I thoroughly enjoyed that... the Q&A at the end was the best part... a fair bit to unpack, but I will do my best to jot down my key takeaways:
Iain started by noting they had ~270 attendees sign up for the preso... with 140-150 joining today... a good turnout for a small cap O&G player.
Mentioned they are well funded for the next 18-24 months of planned activities with ~$23m cash at bank. Taking off a few $m for corporate exps that provides funding for an expansive $100m JV exploration and appraisal program. That's significant.
Referenced the post well analysis completed... with their best guesstimate of 70 to 110 BCF of gas in place within a 1km radius of LD-1... approx. 3km2 of the field. Iain smiled and said if the field is indeed 100km2... you do the math's... which I did... and I get potential field size of gas in place to be 2,333 to 3,666 BCF... 2.3 to 3.6 TCF. I see why he was smiling.
Talked about the sand influx when well was flowed above 50mmscfd... but assured that the production wells will be engineered for 35-40 mmscfd so sand influx won't be an issue.
Potential faulting south of LD-1... 50/50 chance of it but could just me minor faults. The 3D will prove this definitively. Plus if NED well comes up trumps with similar reservoir data and column size then the compartmentalization doesn't matter. Gave example that Waitsia resource is compartmentalized and that has not affected their development.
Noted the register is changing and some larger positions are being taken. Excited to see these names come on board.
2 structural crests in LD structure... LD-1 tested one crest... NED will test the other. Will test that the wells and field is connected. Technically NED is classed as an exploration well... albeit a very low risk one.
LD-2 is designed to test down dip of LD-1... to make sure they can convert as much resource into 1C classification.
LD-1 was drilled on 2D seismic. Rococo 3D will be instrumental in clearly mapping the subsurface... but it is now at the stage where if anyone on the PB can identify a reasonable trap... very high chance you will drill and strike gas. It is that prolific a gas kitchen.
LNG... current price is A$40/GJ vs WA domestic $6/GJ... economics very compelling.
NED is planned to spud late Q4 2022... still pending land access agreements and securing drill rig. MIN is exploring a few options... but Iain is feeling good about it all and said all moving in right direction.
In terms of NWE coy size... can you believe only 3 full time staff in NWE? Leanest and most nimble O&G company I know of. Tip my hat to expense control. Bang for buck big tick.
OK, now the Q&A:
Timeline to prodn?... MIN have done heaps of work on this behind the scenes... tentatively looking at late 2025... early 2026. Will likely be a phase 1 & 2 development... like what Waitsia has done... 40TJ/d gas plant phase 1... then step up to 250TJ/d phase 2.
Processing plant size? Iain smiled... Waitisa is 250TJ/d... sees LD being a base case 250TJ/d... 375TJ/d likely or even higher if they gain export approval. That shows you how confident the JV is on the size of the LD field... without Iain actually saying it (which he can't)... you can clearly see what they believe it will be.
Comparo LD to Waitsia?... 860bcf... LD likely to be substantially larger.
If no LNG export what is next best option? Actively exploring downstream value adding... like what STX is planning with Haber... and MIN will use their portion for with Lithium and IO.
MIN are @ 19.9%... will they go higher? Iain smiled... said we shall see... and that he can't say anything else on that matter. My read of his demeanor is he wanted to say more... but obviously can't.
Any environmental blocks? Not that he envisages... will require EPA approval when full development goes ahead.
Land access? All good... no issues they can see.
Funding for large capex requirements etc.? They have not yet talked to banks etc. but expect to see more info re this next year with development and funding options.
Greens blocking development? Iain noted they have become less vocal... believes all stakeholders now see gas is essential ATM. Referenced EU legislating gas as a green fuel.
Independent reserves? Not yet... only 1 well... will not do it justice... will explore this after next 2 wells and 3D.
Gas mktg? Clearly enough gas for MIN's needs... JoA allows for separate marketing.
Takeover thoughts? Iain said MIN may very well decide to take full control of NWE.... and mentioned plenty of companies would want a piece of LD. He is open to a t/o... but price is key! It's not about protecting their jobs... it's about ROI for shareholders. Noted that MIN are hiring plenty of staff in their energy arm... building a great team. MIN are doing the heavy lifting... NWE adding their thoughts / opinions along the way.
No talk of share consolidation!
2D seismic... due sometime in September
Biggest headwind?.. None that he can see. Said plenty going on in the background. They had a JV meeting yesterday... lots happening that the market is now aware of.
Liquids at LD? Was a surprise... a good surprise... perhaps a dual system of fluids and dry gas. Likely to be repeated through out the field. Incremental revenue.
Encouraged by the Top 20 movements (watch this space).
This is the best JV Iain has even been involved in. Great personalities... highly functioning (May it continue).
They have engaged an experienced financial analyst to produce a very detailed model on LD, to determine it's true value... which would feed into a corporate valuation model. This has been done so that Iain / BoD are ready to go if/when an approach is made. They need to know what is fair value for it's shareholders (Excellent work guys - I'm happy to help out).
Always exploring other assets and even corporate deals... but LD is their main focus and best use of capital.
CCS storage... it's a possibility at LD.
Should I buy a lilo now? Yes, buy it and enjoy it! lol, good one andy.
I think that is all.... not sure about others but I'm greatly impressed and very comfortable how NWE is being managed and the communicated direction we are going. Strong buy from me.
