This announcement only tells half the story the positive half! The marginal uplift in production of 0.4mmscf is great but where is the explanation of the 1.8mmscf decline in production since last quarter? Even if Vali has stopped flowing entirely it still means Odin production is less than last quarter.
IMO VEN, in their rush to try and get some good news out, have shot themselves in the foot on this one. The market knows that there is a scale issue and that the remediation is ongoing. De-bottling is just one step in that process. Maybe do all the remediation work then report the outcome?
The current results really put the pressure on Glennon, Bridgeport and PURE and will test their continued support. I think they will support the scale remediation as it is relatively low cost with a high potential return. That might buy the JV another 2 months? VEN indicated that remediation should increase production by 2.1mmscf/d.
Scale is the Hail Mary but if that doesn't work Glennon and Pure can't just keep writing cheques to support the JV. Glennon has had PAC Partners looking for a buyer since October last year. I'm pretty sure, while they are engaged by Glennon, they would also be shopping the whole JV. If no buyers emerge do the financiers step in a put Odin/Vali and C&M to reduce the losses while they search for a buyer?
Scale was identified in September. The operator should have been addressing that issues then instead, or even as well as, their merger with GLL. Then we would already know the outcome.
MEL Price at posting:
0.3¢ Sentiment: Hold Disclosure: Held
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