Some takeouts from today's presentation.
Wrote this before viewed
@brettw68 post so sorry about any duplication.
Dorado has changed everything in regards to prioritisation of asset development. Adrian wants to get the oil assets producing cash asap, whether they are developed concurrently or staged where one is used to develop the other and then the gas assets is still undecided. However, even if PS3 came in with a great result in terms of reservoir and huge gas confirmation, it would still be on the back burner because Dorado and Buffalo oil would take precedence.
PS3 is not dead, in regard to the permeability, the readings were inconclusive so the sidewall core analysis needs to be completed.
They have 4 funding options ahead .
a) Debt financing..... but is reluctant to take on much debt too early because that can " sink the ship"
b) capital raise
c) sell down Buffalo... his preferred option despite the low risk and rapid payback he ideally wants to cash out some equity and carry for the field development... wasn't number / % specific.
d) the variance in equity position in the Phoenix blocks may allow for some " alignment" which may provide a funding opportunity.... didn't elaborate but would mean selling the extra 10% of the other permits for CVN to have 20% across the Phoenix Project.
The gist of it appears he would prefer not to debt fund the oil projects, decrease the Buffalo equity for some cash and a carry "post the Buffalo appraisal well which they will do at 100%", use the cashflow to fund the rest of the developments in conjunction with debt ( especially the gas components).
He is concerned that the " industry is more aware of CVN intrinsic value than the market" which may lead to an early offer for the company when the SP is low. He admitted the SP may have overshot on the way up, and has certainly overshot on the way down which can leave CVN vulnerable which is why he is on the road selling the story.
For me the biggest takeouts were post presentation when discussing some of the finer geological details.
In regards to the oil generation/ migration ideas.... CVN believe there are 2 factors at work.
1) The gas kitchen under the Phoenix structures is actively pushing the oil updip in pretty well all directions, with the trapping up mechanism against the Dorado canyon basically proven so the structures ROC South and ROC South East looking especially good. There is a chance that the 2 of the 4 sands in Dorado go down to Roc South and possible even to Roc, these being the Baxter and the top Milne. If proven then obvious huge upside.
As far as associated gas at Doardo is concerned he basically said for the 2c, from the ~880BCF, subtract ROC (-~330BCF) leaving ~ 550BCF and half of that is associated. So the Baxter discovered ~280BCF, which could however substantially grow if the sand was connected to ROC South..... however, there is also a good chance there is an oil leg here
The associated gas ( ~280 BCF) will be re-injected back into the reservoir with oil production and can be utilised later on in any gas development.
One thing that hasn't been talked about much is that it appears the lower two Milne sands actually pass under the Canyon . This is significant because even though there was no productive reservoir due to low permeability and porosity, the sands would be capable to allow hydrocarbon migration and there were there were some minor hydrocarbon shows ..... this increases the chances of more joy updip along trend past Dorado.
2) They postulate there is direct oil generation in the underlying and adjacent shale, Dorado probably benefited from mechanisms, direct charging and migration. The significance for the APUS lead is because it is totally surrounded by the shale , it is unlikely to be charged by oil migration so will rely on direct charging.
They have 3D over Dorado but need to shoot 3D over APUS, however, their current 2D exhibits similar DHI 's as seen at Doardo so are encouraged by this.
Pavo is higher risk as is further away from the proven oil migration pathway and need more work.
Could have chatted all day long.
Cheers
Dan
(20min delay)