I believe there has been more than a subtle change in the company's thinking and sentiment over the last few weeks, they have moved from a very highly speculative 'proof of life' phase where every focus was on trying to kill this idea as quickly and cost effectively as possible. Four 'Achilles Heels' were systematically tested and ruled out based on the findings from IW1.
As part of the original plan laid out to investors in mid 2015, if IW1 was a success and the four potential achilles heels could be dismissed, the next stage would be to do a lateral production flow test.
However, I sense that the nature of the results from IW1 were so spectacular that the mind set over the last few weeks has been changing from 'proof of life' and hence 'fail fast' - to one of 'proof of value' and hence "lower the risks" and "cream the curve". As a reminder of the excellent results determined from IW1 which IMO have led to a gradual change in outlook and psyche for the management team of 88e (who are also among the more significant LTH's):
At the risk of overdoing analogies - I think the nature of these results would have had management thinking that they were no longer searching for the whale...they had hooked it and now the challenge was to land it. I suspect that the early and 'encouraging' interpretations of 2.5 D seismic focussed on the HRZ around IW2 and the what they were starting to see from the acreage-wide 2D interpretations, plus the announced planned activity on our northern border - was the final catalyst that pushed management to move the strategy of IW2 from being one of the last stages of "fail fast" to becoming one of the early stages of "creaming the curve".
For this to happen, every aspect of IW2 that had avoidable risk for questionable return was scrutinized and a revised plan that was cheaper, more certain in outcome and had less chance of failure was hatched. If the objective is to "cream the curve" with a farm-in partner deal that was "accretive" to shareholders, then I would think the purpose of the next hole drilled would be to show the potential richness of the HRZ (and for that matter, lets throw in the HUE above it) at various levels. We are trying to sell something that is considered to be soaked in oil, not something that could be argued was just a concentrated vein of oil within the targeted shale. Additionally, even if we only wanted to target a single layer (though on reflection, I don't think that would maximise our value) it is clear that we don't have enough insight yet - to determine what that layer is.
If our objective has changed then so must our strategy. Hence, IMO, the revised IW2.
So whether what I have discerned is a reflection of reality, or whether it is just a construct in my mind to give me more reassurance - I am very comfortable with where the company now is. I have just re-visited a 16 point post I made a couple of days prior to the London meeting, and nothing I have seen reported from that meeting, changes any of those 16 points for me. Perhaps the reports have given some of them more context and flavour - particularly around IW2. I look forward to seeing the video when posted as I do like to DMOR.
While this venture is still officially a "50/50", I suspect that management believe that it has materially improved and that IW2 has been constructed to validate that.
I'm fully on board.
All IMO, DYOR and GLTA
88E Price at posting:
4.6¢ Sentiment: Buy Disclosure: Held
(20min delay)