Emerald Energy Share Discussion Threads

[pendragon2] 05/1/2010 05:48

bob - interesting - I agree the damage caused in 2000 must have been profound. The fire simply raged for weeks. One reason why I wanted to see G2, but also somewhat puzzled that G2 is less prolific than expected. I guess the whole history is beyond analysis at this stage, but after several years of speculation it is still a tantalising puzzle.

re: gpx - I feel the combination of conservative Chinese and the Syrian govt's slow approach to exploiting the fields rather dampens GPX's prospects in Block22. I hope for them I'm wrong. (I dont hold GPX)

re: Kurdistan - I don't hold any of the Kurd oilers, simple because 'Kurdistan' is merely a province of Iraq with some self governing provisions and there is a real danger that the central govt in Baghdad will tear up the contracts, or worse intervene militarily at some point and cripple the industry physically.

[bobobob5] 03/1/2010 12:48

Pen: Emerald's previous management said that the water came from acquifers higher up, behind damaged casing, and I always thought this was so..it was claimed that a cement squeeze had been only partially successful. All the problems experienced at #1A - gas production, asphaltene precipitation, sand in the pump, water production, reduced oil compared to initial flow rates, frequent workovers - seem (to me) to be not entirely inconsistent with early over-production, releasing too much oil too quickly...but of course, the May 2000 blow-out must have caused a huge pressure drop...but why had the output level already dropped to the point at which an ESP was needed? This oilfield remains an enigma... bob

[pendragon2] 03/1/2010 08:45

Bob - surprised to see you suggest the water was associated with the reservoir and over production at G1A. Many times you have asserted here that the water came from 'somewhere else' unassociated with the reservoir and entered the well via damaged casing higher in the well. What made you change your mind?

[bobobob5] 03/1/2010 00:37

RabidDog has just found this:

Passing reference to GPX by Midas

"Takeover speculation has also surrounded Gulfsands Petroleum tipped in March at 141p. So far, the oil explorer has remained independent but the shares have still risen 58% to 224p and last week, the company gave an upbeat assessment of drilling at its Syrian wells. Shareholders may feel like selling some of this stock as a hedge against the future but it is worth holding on to at least half. A bid may still emerge and in the meantime, the group is doing very nicely on its own."

[bobobob5] 02/1/2010 23:58

ken: oil reseves in Kurdistan (the northern part of Iraq) are potentially huge, and already there are several discoveries. This is why MK and AB have gone into SEY, when there were any number of E&Ps or unlisted assets they could have gone for. This must surely be the best that they could find...and not only were Emerald on the lookout for opportunties all the time, but MK's people were doing the same. The non-Kurdish part of Iraq is development, not exploration, territory...there are huge undeveloped fields and that's what their government want pursued.

It is widely accepted that E&Ps make the real upside in the exploration phase...development is simply too expensive and slow. It's best left to the majors and the integrateds. This is why Emerald was sold. It follows that the place to be for share price uplift is Kurdistan, *not* Iraq.

Ombrina Mare is a walk in the park, in terms of capex, compared to what faced Emerald. How do we know what the Capella wells would produce *after the initial period of production*? We have no idea. Production can tail-off dramatically...we don't know if a well that initially produces 200 bopd might fall away to as low as 50 bopd. It cannot be ruled out. To produce say 50,000 bopd from the field would require 1000 production wells at 50 bopd per well. some might think that's absurd...but take a look at the # of wells at Bankers Petroleum's Patos Marinza heavy oilfield in Albania. The pipeline and surface facilities alone at Capella would probably cost something like a quarter of a billion dollars...how many new shares would have to be issued to raise that much? If the share price had fallen to £3 without the Sinochem deal - which is what Emerald thought would have happened - they'd probably have to discount new ones to something like £2 a pop. So that would be a 100% dilution, and the share price on its knees...and no new shoes, house and car for Mrs cfc! I said over and over again on here "they will not allow Emerald to go the same way as First Calgary" and I was spot-on.

I continue to ponder Gigante. My current view is that it is far smaller than was believed by the earlier management and Schlumberger, but because of its depth it was highly pressurised. The desire for income imo may have led to over-production right from the start: this could explain why they had to install a pump so early on in the field life (in 2000, linked to the blow-out) because the reservoir pressure could have dropped significantly in the producing zone. Asphaltene precipitation (referred to c. 2002) is also a key sign of pressure drop and gas production within the reservoir. Another point concerns sand production: this can be associated with an ageing producing zone, as the sandstone collapses under redued pressure and the grains are swept into the pump. There have been endless problems with pumps at #1A, and also a reference to sand somewhere...I don't think we picked-up on these signs at the time. I now reckon that AB knew from the outset that G#1A was showing early signs of a smaller reservoir than had been claimed in 1999/2000/2001. Water production at #1A also fits the model of over-production, though it has neber been made clear where it came from. Nor, indeed, what the various "workovers " were for. I no longer think that the evidence points to Gigante being a big field; AB has to be fair to him argued this quite strongly for years. I think it's very hard for some of us to accept that the original estimates were perhaps so far out...it takes a sort of 'mental leap' to do do that. But look at Tigris: the Ryder Scott P2 figures, which were published in the Reserves table, were utterly wrong, it was a dry hole. Ouch. And then look at the Miller&Lents pre-drill estimates for B26...they now considered to be miles out...and also look at what was 'leaked' about the supposedly "mind blowing" volumes of oil at Souedieh North - oil which was then deemed immovable, with a big "hit" to the share price as a result. Double ouch. Quite frankly, I do sometimes wonder whether some of these supposedly expert reports are worth very much at all!

AB was NOT ALLOWED BY THE TAKEOVER PANEL OF THE LONDON STOCK EXCHANGE to buy any EEN until it was taken out by Sinochem, which automatically triggered his options. That is a FACT. It is because he was in the Concert Party. If he had been allowed by the LSE to exercise his options at 50p, he would have paid CGT on the £7 gain, at 18%. As it was...he has been taxed on the £7 as INCOME TAX. Work out how much that has cost him...a small fortune!

To quote the words of Young Mr Grace: "You've all done very well". We all wanted more...but I think with the benefit of hindsight that we have done well to get out of it as well as we have. And to quote Mr Humfries: "I'm free!" Free of the Endless Emerald Nightmare, that is.

btw being free of 'Gay' Gordon will take a wee bit longer. bob

PS it is of course *possible* that Gigante is a huge field, which extends into the recently-acquired Block. And it is also possible that the Capella wells would be able to bootstrap a long-timescale field development. But...if you were sitting here with your £7.50 in your hand...would you BUY Emeralds for £7.50, on the chance that this would prove to be so? I stopped buying when the price got to £3, and I was looking for £12 to £18 long-term. So even with that much upside, my reply to my own question would be: no I would not, not even when Hell freezes over. For Sinochem to buy it, however...well that's a very different matter. Their resources, goals, timescales, and so on, bear no resemblance whatever to mine.

but imho DYOR etc as always

[captainfatcat] 01/1/2010 21:25

Just like old times, Happy New Year all

[7kiwi] 01/1/2010 18:55

Yes, HNY all.

[efagie] 01/1/2010 18:29

you're right 264, scuse me manners. happy new year to all. ken

[264091] 01/1/2010 18:03

Happy New Year all. Another one the same will do me.

[pendragon2] 01/1/2010 12:02

spangle - payments systems are a moveable feast, the previous technology was based on a version of sms, that is gradually being superceded. It wouldn't suprise me to see BGO tied up with/taken over by, whatever, either a bank for their technical savvy and potential forex business, or a telco who might find buying the company cheaper than a trading partnership. The shares floated at something under 200 and are now just under 60, so theres some catching up to do. The recent fundraising of 3mio was to buffer clients' cash flow, (accelerating payments by about 1 month between people paying and telcos forwarding cash) so they are obviously anticipating growth.

It is this service orientated side of the business that interests me more than the tech, as that will presumably progress as the sector shifts from one fashion to the next. Although they have concentrated on mobile, there might also be the notion that they would move backwards towards serving traditional online services via the web as a kind of comprehensive payments system.

The trick is that people don't need special accounts,(as with paypal) or have to reveal passwords etc online, just click and the bill goes to the telco, where the phone bill is paid. The metrics to confirm who has paid what to whom from which source is reliable.

The BGO website has a page where you can watch people paying, cash flow in action. I wish I had something like that....

[spangle93] 01/1/2010 09:46

[I was going to write "sorry for O/T", but there isn't really an "on-thread" now!]

Pendragon - thanks for your considered and insightful response. I've been a passive holder of RGO for a number of years. They spun off a product called 2safeguard into a company called Broca, which was listed. RGO shareholders got shares in Broca, but after the heady early days, the price plummetted and RGO bought Broca. So I know that they do include mobile payment security in their suite of products. However, as you say, this is the core business of BGO.

Thanks for the explanation, and Prost Neujahr

[dfgo] 31/12/2009 19:31

Happy New Year to all EENer,s and who every read this post may you all have
a very fruitful 2010.

[bobobob5] 31/12/2009 16:18

Cyfalafwr: by this time next year, there could be 2 wells on Sangaw in the SEY Sangaw North block, plus another well on Sangaw on its (suspected) eastward extension in the KNOC Sangaw South Block. And also other wells nearby, including in the other adjacent KNOC block. Time will tell!

Best wishes for 2010 to all Old Emeraldians!

[pendragon2] 31/12/2009 09:12

spangle: rgo seem to be a company developing platforms for mobile, ie similar to devising websites. I don't have an opinion about the quality of their work or business model, but I guess their income is based on fees from clients for work done. They seem to have a strong client base.

bgo have developed a payments system which enables people to click on a button when they are using a mobile device and make a payment via their phone bill, credit card or paypal. This may not seem remarkable to UK users, where the industry has developed a common platform, but such services do not exist in the USA and many other countries, so BGO is doing something with significant potential and are now picking up clients as the whole mobile phenomenon takes off. Their income is a percentage of the turnover clients accrue via mobile usage. BGO came onto the stock market before their own market began to grow, so the share price was depressed and is NOW (edit) recovering as their business plan begins to show fruit. For services with paying customers in many countries this is an attractive alternative to doing deals with separate telcos in each country and their system also functions when people are using wireless LAN connections and the phone link is inactive.

The two companies are therefore very different.

btw: the other point about BGO is that there are not a lot of shares around, current price is a little under 3x their face value and the market cap of the business is also modest, so the P/E for 2010 should look very healthy.

[cyfalafwr] 31/12/2009 08:11

Bob
I decided to reinvest 8% of my £EENies in SEY ,slightly more than 1/15(6.7%)

But I do not think it will be a 10x bagger ,looking at the current market cap for a start.3x is my prediction in 12 months if we are lucky with the drill.

GKP had a much lower market cap at the start of Kurdistan drilling,

Regards

[spangle93] 31/12/2009 08:09

Pendragon - is there much difference in the product suite between RGO and BGO

[bobobob5] 30/12/2009 22:39

utrecht: Emerald had its own Block 26 geological team...what's more, I happen to know the people. I think it would be unwise to view Emerald as having been some sort of "sleeping partner" in Syria. There is also the issue of how Gulfsands happened to raise their stake to 50% of Block 26, and get operatorship from Devon Energy, in the first place; this seems to have involved Soyuzneftegas in some way.

Pen: I would have preferred about double the £7.50...in fact, £12 to £18 was what I was looking for by maybe 2010-11. But...I was working on the assumption that Gigante could be profitably developed (which may not be the case), that Capella devlopment could be bootstrapped (which does not now appear to be the case), that 40,000 bopd fromm KHE was within reasonable distance (where is AG these days?), and that the original Miller&Lents pre-drill estimates for B26 were broadly indicative of what might be there (I now understand they are not).

ken: would Kurdistan have been a better bet than the south of Iraq? My guess is that Capella will be a cashflow drain for a number of years...it might be a kind of all-or-nothing project, which requires some sort of 'big bang' plan, involving a pipeline and significant capex at the wellhead to render the oil mobile. This is a variant on MOG's problem with Ombrina Mare; they either do it big, or they don't do it at all. Suppose your figure were correct, which I personally think it may very well be, and that cash only started flowing from oil sales after $500m had been spent. Such a thing would be total madness for a company such as Emerald; it would potentially soak up all their post-tax income for a decade. Dilution would imo be unavoidable in such circumstances. Unless B26 proved a bonanza. But is it? G#2 has, so I believe, drained a lot of cash out of Emerald and my guess is that there wasn't much more than $30m left in the bank when Sinochem took it over.
I don't know how much money Michael Kroupeev has in the bank (nor should I) but I don't buy the argument that some others have posted on the blogs, that Emerald had to be sold in order to pay for the investment in Sterling. The numbers don't add up; Waterford had in any case had the money from the sale of First Calgary, and if they were short, they could have trimmed their Emerald holding a bit. The dates don't seem, in any case, to reconcile very well. Incidentally, there is a rumour on the web that 'the Russians' had more Emeralds than the Waterford and Soyuzneftegas holdings figures suggested; if that were in fact so, the share price might otherwise have been lower than it was; I don't know what truth there is in it, I found the reference to it by chance, earlier in the week. I'm personally looking to SEY to kind of "make up the gap" between the £7.50 figure for Emerald and the rather higher expectation that I'd had for it. But if one does the sums, and reckons that we're "short" of say £4.50 on EEN (i.e. the differnce between the £7.50 and £12) then *if* SEY is a possible 10x bagger from the price when AB said he was joining them, then it would require 50p of "Emerald money" to achieve that £12 (i.e. £7.50 less 50p to be invested in Sterling, that leaves £7, then a hypothetical 10x bagger on the 50p = £5, add the £7 and the £5 and we get the £12)
So 50p on £7.50 = one-fifteenth of what one has received in the cheque. I'm happy to punt 1/15 of my Emerald money on Sterling, and I have done so...others will have to do what they think best...fingers x'd as always!

but imho DYOR etc as always

[efagie] 30/12/2009 12:49

utrecht; if it was for syria they would have gone for gpx, would have been cheaper. yes! they may have attempted to, and got the cold shoulder. but they did'nt have to do a friendly takeover..
if they had gone for a hostile takeover, they would, as like as not, had to pay over the odds. though they may have been able to get the old gpx bosses shares easier. but still been cheaper than een.
as their only interested in oil, on the cheap if possible, and likely ease to production. ( by that i mean, gpx being the operator, have the lead.) and as een, seem to have found, maybe not the best to push things onwards quickly.
one advantage with gpx, is the foot in the door to iraq, in the long term!.

imo. it was for the ombu/capella. with canacols estimates of c6,000bopd by 2015 ( i think) meaning some 60,000bopd gross..
and with sinochem holding the financial purse strings, puts them in a better position to get higher production quicker with capella, than with what gpx offers in syria. though the money point re-canacol may hold things up, and maybe make them a future takeover target.
i think it was the een's concert party's fear of the costs for capella, that bought about the selloff. ie, they lost their bottle, and went for the cash...
sorry, that might be harsh on ab and the bod. the overall costs will be high, some $500m+ but spread over a few years and with what others will pay for, i think eens costs would not be to bad for een's own total payments.
but if the concert party are doing things for the money first and foremost, so, may from their point of view, been the way forwards. and as bob has said, be likely what they will do at sterling, should they find anything commercial at sangsaw. more so when the development costs are looked at... ken

[pendragon2] 30/12/2009 11:35

utrecht - that depends on your view of gpx.

[utrecht_00] 30/12/2009 11:29

Pend- you dont understand what Sinochem has bought.... maybe assets in Syria.... as for broken up the team- GPX is the operator in Syria so no great loss.

[pendragon2] 30/12/2009 11:17

I hope every enjoyed their Christmas' and wish you all a happy and prosperous New Year.

Thanks for the update Bob. Very interesting to read that AB thought G2 might produce at 1k per day. Not unsurprising, but nevertheless lower than I would have hoped. Rather like Ken, I had hoped that EEN would have continued to accrue through to retirement - for all our quibbles, AB's team made more good decisions than poor ones and I don't see what Sinochem have bought, if they have borken up the team. Pity. Means I will stay away from EEN's former partners should the opportunity to invest arise.

The rumour that Kroupev is interested in COP, confirms my impression that the business is undervalued, but also makes me feel a bit better having put some EENquids (a new currency in my private world of mini-micro-economics) into COP.

At the risk of being repetitive, I still think the rather undertraded Bango (bgo) looks interesting, as their business is just about perfect for the new environment of mass mobile and I suspect they might be about to reap the rewards for their research work over the last few years. They are certainly picking up some major clients in the US. They are trading at about 57p today, but the face value of the shares is 20p, so it is still a rather conservative market cap, imho. dyor and dont blame me if you lose money.

all the best folks, pend

[bobobob5] 28/12/2009 10:59

You can think what you like!

Incidentally, I was told that Emerald were losing money on every barrel of oil produced at Capella. They had the wells in operation because they needed to demonstrate the production potential of the field...but such opeations clearly could not continue indefinitely, because doing so would drain money out of the company. A field such as Capella is a challenge for a company such as Emerald; if you want to know the sorts of capex needed on heavy oil fields, take a look at Bankers Petroleum BNK.

The assumption that production from the Tetuan at G#2 could be 3000 to 5000 bopd depoends upon the assumption that the reservoir is large enough to support such levels. But is it? This is a very high level for a single well. OK, G#1A produced at 3500 bopd for a short time...but the reservoir was, at that time, believed to be huge. Subsequent work has indicated that the original Schlumberger estimates were wrong, and Gigante is much smaller than originally believed. If #1A was (mistakenly) over produced, it could explain the need - at a very early stage - to put it on-pump. And it could explain early gas production, because of reduced reservoir pressure and gas coming out of solution in the reservoir (rather than at surface) as a consequence. And it could also explain the water-cut.

It should be possible, in due course, to find out more about Capella and Gigante from Colombian sources.

imho DYOR etc

[stevea171] 25/12/2009 19:16

Yes, Merry Xmas from me too to everyone.

Capella: the third brightest star in the northern celestial hemisphere. Although it appears to be a single star to the naked eye, it is actually a star system of four stars in two binary pairs. The first pair consists of two bright, large giant stars. Mmmmm .... Maybe now we can see why Ombu block gave birth to a field named Capella.

Gigante2 production could still be 3 to 5k bopd in full production from the Tetuan. If so there may yet be a G3. No benefit to us but I would not expect the personel who recommended the sell out to shed any positive light on either field. (Or their spokesperson on this thread for that matter) ...

[7kiwi] 24/12/2009 14:23

Ken,

Take a look at IAE. You'll find some familiar faces there.