The release of that announcement last week seems to shed some light on the intended strategy of the company, although I'm not sure how widely this was picked up. Sensible analysis of this stock seems to have been largely drowned out by the noise over recent weeks, though things seem to have quietened down recently.
I remember a veteran of Hotcopper commented one time that posts on the threads of speculative-type stocks often provide cues as to the likely near term direction of the share price.
When you see a sudden surge in interest, accompanied by terms such as 'FOMO', or allusions to 'trains leaving the station', it is frequently indicates that an overhyped stock has run up too far, and is probably overdue for a pullback. Another common red-flag is when threads starts getting clogged up by posters throwing around insults at anyone expressing a negative sentiment.
When the share price eventually heads in the other direction, as is generally inevitable, the character of the posts also changes: posters, previously unknown, suddenly emerge out of the woodwork, offering insightful contributions such as 'this stock is a turd!.' Meanwhile, burnt speculators, angry that the stock stopped going up after they bought in, typically call for class actions against the board of directors and/or demand an ASIC investigation.
We've seen the whole kit and caboodle here on BNL over the past few weeks, and hopefully now the noise has died down, the sober investors who have been watching from the sidelines will have a chance to assess things with less distractions and clearer heads.
Reading over the Big Star announcement last week, I was reminded of another company that operated in the Wyoming region, Entek Energy. As mentioned here in a previous post, Trent Spry, who was appointed as Executive Director of the company back in April, was formerly the MD of Entek, and spent many years working in the region of Carbon County, Wyoming, where the Percy Creek project is located. The strategy of Big Sky bears some similarities to that of Entek while it was operating in the same region.
Entek's strategy at Niobrara was an basically an acreage play, and they were at one stage sitting on as many as 60,000 acres or so in the area. The aim of the game was to build up lease acreage in the undeveloped Niobrara region, in the hope of developing the acreage and selling it for many times the entry price. A comparable strategy was successfully adopted in the US by an Australian company called Aurora Oil & Gas, who ended up being bought out for $2.4 billion in 2014.
Thus the Big Star strategy seems to bear some resemblance to Entek's previous strategy in the region, except with a focus on helium rather than conventional oil and gas.
Entek's Niobara oil play was only viable with a WTI oil price of around the $60 mark, and so the oil price crash in 2015 rendered the strategy problematic and thus the company share price took a battering. But the same strategy adapted to a helium play is likely to avoid this kind of speed-bump, as helium, a high value gas, is worth far more than hydrocarbons. So at the very least, it is an interesting strategy.
The pertinent question, of course, is whether or not Big Star is likely to find the high-value helium that they seek in the area.
Spry's extensive background in the area would certainly provide some advantage. Apart from that, however, I suspect Spry might have an ace up his sleave.
Shortly after the oil price crash Spry was shafted from Entek by the Chairman, ostensibly to save costs. Spry's next role was at a company called Black Ridge Mining (subsequently renamed Surefire Resources).
In early 2015, Black Ridge announced that they had entered into an exclusive agreement to acquire a new generation seismoelectric technology called Petrolocate, and it was clear that this represented a new direction for the company ('Exclusive agreement signed for Seismoelectric technology', SRN announcement 21/04/15).
Only a few weeks after this, Black Ridge announced that Trent Spry had joined the company:
...Black Ridge Mining NL (ASX:BRD) (the Company) is pleased to announce that it has appointed Mr. Trent Spry as Geo Science Technical Advisor to the Company. Mr. Spry’s role will be to progress through its wholly owned subsidiary company, Oil & Gas SE Pty Ltd, the Seismoelectric exploration technology, PetroLocate, to Oil and Gas exploration companies through the regions of Australia, Indonesia, Thailand, Malaysia, Myanmar and Cambodia.
This recently developed cutting edge new generation Seismoelectric technology is designed specifically for locating resistive liquids (oil, gas and water) to a depth of up to 3,000 meters and is having considerable success in a number of oil and gas drilling locations in the USA. ('APPOINTMENT OF GEO SCIENCE TECHNICAL ADVISOR', SRN announcement 18/05/15)
My strong suspicion has been that there was some association between Spry and this technology, given that these announcements were back-to-back, as well as in consideration of Spry's background in the oil and gas industry in the United States.
The following year, Black Ridge announced that another listed Australian company, Baraka (subsequently renamed Global Vanadium), who had an oil and gas project in the Northern Territory ('EP 127'), were interested in employing this technology:
...Black Ridge Mining NL (ASX: BRD) ("BRD" or the "Company") is pleased to announce that Baraka Energy and Resources Ltd (Baraka) is considering utilizing BRD’s advanced Seismo-Electric (SE) Resource Imaging Technology (RIT) in order to better define the hydrocarbon presence within prospects and leads in its EP 127 permit in the Northern Territory. ('SEISMO-ELECTRIC (SE) RESOURCE IMAGING TECHNOLOGY (RIT) UPDATE' , SRN announcement of 24/08/16)
Baraka, in its Quarterly Activities and Cash Flow Report for the period ending 30 June 2016, provides an overview of this technology:
...Baraka is considering a Resource Imaging Technology (RIT) survey utilizing advanced Seismo-Electric (SE) technology, which has just been introduced to Australia in order to better define the hydrocarbon presence within prospects and leads.
The Company is in discussions regarding a trial survey around existing wells, prospects and leads. A full-scale study across EP 127 will be implemented based on initial results in order to better define the distribution of hydrocarbons prior to a relinquishment decision later in the year.
This new and innovative technology has the ability to identify hydrocarbons in the subsurface without the need to drill an exploration well, therefore significantly reducing the uncertainty of a prospect pre-drill and enhancing the chance of success. The technology is based on the seismoelectric effect, which is influenced, by both the quality of the reservoir and the characteristic of the fluid within that reservoir, it can therefore help determine the quality of the reservoir and movability of fluids within that reservoir.
The ability to identify the presence of hydrocarbons in the subsurface and to be able to rank the prospects within the permit in terms of reservoir quality and movability of fluids is a great advantage in an area with sparse seismic coverage and allows for better direction of exploration money.
Shortly afterwards, Black Ridge changed its name to Surefire, and following on from the quarterly report released on the 31/10/16, there are no further mentions of the Seismoelectric technology. Trent Spry left the company at about this time, and so my suspicion is that Spry brought the technology to the company when he joined, and took the tech with him when he departed.
Notice in the Baraka announcement above, it mentions that they were considering deploying the Seismoelectric technology on their EP 127 permit in the Northern Territory. This is intriguing, as it seems that Baraka subsequently detected helium on that permit.
This extract is taken from the Baraka announcement of 21/05/2018 ('Baraka Seeks Helium and Conventional Hydrocarbon Potential')
...The Company has continued regional and permit wide desktop studies as part of its work program commitment with a focus on exploration for conventional hydrocarbon resources in the permit...
The following text is lengthy, and so for convenience so I'll skip to the relevant extracts:
...The Company will also look at adding a helium survey to the planning of its permit wide geochemical survey (for hydrocarbons) and seismo-electric survey designed to significantly reduce the uncertainty of hydrocarbon presence in the prospects and leads already identified in the permit. It is envisaged that water from bore holes and stock wells will be sampled and overburden gas sampled and analysed for helium.
The stacking of a seismo-electric survey, geochemical survey and helium survey data over the interpreted prospects and leads from existing seismic and gravity magnetic surveys is designed to reduce the uncertainty of resistive fill within the structural closures and then to attempt to further characterise the fill as hydrocarbons and/or helium.
Notice the mention of the Seismo-electric survey above?. My assumption is that this is the same 'advanced Seismo-Electric technology' that Baraka mentioned they were considering employing in the 2016 announcement highlighted earlier. My guess is that Spry continued to do some contract work for Baraka after leaving Surefire.
Shortly afterwards, Baraka was hit by a 249D notice, and the former management lost control of the company. The clique who took over the company changed the name of the company to Global Vanadium, with the aim to shift the focus of the company to the metal of the same name. As such, they sold off the Northern Territory EP 127 exploration permit, to a group who intended to relist it on the LSE ('$1.5 Sale Agreement for Southern Georgina Project Executed', GLV announcement 28/3/19).
Earlier this month, a
feature piece
from Proactive Investors UK highlighted an upcoming IPO on the LSE, for a company called Georgina Energy. I've included the full text from the article below:
Georgina Energy IPO brings Aussie helium play to London
While access to the inert gas is becoming limited, demand is growing and there is no direct substitute
Joining the LSE Standard List by the end of the month is Georgina Energy PLC, which will provide investors exposure to the supply-constrained helium sector.
While access to the inert gas is becoming limited, demand is growing and there is no direct substitute. The MRI scanners sector is the biggest consumer (30%), while it is also used for weather balloons.
This imbalance was most evident at the last helium auction (yes, that is a thing) with prices rising 135%.
Georgina is acquiring the EP127 licence in the Northern Territory, Australia, which has significant helium potential.
It is raising up to £10mln, and has already secured over £2mln with strong expressions of interest for the balance, according to Proactive Research’s Ed Stacey, in his initiation note on the company.
“We believe that Georgina Energy offers investors a unique opportunity to gain exposure to the helium supply squeeze,” he added.“The business plan offers strong profitability, modest capital requirement, and a fast transition to positive cashflow.
“We argue that investors who enter at the IPO stage stand to benefit from substantial valuation upside if commercial volumes of helium are confirmed.”
Note that the EP127 license referred to above was the same that was formerly held by Baraka/Global Vanadium.
The above article reckons that they might raise as much as 10 million pounds, which if I'm not mistaken, converts to around $18 million AUD at the current exchange rate. If they achieve this, there will be no doubt some feelings of sellers remorse in the Global Vanadium office, given that they sold the asset for only $1.5 million just six months ago.
Anyway, It will be interesting to see how this Georgina Energy IPO is received in the UK over coming days.
Now, the relevance of this to Big Star is that, if you join all the dots from various sources, it looks very much like the Georgina Energy IPO was made possible by the work of Trent Spry and the Petrolocate Seismoelectric technology.
While I can't conclusively prove this, it is possible that Spry might have brought the Petrolocate technology with him to BNL. If so, that could provide Big Star with a significant competitive advantage in their hunt for helium.
At the very least, Spry does seem to have a good track record when it comes to developing helium projects, given that his legwork for Baraka seems to have played a part in bringing the Georgina Energy IPO to fruition.
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