Thanks for reading and commenting Cloz. Keep in mind there are...

Thanks for reading and commenting Cloz. Keep in mind there are many assumptions in the estimates ... but then so too are there in CE1 presentation and I am reusing many of them.

Maybe a point of clarification on the 2 scenarios. Neither includes the further reinvestment of cash flow into drilling additional wells and that's important to recognize:

Scenario 1 was simply to look at how far (and 5 years is a long time) the present 2 wells take us. My conclusion is "not far enough" and at end of year 5 we have paid for the pipeline but are in the hole to the tune of $3M AND the cumulative cash generated peaked at a little of $5M

Scenario 2 upsized the next equity CR to allow for the additional D&C of 2 more wells (at C$9.42M each per CE1 estimate) and that does get CE1 over the line. There is sufficient cash to drill additional wells (but at what pace ... the price for D&C of wells drops so that helps too ...) and perhaps with some high yielding notes a reasonably aggressive pace of development might be possible. E&P companies don't hold much cash, they reinvest that back into the ground.

But, like I say, read it in conjunction with Saguaro's Field Development Plan (FDP) and put CE1 into that picture. How much capital has Saguaro put in so far to get to where they are now. It's in there.

Also what is NOT in our FDP is a gas processing plant to get full value from the "plant condensate" which has been estimated at equal to the field condensate produced. Saguaro, BSE, PONY, .... all have their own processing plants and JVs ... these things cost over $100M to build for a 100MMcfpd facility. We are reusing a 3rd party's plant. There is no free lunch. We supply liquids rich gas at a negotiated price and they will "fractionate" the gas into individual streams to maximise the profit for them (not us). So I dealt with that issue in the model simply by accepting CE1 assumption on NGL revenue but then applied full cost of NGL transport on a per Bbl basis. Hopefully that's close to a wash cash flow wise.

But the point, as you've picked up on, is why companies with large undeveloped acreage would make the acquisition? For that you need a deeper understanding of the motives of the buyers and where the acquisition would compete for capital in that company. That is a long story. Suffice to say IMO you are getting the picture's orientation.

My holding is pure speculation (a fraction of 1% of portfolio). I never gave the acreage valuation much credibility but the land flip could have worked out +ve from the 4.5cps entry had a few things gone their way and the #1 thing was if they found truly liquids rich acreage. Not CGR analogous to Sagauro but rather an anomaly like double Saguaro's CGR. That would have made their acreage superior to others in the same area. But sadly, CE1 didn't even complete Phase 1 and despite claims all I see is a $12.7M overrun to get to where we supposed to be already. That happens in E&P investing. I still have 100% ... hindsight says should have sold at 3cps and walked away.

So here we are raising ~$12.7M at 1.8cps and none of that results in actual cash flows ... just expenses IMO.

It's the next raising that gets cash flow and I need a credible explanation for why this won't be done at say 1.2 - 1.5cps in 6 months time?