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9.0¢ real energy corporation limited

Ann: Tamarama-3 Encounters Gas Plays, page-88

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Kipper01

7,864 Posts.

617

02/07/18

11:37

Post #: 34079496
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Originally posted by agentdownload ↑

Jas

I stated in my post I am keen on the stock and looking to buy in. My position has not changed. A few points of a cent here or there is of no material regard to me so not down ramping just sharing my thoughts and looking to hear the thoughts of long term holders.

I had some spare time yesterday and read through the last three years of asx releases and was frankly alarmed at what a stuff up the T1 frac was and how long it dragged on - literally years... There are plenty of announcements re rather low rates for T1 and then all of a sudden (as referenced in one of the recent broker reports) the flow rate jumps of to 2.0 (but the recent broker report ALSO puts the average flow rate at 1.2 which is nearly half of 2.0). I note the company has not given an asx release (not slide deck) as to an update of the current average flow rate for T1 - instead it is just commentary that the rate is improving (what from 1.2? - we dont know as the company has not declared T1 average flow rate for quite a long time). why? If it was 2.0 trust me they would be yelling that flow rate from every mountain to gain interest as such a rate would materially derisk the project.

The recent broker report states they need a minimum flow rate of 2.5 per well for commercial EUR - basically double the long term flow average (1.2) of T1. I am not suggesting it can't be done, noting the frac turned the water tap on by fracing the coal seam.

I am just interested to hear the thoughts of long term holders who have, when reading the asx releases, been through a similar experience I have endured with STX (which looks primed to turn their bad run of their K4 frac around)... But again with STX - still waiting on the commercial flow rate.

I do note Haliburton did the RLE frac and they are also doing the STX frac - can't remember reading who has been contracted for T2 and T3 fracs but hopefully if it is Haliburton they are sharing the lessons learnt from the STX frac.... Also, the "imminent" frac asx release was three weeks ago so not sure what "imminent" means - normally if there is a delay due to the contracted fracer the company would advise the market via asx release and give some estimation. RLE has gone quiet in this space. Why?

I will be buying RLE it is just a matter of whether before or after the frac as a stable gas flow of at least 2.5 will need to be maintained for circa 3 months before they can independently book 2P.

And, yes, I still see cash as a major risk.... last slide deck had cash at $5.3m as at 31/5. If there is an issue with the frac of either T2 and/or T3 then this will cost $$ not allowed for in current T2/T3 budget. I still think a prudent company would minimise risk, given the T1 cost blowouts, by doing a CR in the near future. Either way I will not be buying before the release of the next quarterly as the estimated cash flow for December quarter will show how much cash will be in the kitty (forecast) as at 31/12/18 if the T2 and T3 fracs and flow tests do not encounter any issues.

RLE only release, if history is any indicator, until the last day of the reporting period so I will have to wait until 31/7. That said, I hope there is some news flow in the interim re at least an update as to when the frac is scheduled to commence and whether they will frac T2 or T3 first.

Good luck to all holders.

Adl

Expand

* Haliburton will be doing the fraccing after they have finished at Strike.. Expecting to commence in August.
* T1 has been regularly reported as flowing between 0.5 and 2mcfd so no secrets there... And the company has admitted the technique(s) used at T1 left considerable room for improvement - which they have improved upon for their drilling of T2 and 3 …
* Funds cover the fraccing of T2 and 3 and given the state of the gas market (and look at GLL and STX for instance) financing a small amount, if required should not be any issues at all.

If you can't see unbelievable upside given where things are currently and the overall state of play, then that may be a measure of a conservative investor. Fair enough if that is your MO. But if waiting 'til flow rates of 2.5 mcfd and reserves posted is required, the share price won't be within a bull's roar of 9c. Your choice ...my opinion.

Kip

RLE Price at posting: 9.6¢ Sentiment: Buy Disclosure: Held
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