If the first drill is successful or not, then PCL still own 20% of the permit. PCL then has the choice to pay for their share of the second well, via capital raise, or it can choose to reduce its shareholding to 10% and be free carried for the second well, assuming that the 3D seismic is positive enough and the results of the well cores are such that a decision is made to drill a second well. I think that if the first well discovers a massive oil/gas reservoir like Total's Venus, then PCL would be well suited to raise the necessary funds to pay for drill 2 and retain 20% of the discovery. If the first well is dry but WDS is keen to drill another then I think that PCL would be best suited to take the 10% offer and reduce their shareholding to 10% and be fully funded for the drilling of the second well. It would depend on the outcome of the second drill as to what would be the best decision for the path forward given that PCL can at any time opt for the 1.25% overriding royalty payment for no further expenditure.
PCL Price at posting:
2.1¢ Sentiment: Buy Disclosure: Held
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