Interesting (and left field) announcement today from the company. Probably caught many unexpectedly given that most of the company's recent commentary on Fort Peck indicated unequivocally that it was up for sale.
The FP scenario is very interesting. The last attempted sale transaction valued SSN's WI in the acreage at $13M, but fell through. Now the company gets a farm-in partner in Momentus who funds 3D over much of the FP acreage and drills the next well, which all-up is valued at $10M, in return for half of SSN's Wi in the acreage.
It is truly the last roll of the dice as SUDS says on FP. TB must still be convinced that the acreage has profitable development potential to trade a cash sale of $10-13M for a farm-in deal for half the WI in return for another shot at this acreage. If. Momentus' test well turns in a mediocre result after the benefit of 3D, the company will get very little for the acreage after that, imo.
So is this a good deal or a bad deal? Getting the cash for a sale would of course be very handy right now. I would like to know how the company will otherwise fund its HS development commitments. The operators around FP have accumulated a year's worth of extra data since SSN drilled its wells, and there have been developments in drilling/completion technology that would improve FP yields. Finally, getting 3D will obviously be very advantageous in any further development of the acreage. I recall TB was very big in exploring the area around the edge of the Prairie salt layer, in the east of the FP acreage.
I think its worth the roll of the dice. A good result from the first Momentus test well will have more potential to move the SP than continued development at NS (imo). We'll see - i expect the amex to respond positively to this.
Cheers, Sharks.
SSN Price at posting:
2.4¢ Sentiment: Buy Disclosure: Held
