But there things (IMO) to take away from this valuable piece of learning.
1. That little discussion about "luck" and "by design". For GGP I think it will be about the Cline ("D" bench?) as the that bit of luck - no one thought it would be there - and it may not be across all acres
2. The initial plan was really a vertically focused play (like AREX) but the logs on those first four wells tell a different story. Yeah maybe we're having the wool pulled over our eyes OR maybe not and a whole lot of testing unveiled something completely different
3. How big is this project!!?? Well depends on how many acres we get to hang onto. That depends on how much drilling capital we can raise.
Think about it - AREX at MC $840 going to spend about $235M drilling Hz Wolfcamp wells - so about 30% of its Mkt Cap. If we applied same ratio to GGP we drill about $5M - or 1 well.
Shows just how big a project 8,800 acres is to a company of GGP's size.
4. The discussion about "statistically the model works" is what is scary for GGP. I mean:
a. What are the chance they get it right first time - the frac design I mean. I'm sure we can get the hole safely and effectively drilled - the Frac design is key. Are we using (can we afford?) all the techniques discussed.
b. We don't have tothe infrastructure in place - so our cos are way higher to begin with. AREX spent about $45M in 2012 to build this out - thats 3 times our MC and AREX are small fry - how many times did he refer to his company as small cap producer explorer.
The enormity of the job in front of the GGP BoD and hard working employees in Texas to boot strap this piddly little company into a company that has a chance of potentially progressing to possibly $100MC in next 18 months (and 5B shares on issue in case someone's thinking there is a free lunch and dinner)and growing from there is I think lost on most.
Really hoping our new board can get the funding from whatever means necessary (meaning I hope Trevor is on the Board and I hope we can do it without further C-Notes as we know them) but we will need major capital and if its not equity then its debt (given mimimal FCF) and if its debt then watch out debt/equity ratio. Also if its debt and we face a commodity price collapse then I wonder how loud we scream then.
This will not be an easy 3 month, 6 month, 12 month or 24 month period for GGP. If they make it then looking to a good reward - otherwise Kaboom like Katoom (could not resist it).
GGP Price at posting:
0.7¢ Sentiment: Hold Disclosure: Held
