T.Barr 6 shareholders 2 executives from Patersons.
I was very impressed with Terry Barr and his delivery of information which was honest, up-front and forward looking. He was humble in accepting errors in operations and decision making and provided logical expert explanations in his analysis of them and detailing his instituted corrective methods to minimize future problems.
Points of Interest :
• AGM 15.11 2013
• New reserves as from 30 June to be published 13 September as per US reporting requirements
• Any major increase in Reserves in the near future will, and have come from North Stock Yard and the Rainbow Projects
• Buyer for Roosevelt has $25 million in allocated account and checks out o Legitimate buyer but requested another 2 week extension. Terry said no. o Buyer guaranteed that money will be in Samson’s account first light Tuesday am ( post public holiday ). o If not, Samson will proceed to termination. o There will be an announcement to this effect Wed am ( Aus Time ) o If termination occurs – 3 other parties interested in buying Roosevelt for the same price. Terry confident it will sell for same price by the end of September
• Quite a few interested parties interested in the Farm out of Hawk Springs
• Frontier 24 Drilling contract “was weighing Samson down” and “it was a blessing to get out of that” -re the deal with Slawson
• Likely 10 million Bank Loan which will be good for 4 wells spent over the next 12 months. Bank will not have any equity in SSN. Just a debt Facility which will require hedging.
• Most if not all monies in next 12 months to be spent on NSY and Rainbow
• Warren Buffett has laid down an extensive railway and infrastructure servicing the Bakken which has resulted in a great turn-around in the logistics of O & G companies in the region such that Samson and other companies can ship more than they can produce - hence lowering the cost of shipping and the differential between Bakken Crude and WTI
• Cost of shipping oil may have once been $ 20 per barrel or more – now $2-5 per barrel.
• Bakken Crude and WTI trading, now virtually aligned
• Middle East situation likely to prolong inflated oil prices for some time
• SSN Reserves forecasts are predicted at lower end of economic metrics > ie on $80 per barrel oil . So in reality likely to have vastly increased income than predicted from sales in near future.
NSY
• S & A poor well design but eventually overcome.
• Terry has asked for a credit note for $500,000 from initial contractor. Cost $ 1.2 million to fix S & A with second company. S & A now set to go and 100% OK now.
• “We screwed up Billabong” – human error in pressure testing well. Cement truck had blockage for 45 mins. Worker controlling testing ignored 2 failed tests without halting. Did 3rd test which passed ( which was unsound ) – this process over 2 hours and by then cement sealed in.
• Terry confident that core of cement can be drilled out of the well – consulted experts and have decided who will perform task. ( scheduled Mid September )
• No avenue of compensation through contractors - the contractors insurance will only cover $150,000.
• “Have to accept that these mishaps occur in O and G industry’” “Particularly with smaller companies like SSN which sometimes have to accept less known and skilled contractors compared to the Big Boys in Town”
• Next door neighbour of infill drilling in NSY shared data with SSN recently and he/she has produced 40,000 Barrels of Oil in 40 days
• “We can expect at least this from our infills & probably more”
• SSN Reserves based on IP rate 600 barrels oil/day and $ 80 per barrel of oil
• Actual rates may be : 1000BOPD and > $110 per barrel of oil
Rainbow Project
• Not as good as NSY but pretty bloody good • 2 initial wells to “make sure it works” before embarking on 16 wells • Not a lot of risk • Will commence in about 2 months • Have to find a rig “Wont be difficult”. Meanwhile permits underway
South Prairie
• “Bang for Buck” • Shallow wells • Knew Matson a dud early because of drilling encounters, missed on 3D • ‘Birch’ new prospect to be drilled before US Winter. Technical work now going ahead to prove up concept • Now have more information to drill at salt edge with greatly improved likelihood of success
News Flow
• Wednesday 3rd re Roosevelt Sale • Farmout Bluff in next couple of months • IP rates on infill wells
Long Term Plan
• Permian extraction of oil great prospect/best prospect for increasing value of company through exploration
• Sell SSN in 1-2 years and cash out
p.s. * I haven't sold one share since this meeting.
cheers netstockings
SSN Price at posting:
2.4¢ Sentiment: Buy Disclosure: Held
