Morning punters!
Little bit of an update from the company would be nice right about now eh?
Last time we heard from them (with any significant information):
1. Alameda-2 Upper Sheet Net Pay increased to 615m (Resource of 88mmbl based on only 100m Net Pay and 5% recovery). Recovery factor and volumetric review underway. API at 19, low S, and recoverable. Goal 5000 bbl/day in 2024. So we can expect to see a significant resource estimate upgrade within the next few months, followed by updated Upper Sheet valuations. To put that into perspective, in July 2023 Evolution Capital used a 103mmbl estimate to arrive at 19.3 cents per share value, based on a 20% chance of success and NPV of U$25/bbl. Anyone's guess as to what the new resource estimate will be: but be certain of one thing - It will be well north of 103mmbl, and the valuation (for A2 alone) will be well, well north of 19.3 cents.
2. The Conceptual Development Plan for A2 (1B) sees production up to around 15000bbl/day by 2026. MAY's share of that (U$25NPV[net to MAY, per Evolution Capital's calculations) is U$136 million (A$210 million). To put that number into perspective, the current market cap of the company is A$219 million. Someone slap me.
3. A3 spud is imminent. It tracks A1 (known geology) and is well structured. The BOP onsite for A3 is upgraded (10kpsi), and - from what we can interpolate from previous announcements - the rig and supplies should now be onsite and ready to go. The drill program is circa 142 days, so assuming an early December spud we are looking at May as the date when we get initial pressure readings from the Marti Reservoir (@ TD 3835). Previous pressure readings are high, and API certainly much higher than the Upper Sheets.
Stack A2 and A3 on top of each other. A2 resource upgrade may see a three-fold increase in some valuations (that's purely a guess: but based on what we have been told, I think it will be a resource estimate in the 300-400mmbl range, initially), so we will see Sum of Parts valuations (before adding in A3) of up around 60 to 70 cents). In any case, a producer of $200+ million dollars of oil per year isn't going to have a market cap of $200 million. Right. Then add A3 "cream" on top.
At the risk of "roaching-it-up", by this time next next we have have independent valuations of anywhere between 60 cents and $1.00. That's not unrealistic. So why the share price at 6.5 cents?! (*ugh*). Simply put - It's all "theory" to some for now, and until they see the resource estimates, and see the oil spewing from A3 (testing that big ol BOP unit to the max) they will remain on the sidelines. But when they come in - stand aside - this thing's going to move. Quickly.
For me: buy, hold, relax. Simple really.
So. Where's that news AP? A3 rig progress maybe? C'mon. Give us a bit.
Kit.
Expand
