The time has finally come for SGC shareholders with Borba drilling to commence this week.Borba: XST 24%, SGC 76%.
XST: MC 18m (815k cash)
SGC 25m (1.7m cash)
- For those wanting more leverage SGC is the superior option due to its higher interest in Borba and float control.
CATALYSTS- Borba Anticipation.
- Borba Independent Resource Estimate.
- Borba Updates/Results (over time).
For a start Borba is undoubtedly the largest exploratory well to have been drilling in the Sacramento Basin in the last decade and makes for one of the biggest wells to be completed by a micro cap on the ASX this year.
You can tell GJ is exited when he refers to this prospect at
"Dempsey on Steroids"."10,000 psi rated control stack on the 9 5/8” casing below 6,000 feet" - for those unfamiliar to this area that is a monster.
For the longer term holders such as myself in 2018 we witnessed the share price 4 bag on Dempsey before withering away. However Dempsey was imperative to the longer term narrative of the company and we were able to refine our model towards Borba.
It's clear from the amplitudes in the 3D seismic that Borba should produce far superior gas flows to that of Dempsey. Borba lights up like a Christmas tree... But what makes Borba so special is its depth and that fact that it is onshore. As a comparison STK/WGO's Watsaia project in the Perth Basin lies at around 5km deep vs. Borba at 2-3km. For the PEP11 comparison: Borba is onshore, fully permitted to drill (starting this week) and in an area with supreme infrastructure. Not to mention the fact that the Californian natural gas market exceed that of Australia, forever trades at a 1.3-2x premium due to California's supply/demand dilemma.
IMHO whilst the price has bounced from its lows earlier this year at a 25m cap SGC offers perhaps the best risk/return as a oil/gas exploration exposure on the ASX this year. It does not have the permitting issues which BPH will face and is days away from embarking on the Borba well. I can see Borba being north of 1tcf, this company re-rating significantly and I cannot wait to enjoy the prospective returns with all my fellow shareholders.
I have both my fingers and my toes crossed that this is GJ's moment and if all goes as expected I will happily be on the first few rounds of Whiskey at the AGM. GLTAH.
