I just read the Macquarie report again and noted the reference to compartmentalisation. It’s a standard and natural comment to make about associated drilling risks into a large basin and in conjunction by using 2D vs 3D. (I also note that Macquarie has an outperform recommendation at top of note, but for some reason this was not referenced by JD!) I recall when STX were drilling one of the earlier WE holes they said exactly the same thing regarding 2D and possible compartmentalisation. Yes it is a risk and should be noted by all us. ( Go and have a look at IVZ who are one drilling their second hole into the Caborra Massa project in Zimbabwe. It ‘s a very large sedimentary basin. Have a look at the seismic section showing the faults and displacement of stratigraphy!).
We have seen 2D used quite a lot by STX simply because it is much easier to complete by using existing access roads than doing a 3D which obviously requires much more access, often across areas to be cultivated by crops. The point that hasn’t been raised is the geological knowledge that Cortis and team now have. That is incredibly powerful and obviously feeds into decisions re drill site location. Essentially every hole that we have drilled to date has the risks of poorly developed Kingia, lack of porosity/permeability, water and compartmentalisation, the latter, relating directly to resource size and connectivity across the basin ……… and, every hole we have drilled has been successful! In relation to the Wagina I always understood that there was always limited potential in first 3 SE holes with greater chance, based on SE1 results, further to east. Hmm more seeds of doubt.
Of course there is an agenda here. If you want to see the full version of the comments re the “Macquarie analyst concern” go to the TPD site, where clearly the same author is more expansive about the seeds of doubt he wishes to plant, presumably because he believes he is talking to a different more supportive audience and desperately wants the SOA to fail.
My seeds of doubt though relate to this.
Firstly and to clarify, I am both a TPD and STX shareholder.
Comparing the quality of the two companies’ portfolios. Let’s use the “seeds of doubt” methodology and apply to TPD portfolio. a) Condor. Am not even sure if we have actually finally secured the project yet. Have seen no announcement saying we have. Yes it is prospective but still with relatively limited knowledge and will require further work to confirm targets. b) TEG JV. We own 25 %, not 50 or 100% that STX holds on their own projects! Again still limited knowledge where further work will be required before determining drill targets. Now, here’s the clincher in my view. If TPD ever does get to the stage of drilling any targets in either Condor or TEG JV areas then these holes will also be subject to the same concerns, i.e “seeds of doubt” that all STX holders have endured over the course of drilling WE and SE areas. (Porosity, permeability, water, connectivity etc, etc. ).
As a TPD holder, do I wish to start my Perth Basin drilling campaign all over again. Is my money better invested in TPD Perth Basin acreage and start from the start again, when the risks are at their greatest OR do I transfer my shares from TPD into STX and invest in a much greater chance of success, based on drill results to date, and resources booked to date. It just seems a “no brainer” to go with STX. AND… if the SOA is successful we still get these “riskier” TPD assets described above but are now under the STX umbrella. In this game of investing in exploration type companies , either mineral or oil/ gas, it’s all about managing risk investment IMO. It’s all about a company having a balanced portfolio of producing assets, advanced near term producing assets with resources and prospective longer term plays. STX has this and TPD does not. I can already hear the screams from the dissenters ……. But TPD has Walyering! Yes that is true, and one of the reasons I invested in TPD, but even so it will be a much much longer time frame to see those other TPD assets drill tested, and IF successful then obtain certified resource status. ( Note to Crowe .. don’t invest in TPD because you’ll be 90 before you see your return!)
Than the other seeds of doubt for TPD. Have not seen any recent updates on Gurvantes re gas flows. Maybe I missed them. Maybe they are also on LinkedIn! Only seen that TPD are flogging their equity for about 2 cents/share into TMK. Yippee I now get TMK shares. Will flog asap after receipt. Success at Gurvantes is not guaranteed and what are the timeframes and cost? If SOA fails then TPD will definitely need another board and senior management as the current ones, including many major shareholders who are in favour. There’s another risk with who will then take the reins. The risks just keep building up to stay on with TPD.
I forgot to mention one company has some serious takeover potential because of current and presumably near term further resource additions and one seems to be struggling to find another suitor to gazump STX and therefore upset the SOA. All in all it just seems to be a pretty simple decision really. Just look at ALL the risks to decide.
If the response to my post is “ but I just want more for my STX shares”, well bad luck that’s business and deal already agreed between managements. To digress, when I hear “I want more” it reminds me of the farcical scene in The Holy Grail when the king is in the tower with his wimpy son. The King says son, one day all this land will be yours (c.f. Access to STX portfolio via SOA) and the son replies “ I don’t want it, all I want to do is sing”.
Sing on JD it makes me laugh!
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