And this is just some highlights from the Brokers macro assessment of Icewine.
Essentially PART 1
From the get go its very very positive for a highly speculative rating ???
* " Focusing on the HRZ shale which acts as a prolific regional source rock for giant conventional
fields,
it HAS uncovered a major new play which we believe could rival the likes of the Eagle Ford."
* " With analysis of cores proving the play thesis and
CONFIRMING that MUCH OF THE ACREAGE LIES WITHIN THE THERMAL MATURITY ‘SWEET SPOT’, the company appears to have a major new unconventional play on its hands."
* "... with potential further drilling increasing this funding gap"
Interesting comment. Do they too think that 88E/Bex may go for Ice 2H themselves.
" we forecast a cash deficit of c$5.5m at YE16. We would also note that further cash would be required for the drilling of the Icewine#2H well (currently planned for Q1 2017), which we estimate would cost c$15m on a net basis (post-rebate and at 78% WI). "
It may well be the only option if the poo stays sub $40 ftm. But as long as the sp pushes 15-20c dilution would be minimal and the benefits massive imo.
* "....(while likely to be sub-commercial at current oil prices like most US plays)"
Again, interesting comment and possibly taking into account development costs as well.
* And again ultra positive:
We view 88E as one of
the most exciting stocks in the UK-listed E&P universe.
*Did we write this ???
Given the scope of a commercial development we would expect major oil companies and North American independents to be likely suitors for the project. In our view 88E is
likely to have a captive audience were it minded to divest part of or its entire stake in the project,
given the major operators on its doorstep.
* They've been studying their BPSM too !!!
" . The company’s initial focus has been on the regionally-extensive, liquids-rich HRZ shale, which co-sourced Prudhoe Bay – the largest conventional oil field in North America"
* On the infrastructure issue:
"This favourable location (netx to TAP's) should provide significant cost savings and would enable rapid commercialisation in a development scenario."
* Again not too negative
!!!
"While analysis of the cores is ongoing with final results expected in early Q2, much of the data has already been interpreted,
with extremely positive results. Lab tests have confirmed the
presence of liquids rich gas in the shale, while oil/condensate was observed leaching from the core during evaluation.
* Interested to know why the ACREAGE-WIDE comment is made?
"The final thermal maturity analysis suggests that much of the acreage lies within the volatile liquids window as anticipated."
Assumption must be based on previous old 2D seismic which will no doubt be bolstered by the new seismic.
* Relevance of new 2D seismic
"Thick permafrost covers the area, historically making seismic imaging difficult (
new technology is mitigating this)"
" 2D will still identify large conventional structures. As such the results could both further de-risk the HRZ and feed into conventional exploration.
Imo all they are doing with this 2D is confirming WHAT THEY ALREADY KNOW (!!!) from PB's accurate model. The new 2D will
MITIGATE TO A HIGH DEGREE any doubt.
* I love that word EXPONENTIALLY !!!
"we view the ongoing work programme aimed at further de-risking as
increasing the value of the company exponentially."
* So the Brookian and Kuparuk strata will be the ones to watch for conventional traps
The Brookian sequence encountered at Icewine#1 had excellent reservoir quality and hydrocarbon shows throughout the section.
Additional conventional play potential exists in the deeper Kuparuk sands and the Ivashuk Formation. Icewine#1 encountered excellent reservoir (porosities up to 15% and good permeability) over the Kuparuk sand interval, with elevated gas readings over a 58ft gross interval. While we believe that the HRZ will remain the company's near-term focus, this bodes well for the deeper conventional prospectivity and the upcoming seismic survey could help to quantify any potential resource.
POSTER COMMENT ON ON BROKER VALUATION.
As per the report the valuation I based on HISTORIC IRR numbers. SO with the massive changes of late some hefty assumption changes will be made too based on the acreage wide sweet spot, the above forecast HRZ factors and the huge increase in acreage,which potentially could be expanded even more in November !!!
Part 2 critique to come on the detailed broker analysis of Icewine.
d.
(20min delay)