Bowleven Share Discussion Threads

[warbaby43] 20/10/2018 11:57

"I think that’s the issue, there’s only enough gas at Etinde for a 5yr plateau for the FLNG barge as specified... which would be probably payback on the project, or at least close ... so the JV does need to find more gas in the area to justify bringing the barge to Etinde..."

RM137, back to our posts between 17836 and 17844, and I still get the impression from your 10 year repetition that you are viewing FLNG as simply a variant of conventionally long term onshore LNG, rather than the radical departure pro tem, up-anchors and away when flows become uneconomic or politics too adverse LNG, that it actually is.

The CMLNG barge is being constructed not just for five or more years at Etinde and Cameroon but to process gas and liquids and produce LNG at multiple fields over, I would guess, a minimum twenty or twenty five year lifespan.

So far as the build economics are concerned, worth noting that the economics of scale are also involved with Etinde's CMLNG barge being sister to New Age's CBLNG vessel for its Congo-Brazzaville field and constructed at CSSC, China's largest shipyard.

In this debate, I would urge a re-reading of the extended Lowden interview linked to by oilretire at 17057 (and not just his edit) which does answer some of the FLNG questions arising now. In that regard too, while Lowden might have gone, there was no indication in the Conference Call that the FLNG project had expired with him. Indeed at c13.30 Chahin says "FLNG always best for this part of the discovery" at c13.45 "Funding by third party based on gas supplies only" and at 14.10 "extent to which 1-1.5tcf facilitates that (funding) mindful of domestic obligations, a question for project financier."

My view is that the Etinde FLNG project is vulnerable more because of the flow rates rather than the overall volume, though here in his interview Lowden does throw in: "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”

The other issue here is that, as always, the whole Etinde project tends to get looked at entirely through the prism of the gas, despite the bigger prize being the liquids and as is again made clear by Lowden these barges are being purpose built to also process the liquids.

The double whammy negatives of IM-6's 410s and 510s might currently have swung the odds away from FLNG, but it's a long way from being with the parrot yet.

[slipanchor3] 20/10/2018 11:05

gark

The IM6 update is a farce they have declared the update as an extra 3.1 square kilometres rather than the extra volume of oil and gas.
So the size of Etinde has increased by 60% but you would have to be a Well Design Engineer to work out the volume of oil and gas.
What are they trying to hide and why.
Maybe RM137 can help us out on this one.

[gark] 20/10/2018 09:04

Could anyone clarify please? Before the drills started, we had 0.9-1.1 tcf in place. The IM6 well is expected to produce a further 0.15-0.25 tcf with the field doubling in size. Does that mean we will see a further uptick on the back of this given the previous resources were based on a smaller field or it will be capped at the previously mentioned increase? IE4 seems to be separate to this and given the gas and oil flow equivalent led to the aforementioned resource on IM5, are we looking at a further 0.7-0.9 tcf in IE4 and associated oil? In addition, can anyone shed any light on the leftover carry amount? If we get to FID after Q1 next year, we could be looking at a payment of c.$ 40-50mn if our remaining carry is paid to us.

[cyan] 19/10/2018 16:23

Its beginning to look like there maybe more legs in seeking a different route to LNG using other available, and already in place LNG facilities.

Obviously MUCH quicker route to field exploitation and likely a lot cheaper .

[warbaby43] 19/10/2018 15:11

FLNG is very much in its infancy so very few precedents, but my memory is trying to tell me that one of the few has gone in on a five year basis but can't quite recall which one - anyone help?

[rm137] 19/10/2018 14:39

Interesting.... one techy point though, past test rates shouldn’t be added up to an assumed sustainable field potential. First of all, those targets will need to be re-drilled as development wells, and secondly the 180MMscf/d needs to be maintained as a plateau (10yrs?) That’s 650Bcf. Assuming 1TCF in place, that’s 65% recovery on plateau... which isn’t physically possible with reservoir pressure decline... to get 10yrs at 180MMscf/d plateau, you’d need twice that volume...hence the 2TCF reference in the past.

I think that’s the issue, there’s only enough gas at Etinde for a 5yr plateau for the FLNG barge as specified... which would be probably payback on the project, or at least close ... so the JV does need to find more gas in the area to justify bringing the barge to Etinde...

[warbaby43] 19/10/2018 13:56

1.3mtpa of LNG requires around 180mmscfd* of gas and to date, while including IE-4, Etinde has c 160 mmscfd with the government requiring 70mmscfd to be set aside for onshore purposes (but will they waive that to get the FLNG under way?)

There is also at least another three years to go before the FLNG vessel arrives and it is highly likely that more wells will have been drilled by then - though almost certainly without BLVN still being in existence. (There ten other leads still to be drilled so even after IM6&7 and IE-4, there are still seven remaining.) Also worth recalling that Golar's Episeyo kicked off at half chat.

There are some prime drivers behind the FLNG project with the Cameroon government certainly being one and the Chinese shipyard almost certainly another, bearing in mind that this CMLNG vessel will be a first for China and one in the eye for S Korea.

As Our Eli was so keen to make clear in the Conference Call, the ball is in the court of the FLNG project's financier though it would be most interesting to know of any nexus financier/shipyard.

*

[rm137] 19/10/2018 13:54

Thanks cyan, interesting.... if the contract was binding on a development at Etinde, that would imply that FID at Etinde had been reached.. which isn’t the case, so if they are binding, it must be binding on NewAge to build the FLNG barge. That puts NewAGe in an interesting position....having committed to utilise a barge ready in 4yrs time but potentially not having enough gas at Etinde to meet that commitment long term. It would suggest that NewAge will be touting out that barge to other users... which could mean that somebody with an more robust discovery could get a decent deal...

[slipanchor3] 19/10/2018 13:40

cyan

Unable to bring the link up due to a problem with MCAFEE but what you say makes a lot of sense Entinde is aprox 12 miles from the nearest landfall 20 miles from the plant on Bioko Island and a similar distance from Limbe so the infrastructure is there.

[cyan] 19/10/2018 13:12

Good afternoon RM137.

My understanding is that the gas convention is binding and if contracts have already been signed......


I note that Edison (prior to drill results) offered another 'route' in respect of liquified gas;



Click on the 11th August 2017 Edison report

Extract;

" 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. "

[rm137] 19/10/2018 13:01

cyan, fair point, but I guess I’m seeing it from the perspective of having contributed technically to a few RNS’ in the past... this one is long in prose, has caveats, and is scant in meaningful data.. whoever wrote this one is giving themselves a technical out in either direction...it’;s not half full or half empty...it’s whatever you want it to be... which for me is a amber caution.

Regarding the gas convention, the comments from New Age about analysis to end Q12019, and then agreement by JV partners to do further assessment doesn’t square with starting an FLNG build targeted at Etinde next year. If that build does start, it’ll be because they have alternative options on other fields to go to... The word “expected̶1; is the get out here...before these appraisal results, Etinde was the expected location because NewAge held a high probability of success...

[cyan] 19/10/2018 12:55

So, contracts were signed?



Extract;

"The project company, CMLNG, will utilise a newly-built FLNG production vessel to process gas from the Etinde production sharing licence. As a result of a competitive tendering process undertaken during 2016, a contract has been awarded to a consortium led by SBM Offshore, in conjunction with JGC Corporation and Chinese partners, to develop the FLNG project
In addition to the production vessel, it is anticipated that a substantial onshore administration and logistical support base will be developed in Limbe or Douala that will include administration offices, warehousing, workshops and other support services.
The FLNG project will be developed in conjunction with the upstream Etinde development which will include gas and gas liquid production facilities supplying LNG and other gas customers."

[cyan] 19/10/2018 12:16

Its interesting how different individuals interpret the RNS. For me ; rather than 'cherry picking' the better points; I thought it was emphasing a lot of downbeat points and NOT overplaying the better ones. Glass half full; glass half empty.



Where do we now stand on the 6th June 2018 gas convention?



11th june 2018

extract

"Following the signing of the gas convention which confirms and codifies the State's commitment to the project, CMLNG will now take the project to the next stage, officials said. According to the Executive Vice President of Technical at New Age LNG, construction of an integrated floating liquefied natural gas vessel will begin next year in shipyards in China. The vessels expected to be built in the next four years will be deployed as the central processing facility of the Etinde field. "The FLNG facility will be a new vessel with flexibility, high availability design that is capable of receiving associated gas, then processing, storing and offloading over 30,000 barrels per day of condensate," Dave Loran said. He indicated that the vessel will also be able to produce 1.3 metric tonnes per annum (Mtpa) LNG, 0.15 Mtpa of separated propane and butane, as well as gas for export to a delivery point in Limbe to supply potential domestic gas projects. "

[rm137] 19/10/2018 09:58

Good point slipanchor3, that area nonsense actually bugged me as well. It’s a meaningless measurement without the context of reservoir thickness and net pay, and I strongly suspect is designed to mask the impact of less than prognosed net pay.

Thinking wider, when a company releases partial results like this, cherry picking the data for the better points, brushing over the less favourable data points, then I am inclined to wonder ... the major institutional investors have access to a technical folk that see right through this type of approach, and will not be convinced... more questions and answers. I see the potential here from this price, but I still haven’t decided if the asset is in the right hands...

[slipanchor3] 19/10/2018 09:13

One example of hiding information from the average new PI is, they state the volume area has increased from 5.8 to 8.9 km2 an increase of 60%.

Would it have had the same effect on the share price if they had stated the volume on Entinde has increased (fag packet calc)by180 million barrels equivalent?

[slipanchor3] 18/10/2018 20:55

RM137

I appreciate comments for and against the investment case and the final decision is left up to the individual.
If we go back a number of years the development of Entinde was about to take place with Petrofac providing the finance and development engineering with the costs to be paid back over a number of years from oil sales. Letters of intent were signed then along came LUKOIL & NEW AGE with their FO offer which resulted in BLVN having to pay Petrofac in the region of 5 million. (stand to be corrected)for breaking the contract.
Are we now saying that Petrofac, Lukoil, & New Age collectively all failed to carry out competent due diligence which has resulted in there now being some doubt over Entinde being commercial?

[roberto mancini] 18/10/2018 20:15

It's $55m x 25% = £13.75m. SNH have not backed in as of yet.

"they stated an underspend would be credited to profit, so cash would have to be receivable in that event, though I am not sure how much further work may gobble up?"

Where did you hear/read that, my understanding was they were carried for $40m of drilling costs and anything under that amount would not be receivable as a cash refund?

[secs in the city] 18/10/2018 19:16

"the IM-6 analysis reported implies a contact derived from assuming pressure contact between the gas leg in IM-5 and a water leg in IM-6" - in today's RNS they go on to say that IM-6 established the gas water contact, so would this not mean there is a more than reasonable chance that they are in pressure contact?
Also, interesting to see that the two well campaign cost $55m (but they did not state whether it includes testing, probably not), so there may be a chance some of our $40m carry will be unspent ($55m x our 20% share = just $11m for our share of drilling so far), they stated an underspend would be credited to profit, so cash would have to be receivable in that event, though I am not sure how much further work may gobble up?

[rm137] 18/10/2018 18:54

kbrook, no offence taken, I’m an investor looking for an opportunity and would prefer to invest in a sector I understand. I post hear to both offer my technical thoughts in order to prompt debate, and therefore see any information or analysis from others that might fill in gaps in my understanding, particularly outside my technical expertise.

I’m not here to offer investment advice to others - everyone’s position is different depending on entry and portfolio. But I can offer a technical view to the triggers of share value growth. My view, entering now at this level could be a long term significant gain, assuming NewAge and their backers get after this. I wouldn’t want to be a long term holder though, trying to recover value.... just my view.

[cyan] 18/10/2018 17:54

I agree wiseowl65; the light oil bearing sands are an unexpected bonus of unknown value.
I am not bailing.
The share price is largely supported by cash and COC are well managing it and preserving by prudent investing.

I fail to see why our partners spent around a quarter of a billion dollars to buy into just 'a maybe'. Surely they were confident of ETINDE's commercial value?

My understanding has been that the already established resources supported one off take solution , at least, and that these last two drills might have supported a second.

One things for sure; no-one could accuse BLVN of penning a ramptastic RNS lol

[wiseowl65] 18/10/2018 17:45

Don't know how this will change anything unless he can put things in the ground.
The only ground he is good at putting things into is the racetrack!

[wiseowl65] 18/10/2018 17:41

Interesting - to me it looks like the oil gas bearing sands is an unexpected piece of good news. I'm definitely in it for the long haul! No point bailing out when things are just getting interesting.....

[kbrook] 18/10/2018 17:30

RM137 you obviously have far more knowledge of this sector than me or probably anyone else on this site. Are you or have you ever been a holder? I am just trying to establish why you are posting on here if not a holder. No offence intended but some of us have to make important decisions about whether to bail out or stick with it,sitting on huge losses.

[cyan] 18/10/2018 16:37

Interesting opinion RM137.

Well argued post with thought provoking quotes from the RNS.

I will hang my hopes on this RNS qoute;

"The test results have increased the overall likelihood of a commercial development of the IE field area."