Hi Randy,Yes I'm a bit surprised that Gary chose Dempsey...

Hi Randy,

Yes I'm a bit surprised that Gary chose Dempsey and then Borba over what is essentially an appraisal well.

If I ever met him one day I'd like to understand what the thought process was lol.

I'm assuming Alvarez-1 is even deeper so more costly to drill and there's no immediate pipelines in the vicinity I'm guessing so as a minnow went for what was more likely to be cheaper to commercialise. Unfortunately Borba with the regulator capping the trunkline screwed that over. Also let's face it Dempsey was a failure no traps deep for the gas. Borba is only partially successful 3-5 bcf in the shallow ord bend the deep traps didn't exist here.

The funny thing is Alvares-1 seemed to confirm a good seal so again ha ha the mind wonders what the thought process was. Maybe third time is a charm I don't think SGC would have any trouble finding suitors to build a pipeline from borba and a development budget for more wells if it's 2.4 TCF confirmed with reasonable commercial flow rates 5-10 mmscf/d should make even $5m per well commercial if it's that deep and that amount of gas I don't see the flow rate not being intense /commercial.

Well I guess was too much to hope for a Trading Halt this week to announce nido sale and new ventures looks like asx will make them do that rule 11.2 egm and also clarify / justify why sgc should stay listed so I think we are going to see a very cool presentation soon on what the plans are.

We won't be $5m market cap if they show a path to many m's $$$ more in revenue.

By my thinking

1. Red Sky assets and small gas in Sacramento got to be good for $5m profit aud to sgc based on 260 bopd and a $50 margin AUD so $35 usd profit margin that should be conservative it means Alberta is costing like $45 a barrel I'm sure it's less than that per barrel to produce. We have not seen this revenue properly as money has been poured back into red sky and Phillipines so it's not been shown adequately in the quarterlies until nido was sold imo.

2. The two appraisals wells Cadlao and Nandino are good for somewhere between $15m USD - 30m USD per annum if they get them flowing between 10-20k barrels per day SGC will have a 500-1000 barrel a day overriding royalty payment.

3. If they commercialise borba to hydrogen it should be at least $8-10mmin revenue per annum. I don't know we'll have tried to extrapolate the sales for blue hydrogen simply find out what 3 mmscf/d of methane can be converted to in hydrogen units and times the hydrogen units by the wholesale price for hydrogen etc.
I think I got it to about $17m. Regardless if it was natural gas low end start at 3 mmscf/d it's 3000 units times twice the Henry hub price of $2.60 usd. It comes in at around $15600 usd per day $5.6m usd and that converts to $8.6m AUD revenue. I assume people don't convert methane to hydrogen unless it's more profitable or in sgc case stranded gas so to go to the effort of getting hydrogen converters etc it's got to stack up because it's harder to do then sticking it in a pipeline as methane.

I think if they get borba online rapidly between themselves and Xstate plus their small profits from red sky they can sustain a drilling campaign going forward.

Of course we aren't privy to what deals are on the table but to my mind the smart move is the shallow plays essentially gas farming around borba then a bit oaky like Alvarez's at the end.

Be nice if they could do something like ADX maybe sell 10-20% for over 50% of drilling costs of Alvarez. Surely there's some people with deep pockets in California who think that's worthwhile.