Ann: Block 9 Alameda 3 Appraisal Update (Alameda reservoir), page-651

@bevans

I respect your position of "the buck stops here" with regards to AP, however note that Duncan and the Johnstone Twins are paid a large amount of money to provide guidance and advice to AP and the Board. Good advice backed by sound logic and good research would be listened to and acted on. My gut feeling is that those closest to AP - Duncan, Erol and Dean - have either failed to provide good advice, or have failed to drive it home. Either way, they are a constributor to the failure of Marti and Alameda (failure to flow, so far at least) and need to step up and take responsibility for that failure. Heads need to roll, otherwise AP's credibility is permanently compromised.

Regarding remediation of A3 - I think they have several choices they need to consider:

1. Mechanically fracking the two zones (additional perforations);
2. Chemically cleaning / treating the two zones (acids);
3. Drilling a new sidetrack (from just above Alameda), and adjusting the mud pressure and mix;
4. Plugging below Amistad and perforating and flowing from the upper units (similar to A2); or
5. Plugging and abandoning A3 altogether.

The factors to consider are:

A. Current posssible wider formation damage (ruling out options 1 and 2);
B. Inability to identify reason for mud spurt/cake (pressure-based formation damage or mud/oil reaction?);
C. Cost of remediation (for options 1, 2 and 3);
D. Rig availability (for options 1, 2, 3 and 4);
E. JV partners preferences (for all options).

Noone here is privvy to the conversations currently taking place within Melbana, despite the insinuations by one or two posters that they are closer to AP and the Board that the rest of us. So for all of us - them included - it is an absolute guessing game as to what is going on, how long it will take, or what the outcome will be. That said, having a "random guess" at this (and perhaps this is where some geos can step in and correct me) it will take one or two weeks to assess the situation, talk with JV partners (Sonangol and CUPET), talk with Sherritt, and agree an action plan. Although a market update from AP would be nice, I can't actually imagine what value it would add, except to say that "guys - we are working on this - we will get back to you", which is similar to what he said last week anyway.

To what some here call the "31 million dollar question" about financing: As at the end of the March quarter -

* Cash and Cash equivalents were A$16,388,000
* Outstanding Cash Calls from JV partners (Sonangol) were A$31,044,000
* Total available funding was A$47,432,000 (being Cash plus the amount owing from Sonangol)
* Estimated quarters of funding available = 2.59 (assuming cash burn is constant)

Sceptics (those who seem to have failed Accounting 101 at University) seem to think that the Sonangol amount is "optional", whereas the company has been quite clear that the balance sheet item is the result of "AR lag" which is normal and in accordance with the JV Agreement. In essence, those here on this forum insinuating that there is some "question" as to whether Sonangol will pay this (and 70% of the costs incurred in the current quarter) are way, way out of their depth so far as accounting knowledge goes, and are merely making such claims in order to destabilise the share price. Deliberate misleading of the market, nothing more than that.

So with the current Marti / Alameda problems, there appears to be sufficient cash available to opt for any of the five options outlined above. The key questions will therefore be (a) which option do they take, (b) have they got Sonangol on board and (c) have they got Sherritt on board. With regards to that third matter, there are also some here citing Sherritt's own quarterly report (which implies working with CUPET on various projects), however that particular statement can be read both ways in that it could also imply that CUPET's interest in Block 9 (with MAY and Sonangol) is indeed a priority for Sherritt. So again, guesswork is required with regards to the rig - and anyone here claiming superior knowledge of that subject needs to be treated with caution.

So in essence - we are all guessing. Every. Single. One. Of. Us. Sceptics and bulls alike - all are guessing.

Take care, stay safe, and avoid all the BS that is being tossed around on these threads.

Regards
Kit