if the hype was replaced by some pragmatic engineering, then FID could happen late 2019... which would maybe trigger the share price response that everyone is looking for.

[slipanchor3] 18/9/2018 22:39

This time next year Rodders.

[dianecarberry] 18/9/2018 20:39

NO he killed himself some time ago.

[leoneobull] 18/9/2018 20:02

Is le com still posting?

[warbaby43] 18/9/2018 17:48

And the 52p figure is echoed here in a report from their broker Stockdale:



It also gives an answer to my Perenco/Golar question here:

"Interestingly, another FLNG project came onstream in Cameroon earlier this year. It involves
SNH and Perenco supplying 500 Bcf of gas from the Sanaga Sud and Ebome fields over an
eight-year period for liquefaction aboard Golar’s “Hilli” vessel. This suggests that the volumes
already discovered on Etinde could be sufficient to justify a stand-alone FLNG project.
Furthermore, we note that Sanaga Sud and Ebome are only utilising 50% of the Hilli’s
nameplate capacity, indicating the vessel could represent an alternative offtake route for
Etinde gas. Although this would require the construction of a pipeline at an estimated cost of
approximately US$200 million, utilising existing infrastructure may be simpler from both a
technical and a regulatory perspective."

I had visited the BLVN site to have a re-listen to the Conference Call only to find it, disappointingly, no longer there - or am I looking in the wrong place?

[cyan] 18/9/2018 17:02

August 2017 Edison did a research note and came up with a NAV assuming fertilizer route to monetization and discounting any possible upside from our current drilling campaign; 52p

These lines caught my attention;

"We continue to use the fertiliser plant development as our valuation basis, even though other options (FLNG, gas to power) are currently seen as more likely and simpler to execute. The fertiliser or gas to power solutions would need two plants to be funded, designed and built. The gas to power concept would be simpler, albeit requiring the government to commit to a base load takeoff to underpin the project. Finally, an FLNG solution is perhaps the best one economically and could be the quickest, if an agreement is reached with Equatorial Guinea over taking the gas to existing processing and LNG facilities in its waters. "


Interesting bit; "an FLNG solution is perhaps the best one economically and could be the quickest, if an agreement is reached with Equatorial Guinea over taking the gas to existing processing and LNG facilities in its waters. "

[warbaby43] 18/9/2018 13:19

"but are these contracts placed by the JV, or are these by NewAge setting themselves up as the FLNG provider...which could of course be provided to other JVs elsewhere as volumes are proved up?"

Yup, you surmise correctly:

With regard to the 280mmscfd figure, the implication of the schematic appears to be that 210mmscfd would be FLNG allocated after 70mmscfd being required to fulfill obligations to the government. However, c140mmscfd is patently a considerable distance from that.

At c8.10 in the Conference Call, Our Eli indicates that there is an assumption that analyis and interpretation of IM-6 will produce an uplift in the resource estimate but some way short of the hoped for .7 tcf. FLNG and Plan B he comments on and is interesting on between around 13.10 and 15.30. Does seem clear, though, that nowt is going to happen in the originally envisaged FID timescale with IE-4 drilling completion and subsequent interpretation inevitably going into 2019.

With regard to a gas to power scheme, while it might very will fit Etinde it only accounts for c70mmscfd and while supplying the gas might be one thing but getting paid for it quite another, especially in a country as skint as Cameroon and with a government of cads and bounders like Biya and co. Producing gas to get at the liquids might be justifiable, but staying well away from onshore and government involvement, other than the unavoidably contractual, might make for more peaceful sleep.

Meanwhile, on Golar's Episeyo, which is double the size of the intended New Age barge:


What I would still dearly love to know, though, is the size and flow rate of the Perenco resource which is currently feeding it. Can you shed any light RM137?

[alamaison5] 18/9/2018 09:32

When a fund manager has decided to sell nothing will stop him. Especially if he's in profit.
25p again soon then perhaps a saviour strike?
Which I think will happen.

[rm137] 17/9/2018 21:32

thanks warbaby43, some interesting points on LNG. I'd offer that the economics is both about volumes and well potential due to the need to sustain a decent plateau. Despite the technology innovation, or perhaps because of it, the upfront capital cost of FLNG barge construction is significant. Whatever the source of finance, and also to support any sales agreement, there would normally need to be an independently assured 1P Reserves estimate based on a 10yr plus plateau. 280MMscf/d for 10yrs is 1TCF. For that to be the plateau recovery, you need at least twice that volume in the reservoir.. .hence 2TCF.

As regards the placement of contracts, wouldn't any contracts entered into by Bowleven need to be declared - public company etc? Ready to be corrected here, but are these contracts placed by the JV, or are these by NewAge setting themselves up as the FLNG provider...which could of course be provided to other JVs elsewhere as volumes are proved up?

The advantage of going for a gas to power scheme at Etinde is that the plateau can be set lower, and then either extended or increased as more Reserves come on line. This lends itself to the Reserves distribution at Etinde, which following the IM-6 result is now multiple reservoir units and intervals, each of moderate rate potential and moderate volumes which do not sustain long plateaus.

[kbrook] 17/9/2018 19:41

Whilst I don't pretend to know as much as some others on here , I do know that COC have millions invested here, they haven't done that on a whim, or a slim chance that this will be successful. So I am happy to hold for the end game whatever that may be, hopefully the end game will be with us soon, as I've held this for many a long year.

[warbaby43] 17/9/2018 17:56

When considering FLNG viability two factors that perhaps need to be taken into account.

Firstly,this is a very new technology/process with only a handful of units so far operating so relevant precedents barely exist

Secondly, the very essence of FLNG is that as well as “Floating” it is also by its nature Pro Tem LNG, so the economics of any project are vastly different from those of onshore LNG plants where capex is of an entirely different order to that for an FLNG unit and require a large surrounding resource to provide feed to amortise the investment usually over decades. Other considerations such as political stability and predictability must also be factored in given the size of capex and length of amortisation period for an onshore LNG plant.

An FLNG unit radically differs, however, with its possibility of much lower capex (eg Golar's Episeyo was originally a 1975 constructed LNG carrier) and provides a flexibility of operating location diminishing, if not completely eradicating, factors such as the political situation as well as being economical over a much lower time period thus requiring a much reduced total resource than an onshore plant with its ability to simply up anchors and move to a new location once viability is exhausted.

Reasonable to believe, therefore, that what is critical for Etinde economics is less the TCF size and more the flow factor, but even here the JVP looks currently well short at around 140 mmscfd as opposed to the 280 mmscfd indicated in the schematic on p8 of the 2017 AR and in the April 3rd Presentation. Even if the government were to set aside the 70 mmscfd requirement, it would seem that IE-4 would need to at least match if not exceed optimistic expectations.

However, as regards where any Etinde FLNG might be, perhaps worth recalling that New Age announced earlier this year that contracts had been placed with a consortium led by SBM Offshore of Holland in conjunction with JGC Corporation of Japan and Chinese partners to develop the project. While Lowden may gone the board of New Age along with the other members of the JVP must have consented to those contracts which will, no doubt,carry termination penalties.

Incidentally, for those so interested and of a persevering nature, herewith an October 2016 study of FLNG and its comparative economics (SBM does get a mention on p21.)

[slipanchor3] 16/9/2018 18:38

aalanani

Welcome to the Bowleven BB and thanks for your contribution only a couple of posts but you appear to be very knowledgeable about BLVN and have a lot to offer, please keep them coming.

[gunsofmarscapone] 16/9/2018 16:23

aalanani

The operator can declare a find commercial but whether FID is reached or not is a colossally complex, expensive and risky process. I’m happy enough to capitulate here, accept 10-12% loss and refocus on my original and very succesful recovery share strategy along with a very few small O and G companies.

Even if, years down the road, another FLNG tanker comes onstream at Etinde it is not, a priori, evidence of a decision making error.

Just a micro holding here now. Fwiw Dianne is very annoying but we both called BPC bang on the money and actually, for me, quite usefully profitable. MATD same. Tbh investing and trading in AIM tiddlers has virtually nothing to do with eventual profitability or, ha ha , what commodity it is! Could be a malteser or quantonium mine to the west of the lower Zambesi, the only thing that matters is A/ too many people LOVE the share to the point of hands-free orgasm or B/ everyone HATES a share and are frightened of either investing or letting on that they are buying. There lies the profit gap, unless a V food directional trader (I’m definitely not).

Really most of AIM is absolutely crackers, a few honest speculative buy and hold (with trading of course) but most awful.

Atb GoM

[cyan] 16/9/2018 15:41

welshki.

Agreed. You do not get circa a quarter of Billion dollars farmin's into fields that do not already have a reasoned eccomomic case.

[rm137] 16/9/2018 14:33

tombag, Steve Lowden is no longer at NewAge, and given the circumstances of his departure, it would not be wise to take anything he has said about FID on Etinde at face value. Anything he did say was prior to the result on IM-6, which failed to prove up the volumes that NewAge had asserted as present at Etinde.

Again declaring my credentials, 30yrs of oil and gas development experience, I'd offer you the following

- if there had been enough proven volume for an FLNG development at Etinde, then the projects would have been sanctioned without the additional appraisal wells being drilled this year. I suspect that Lowden's statement included unproven volumes, targeted by the appraisal.

- An economic FLNG project would have required >2TCF. The appraisal this year was targeted at proving this up. Unfortunately, IM-6 came in wet; even with success at IE-4, we're looking at c.1TCF.

- Project sanction, FID, of multi-million dollar projects doesn't happen within weeks of appraisal well completion. It happens after the completion of FEED - Front-End Engineering Design - which is based on the proven volumes, and requires a clearly defined development concept from sand-face to export. This project will not see FID in 2018.

The value to Bowleven of the Etinde asset is not lost, but it is not yet defined. Monetising this asset requires sensible and pragmatic engineering rather than speculation and hype.

[aalanani1] 16/9/2018 09:47

Hello everyone! Banter and attacks aside, I felt it would be appropriate for me to chime in and remind everyone of the fundamentals that drive BLVN's valuation. I am seeing figures and numbers thrown around, but without any basis to back them up.

There is a general agreement amongst analysts that the the existing (unrisked) resource base is worth c. $170-190mn. Let's take the lower end of that range and consider it in the context of the development options available (i.e. standalone FLNG, offtake to Hilli, Bioko, etc). In my view, I am comfortable placing a 75% chance of the project proceeding with what we already have in the ground (you can adjust that probability as you like, point is it's not zero probability). That then gets me a risked value of the existing resource of $127.5mn. I then take the $25mn cash at FID and risk it by same probability, netting me $18.75mn. Finally, we have another $80mn of cash on the balance sheet, resulting in a total NAV of $225-230 vs a market cap of $140mn. By my math, that's an upside of 60-65% from current stock price.

Although IM-6 did not establish as much additional resource as hoped, the drilling program represents a critical step towards the development of Etinde. I am confident that we'll have FID eventually, not a question of if but when in my view.

[welshki] 16/9/2018 09:13

Diane

Etinde already has commercial hydrocarbons, these are just wells to firm up the numbers and hopefully add more. There is no way Etinde isn’t going to be a producer. Will Blvn be sold before that, yes IMO, and in excess of 45p.......I am happy to wager on that

[tombag] 16/9/2018 09:07

It seems from what Mr. Lowden is reported to have said, ETINDE already has enough gas for FID without the additional wells.

ttp://www.lngworldshipping.com/news/view,newage-taps-opportunity-in-african-flng_50093.htm


NewAge LNG is working with Chinese partners to design and lease purpose-built FLNG vessels that will unlock its parent company’s offshore African gas reserves. NewAge (African Global Energy) founder and chairman Steve Lowden tells Karen Thomas why scaling down is the new scaling up............


.........NewAge LNG hopes to reach FID on up to two projects in 2018.

The first is its proposed 1 mta project in Congo-Brazzaville, tapping gas associated with the Eni-operated upstream oil project involving NewAge and SNPC.

NewAge subsidiary Congo-Brazzaville LNG (CBLNG) has secured government approval for the vessel and the offshore location and hopes to complete the fiscal arrangements shortly. If all goes to plan, Mr Lowden says, “we will be ready to go to FID before the end of 2018”, producing the first cargoes in 2022 or 2023.

The second is in Cameroon, where NewAge is operator for the Etinde joint venture, which has rich gas and a development concession from the government that includes FLNG. This, too, may produce 1 mta of LNG. NewAge has completed the tender process for the vessel alongside the CBLNG tender process.

“There is clear motivation for the stakeholders to want to take FID on this project before the end of 2018 – although the upstream joint venture plans to drill more wells to prove additional gas, which may be sold to other domestic and export markets or used to expand the FLNG project,” Mr Lowden says.

NewAge has yet to sign its first offtake agreement. And it will not cut steel until at least one project reaches FID. However, Mr Lowden hopes to synchronise the first two projects to optimise the work in the shipyard and with the topsides.

[rm137] 15/9/2018 19:28

Let’s break down the NewAge website account of Etinde - I’ll declare my credentials, developing oil and gas fields is what I do for a living for the past 30yrs.
- Exploration success without development suggests the discovery to date is not economic. In this instance, the continuing appraisal programme was about proving up sufficient volume for an FLNG scheme - see my last post, needs to be 2TCF plus.
- The main reservoir target is the Intra Isongo discovered in IM-5. New Age refer to this “extending across the block” and the “key objective of the future work plan”. This was written before IM-6, which came in wet in the Intra Isongo.
- so the appraisal has failed to prove up sufficient volume for an FLNG development. The volumes targeted in IE-4 are irrelevant to that conclusion.
- So, to achieve monetisation, the development focus needs to shift away from FLNG, which at a lot less than 2TCF doesn’t work, to what can be achieved, a gas to power scheme with liquid offtake, but with less return...or even potential uneconomic if the development well costs and numbers can’t be reduced.
- The IE-4 result is only relevant to the extent that it provides another offtake point to support that development solution.
- Therefore, the future of Bowleven share price depends on whether NewAge can shift to a power scheme development of Etinde. There is no other sensible monetisation route.

[wiseowl65] 15/9/2018 19:28

Did dianecarberry mention Hart? Fraudsters stick together. Ha!