 Cash - On the geological risk - Don't skip doing the research on the analogues that SEA have provided in their presentations all the way through. Provided for that very reason and why they're analogues and displaying the same characteristics to other multi tcf giant field discoveries. I posted on these back in June when it was covered in the earlier presentations.
They have used Kasawari (it's own gas chimney/clouds on seismic), Lang Lebah and Majoram as analogues (Slide 11) . A must to read the actual reports/science/references in the notes labelled 1-4 dealing with gas chimneys/clouds/top seal integrity - we display the same similarities pre drill but one other crucial point is we are out of the CO2 window which would make any gas much more valuable and cheaper to process if correct.
All 3 analogue fields are sour/C02 rich yet in development (1 now producing) 120,000+ boepd each field.
Majoram was hidden by a large gas chimney and there is detailed references to seal integrity but the chimney/leakage was a dilation of fracture induced by the 455m gas column in the reservoir responsible for the leakage. A lot of this is technical stuff so i doubt if the board could just explain it that easily in a 1 hour presentation hence the references there for everyone to go research it. This is a 3 TCF gas field bringing on 800 mmcf/d production.
Likewise again all similar to the gas clouds/chimney at the huge Kasawari field.
Again worth reading about Lang Lebah and the source material provided ' Unravelling an abandoned giant - success story of Lang Lebah' - all there in slide 11 for further reading.
I think the chances here are very fair and in the above context i'm not concerned about any instances of leakage/chimneys - all imo good indicators of gas being there and the fact that the seabed geochem samples show very low to no CO2 and high methane is a big positive.
Take also in context where Rystad Energy have predicted the breakeven for Kasawari may be as high as $5.50 mcf or an extra $3 billion just to deal with the near 40% C02 concentration makes Kertang and the rest of 2A one hell of a very important play and a piddle in the ocean for a well being drilled out of the majors and others budgets for the gas hungry SE Asia market. I think i was very conservative in my original $3/boe valuation on a success case when considering the huge costs in some other fields.
But for now and on a seperate value path i see DEWA and it's additional upside to come along with a future addition of another of these assets making us a £100m+ company on it's own. Imo one of the best calculated risk stock to hold from this extremely low valuation by comparrison ie £12m m/cap at 21p.
Yesterday and todays presentation saw the board place an expectation of £800m+ net for Kertang on that success basis - so no doubt we're chasing around £1b value creation target. |
Investor Meet ..As I said before you couldnt wish for better guys to safeguard your investment here . |
It is worth listening to the June presentation again as the CO2 issue was was discussed more in that presentation. 2A is outside the CO2 areas |
I thought the same and a very good idea to remind everyone. The low CO2 in shallow gas samples is another major benefit for 2A in comparison to neighbouring blocks to the SW in the CO2 belt (i.e., no need for CCS, lower production costs) |
Thanks SIRC and just a reminder as it wasn't touched on today ..it seems 2A doesnt have a CO2 problem which some gas structures have in that area. |
Cash - from my perspective the critical risk (as mentioned by James today and ERC) is seal integrity. From my perspective, for what it's worth, as an experienced industry geologist there is a misnomer that a seal can be "bust" so gas clouds are bad news. Seals don't work like that, they're more like pumps that will open once pressure builds, and close once the pressure is released. The gas cloud likely tells us there is a very prolific source rock recharging the structure - James said similar today, in between the lines. These guys are good and I genuinely think 2A has a much higher CoS than 22%, particularly given the nearby megastructures with gas clouds above them |
I'm very much a laymen at this, but in the summer time they were talking about the seal being broken, and that all the gas could be gone. I think that's what they meant, they won't know until drilled.
However the DEWA cluster now underpins this company. They have a known resource. |
Zengas et all,I've been trying to knock holes into the thesis behind 2A. But yet again, given the presentation today, the case is very robust.What are the key unanswered geological risks as you see them?Cash |
I have to say I had a lot of time for Helge.
A straight up and down guy ..maybe a bit dull but you always knew he was competent and honest . |
Yeah I agree on that. They were absolutely loving it. I reckon this pivot and what's coming has them very excited .. as we are! |
Quite apart from anything else while watching the presentation today I was just thinking that those 3 guys are just consummate professionals who aren't just good at their jobs ..they really love what they're doing .
They have a perfect springboard now to do something really special for themselves and their shareholders.
The only risks now are geopolitical .
Equally if you turn that on its head you would want to have to have a small position here at least to hedge against that.
I really was most impressed today .
GLA ..roll on that 2A farmout ! |
I dabbled and lost with this share in the 90p - 130p range back in late 2020. Everybody was piling in with their RockRose Energy winnings at the time, pushing up the share price, in anticipation of Helge Hamster pulling a rabbit out of the hat. (Turned out his hat was just full of hot air...)
After watching the presentation today I am now back - back with a vengeance baby
Some opportunity here, with the shuffling of the pack, the old IIs leaving, and before new ones arrive.
JM may have done the deal of his life by getting Block 2A off of BHP. Getting the DEWA cluster for free aint bad either. Hell - he's even got Nick Ingracious smiling and sounding like a man with a purpose!
One thing is very clear now - James Menzies is everything that Helge Hamster isnt.
And Seascape Energy is everything that Longboat Energy wasnt. |
They were obviously limited in what they could say about the Block 2A Farm-Out. But they show it on the timeline as being announced before year end. So sometime in the next 9 weeks.
That will be a big catalyst! |
Hope so Junga - they've been one hell of a drag on the share price.Was also great to hear from the horse's mouth today that share dilution is to be avoided, and that they are confident of arranging other funding sources to bring the DEWA resources to market. |
This isn't even back to here it as in Sept. and that was with no deal yet signed. |
Probably our seller since July is done? |
Company assets now better than ever before. Share price yet to get the memo... |
Time for some rerating |
added today |
Looks like the overhang has cleared |
Only 57.1m shares in issue. So at current 16p, valuation is just £9.1m.
Crazily cheap now they've been awarded the DEWA Production Sharing Contract. |
This transaction seems to be as close to the very opposite of the truism, "there's no such thing as a free lunch" as you can imagine! |
My notes
DEWA -
Hugely transformational at zero cost for those resources.
500 Bcf in place (3-400 bcf recoverable).
'A lot of upside beyond those figures'.
Also a lot of low risk fault blocks to be tested yet.
'There is hard value in those - now underpinning the company.'
'Lots of options under consideration -'negate any need for equity'
Build a train of these opportunities (in what's being looked at post DEWA).
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Kertang on Block 2A.
Mentioned the 3 other analogue type fields that had gas chimneys etc similar to Kertang.
Gas coloumns are huge in those fields - the 450m in one being higher than the Pertronas towers. The other 2 fields with 800m and 1km columns.
Kertang modelled at around 600m - potential upside could be 3.7 billion boe (why i said this was a 'Cove' like play for value months ago - see the £14.65 estimate for 1.7 billion boe).
Expect a transaction announcement this quarter.
Worth mentioning in previous presentations (not covered in todays) - other major prospects in 2A beyond Kertang if a success.
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My take as ever - DEWA+ expected resource upside are company making as Malcy himself opinioned on yesterday and with further opportunities of similar likely - so this is only the beginning of material resources/reserves growth coming in at zero cost wheras others have to use the drill bit first to find those BOEs. Hoping for a 10 bagger from these levels on that basis (which is barely £90m m/cap at current shares in issue implying a future 30 mmboe). This is the underpinning of the company on those.
Kertang - entirely blue sky opportunity. |
https://youtu.be/tb56KHNYrzU?si=am9wwh4LncH-MM5QOn Youtube |
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