Hey Flam, appreciate the differences in opinion. I’d like to see your view on the current situation and I’ll present to you my thoughts. I think we can both agree on the inherit value of PEP-11 and the advantage the tenement has given its location. I recall you rightly pointing out other avenues for gains with BPH including the cortical stint. While I do agree that BPH saw a meteoric rise over the last week with plenty of up and downs as uncertainty and misinterpretation of announcements occurred resulting in sell offs and cheap buying or expensive selling opportunities. It seems most people’s thoughts are solely focused around PEP-11 and it’s approval that will be the next catalyst for a re-rate.
In my case I do believe that we have a good probability of achieving approval. PEP-11 is a long standing and old tenement and there is no reason to cancel it now. The bout with SOC is no different to the years before it and now BPH and Advent are in a better position now than ever to appeal to those who share their concerns about the environment and rightly so. I’m not here to judge them and there are pros and cons to everything so let’s weight it up.
Environment: - Removal of 3D seismic testing is a big win, especially for SOC and our earth as this is proven to be harmful to marine life.
- Addition of CCS development which aims to achieve carbon neutrality for the region and not just the project alone.
I see these as positives and despite the second application, I doubt that NOPTA and NOPSEMA will force 3D seismic testing which you have claimed. These bodies are world renown and I highly doubt would risk both corporate and public backlash over forcing a test which has been deemed no longer required.
Here's a quote from an online article re: seismic testing “Advent Energy will revert to its pre-existing plan to undertake drilling in the Baleen and Fish basins in the Pep11 permit zone,” Breeze said. “The current program requires drilling as the next step.” Breeze said the
decision to abandon future 3D seismic testing was based largely on independent, technical, geological advice that indicated it was not necessary."
NOPTA and NOPSEMAs role aren't to dictate work required, it is to validate works are able to proceed and are necessary for development of the resource and if they are in line with regulations. If so, to enforce and ensure that work is completed to prevent non-development of Australian assets (Preventing holding of titles similar to landbanks).
In addition, the announcement related to this from BPH states "The application comprises a
24-month suspension of the Permit Year 4 work program commitments, with a corresponding
24-month extension of the current permit term. This application was accepted for processing by NOPTA on the 4th of February 2021." Breaking this down - we can interpret this as suspending Permit Year 4 work program commitments - which is related to well exploration drilling.
Year 5 is in relation to the seismic survey, which has already been communicated as unnecessary by Advant, and in the PEP-11 application we are all waiting for, this has been adjusted to reflect this removal. In addition, the new permit extends this period for 24 months. So in effect, utilizing the COVID provision, BPH is using this to prevent the title from lapsing should the decision go longer than expected. It's prudent. It doesn't mean that 3D seismic testing will be forced and I'm sure if accepted the regulatory bodies and Advant will hold dialogue over this if they had not already given the initial removal from the original permit application.
Finally we have NOPTA approval which we are all waiting for, here are my reasons why I think NOPTA is likely to be approved. The regulatory bodies are bound to act through legislation and again, are world renown in the exploration fields and with titles and permits. With approvals and declines everyday - they are professionals in this matter.
Please see listed the regulated bodies values which you can find on their website:
Professionalism - We will be
accountable, consistent, reasonable and act in accordance with the law.Ethics - We will demonstrate respect and integrity in all we do.
Independence - We will make our decisions impartially on the merits of the circumstances, and without undue influence.Leadership - We will be
proactive, inclusive and decisive in our conduct as a pre-eminent regulator.
Collegiality - We will make and act on informed decisions through open and respectful dialogue.With regards to approval timing, it is indicated that NOPTA and NOPSEMA will aim to achieve and pass their decision and recommendations to Joint Authority in a timely manner to prevent disruptions.
However it is noted that the JA and their effectiveness and procedures is out of the scope of NOPTA and NOPSEMA
Although in their process review they have recommended and implemented protocols to improve on the effectiveness and influence the timeliness of approvals by the Joint Authority process.
Following on this we also noted that;
The title holders are able to track the progress through the JA process, with more details in a post I made earlier today. This means David Breeze is aware of the progress through the JA process and whos reviewing and deciding at the time in point. Does it mean he knows if it's accepted? Potentially, potentially not. From these findings it's in my view we will see a TH or decision by Friday, Monday as the permit lapses. This date has also been indicated and cited by SOC, other ministers, and members of the JA itself.
So, what is the importance of this?
Given the findings and the recent announcements
- 9m raised from sophisticated investors with it being oversubscribed, and ~5m allocated to drilling
- Appointment of CCS expert and contracts manager
Of course, you can refute these and state that our board and management are doing this to protect themselves from a negative application outcome, which it might be the case - however, it then becomes a case of damned if you do, damned if you don't. I can imagine the negative view with no cash, no appointments being cited as a negative outcome too. In my view, these all appear that BPH are lining up to go ahead with well drilling and exploration and our management believe that there is a high likelihood of acceptance. BPH are in a healthy financial position, and leveraged to take on works. This could very well be their response to prove that they are compliant and able to fulfill their end of the obligation should a permit be granted. There is no benefit for propping up the "share price' with daily announcements if management knows there is a lack of approval as this will immediately mean a huge dump afterwards, and again, there's no advantage to this given funding has concluded. I think it's a far stretch to read into conspiracies especially if there are no tangible benefits to DB or BPH in the short or even medium term. Isn't it more likely that the company are announcing developments as they transpire and these developments are related to their pending application and goals with Advant and it's tenements?
Of course there are hurdles, any resource company has them - including the cost of drilling. The last time I checked, most if not all new resources require some level of drilling and costs. It's not like these wells appear magically and only BPH is having to pay for this. The resource, is worth a lot more than the cost of drilling and it would be deemed economical with an acceptable level of risk should they decide to proceed with this.
This is from the NOPTA review.
Title holders must also demonstrate their financial and technical capabilities to undertake the work. Hazard a guess to what you have been seeing over the last week? Finances? Check, Technical expertise? Check.
We have world class regulatory bodies with well defined procedures viewing and having already recommended on our application to the JA which I hazard the recommendations are a yes, given the time in JA - as if the recommendations were no, we would have been notified of such developments.
And given the information in the review, if NOPTA is in favour of our tenements then it bodes well for BPH. I recall reading a stat around 80-90% of applications follow NOPTA and NOPSEMAs advice, although am unable to find this at the time being as I'm writing this at work.
And in addition the bodies are aware of JA and the time taken. This is usual and not out of the ordinary. It does not indicate a negative outcome for BHP.
Appreciate your thoughts and as always do your own due dilligence.
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