california

Good to see a clear and precise briefing this morning dispelling a lot of the wild speculation of the last few days.

I have noticed there does not seem to be much knowledge of CA assets on the thread so I am reposting info I prepared a few days back, albeit modified to include todays update.


Running the ruler over California I come up with a value close to 15cps thats putting $9 a barrell on the NSA producing reserves, and $5 on the 9.1MB of 2p reserves at Paris Valley. Paris Valley would rise to $9 upon production making this asset worth $81M and take the theoretical sp to over 20cps. (note values per barrel are based on US onshore field sale values)

Unknowns in my analysis that could add to the price are Glau, Eddison/Mountain View and less likely, Paloma.

Glau is meant to be of similar geology to NSA and if successful will be tied back to the NSA facilities. Neon is yet to say how big a target(s) sits there but seismic analysis ought to be complete so we should find out soon. Aereal coverage is larger than NSA. Assuming similar depth characteristics I can see something around 5MB recoverable. These wells could also be very good for short term cash flow as NSA wells flowed up to 2000bopd initially before falling to 10-50bopd 18 months later unstimulated.

The Eddison acreage I've not been able to get much on at all. Even DOGGR records have not been much help. Neon got 3 well permits in mid December to drill at Eddison/Mountain View.

Paloma I don't put much weight on. Its a shale play at depth which has many technical issues. Theoretically there is 30MB there but until its producing I am putting zero on it. It could surprise to the upside but even if it does I can not see anything happening there this year.

NSA is gradually yielding more oil as the cyclic steaming has effect. Its a very slow process getting heat into the reservoir but it appears to be working with incremental improvements in average daily production.

The extra yield is significant not just because of faster cash flow but it also may mean more oil overall is recoverable. Currently NSA reserves are based on 30% recovery. Chevron next door is achieving 70% with cyclic steaming and steam floods.

These figures are all small fry by comparison with the potential Vietnam once had but they do all add up.

Given Neon clearly has time up their sleeve I think whilst the road may be a little lumpy it looks like they have the arsenal to achieve success at least in CA.