Hi Aussie.
These are not bad feelings to have when it comes to such investments. One has to be guarded about the potential for downside which is always present with such high risk plays
Imho Aussie you must look at the relative metrics and leverage involved for the smaller investor here. Yes it does seem a little unnerving re the positivity floating around on this forum. But this is Australia's largest investor forum and the tendency is for the more glass half full investors to post on such stocks which does give us a much more positive bent if you like.
However one must keep things in perspective and 88 Energy may come up with a shocker with rock mechs and the shale may be too porous to frack and it might simply collapse under fracking conditions. However the intimation with the core samples is that the HRZ does in fact HOLD the TLO and correct GOR which STRONGLY implies that its a viable SSR(Source Rock Reservoir). Cant say I sensed anything negative in those recent drill core analysis annmnts. But then I'm no Petro Geo !!!
In the scheme of things we are nobodies in the investment world Aussie.
I believe these investments have several tiers of investor over the life of the development phase of such projects, well the successful ones anyway.
88 Energy came to the SMALL RETAIL INVESTOR(with a few higher risk taking funds/Brokers) as 88E were looking for the REBATED CAPITAL to drill Icewine, which in the scheme of things is quite a coupe' by this company, as it has always presented the investor with MASSIVE leverage IF it played out successfully. This was obviously directly related to the depressed oil price and the fact that majors were/are shying away from developing major new plays, e.g Shell pulling out of Prudhoe.
But as with all such plays if one can put the economies of scale on the ground, as 88E has done with securing the majority of the Basinski Sweetspot, then one will materially effect the development and running costs of such an operation to the positive. This will be very necessary in the coming years as it will only be the more competitive Unconventionals that will survive.
I wont get into the potential metrics and costings of Icewine, as the currently available numbers will soon dramatically change given the recent acreage acquisition and the firming up of Basinski's BEX model to the positive. It is becoming obvious that if they do annc a large net resource base with a relatively easy to extract TLO, that the cost/bbl could reduce quite markedly and THIS is one factor that may just impress both the market and any potential Farm in partner.
This is not to mention the possibility of Conventional finds on this acreage with the 3D seismic to come over the huge organic turbidite fans on the slope.
Now I don't want to continue the positive rhetoric that You seem to be worried about here, but its important to appreciate WHY, we as the basement level investor, are so keen on 88 energy given its potential. It comes back to several combining factors.
* The Sweetspot indentification by Basinski
* Recent confirmation they are ON the Sweetspot.
* The coupe' de grace re the acreage expansion and full Sweetspot coverage.
* Increasing confidence in the HRZ data by hydrocarbons/structural wise from the core samples.
* Alaskan support for the play.
and probably a few I havnt mentioned.
Yes its important for the last analysis and data to come in supportive of a viable play, and there is the chance it may not, but week by week and annmnt by annmnt, THIS RISK HAS BEEN REDUCED TO THE POINT THAT THE SECOND TIER INVESTOR APPEARS TO BE MOVING IN. These guys only do this if they see a profit in the future and will have run some pretty detailed analysis over this play.
No we don't have a Farm in partner yet .But I'm pretty sure this is a function of the oil price atm and their attitude to spending reserved capital unnecessarily in such a low poo enviroment.
As Dave Wall said, if they de-risk this play to the extent it becomes simply a matter of confirming flow rates from a horizontal well with fracks, which will cost this partner between 25-30M usually (then add the 35% rebate if done in 2017), then its not a great deal in the scheme of things, given the profits these potential Farm-in companies would have reaped whilst the oil price was above $100/bbl.
All these factors are beginning to gel in the mind of we first tier investors, and now it appears, second tier money.
It is imho that due to the above reasoning we are seeing such positivity surrounding 88 Energy and in this day and age of communication between INDIVIDUALS via various forms of media and forums, that this probably has a bigger snow ball effect, as is happeneing with 88 Energy atm.
So yes, there is much that one has to be guarded about with Icewine development. But by the same token we higher risk takers are seeing the relative risk reduce week by week, hence the UNNERVING positivity.
You are certainly not alone in feeling this Aussie and one hopes that the info we need is forth coming soon, because if the traders move in and knock this back down if they get a sniff of negativity via news delay, then the current sp momentum could be hit big time.
For such a small company to own such an asset is a rare occurrence and even rarer that it develops such a viable play. There is much to happen yet for this to be successful, as this is very much a greenfields play in an unknown region. However someone has to start the party and it may as well be our 88 Energy as anyone else !!!
GLTA and lets hope the recent promise at Icewine continues its impressive momentum with the next annmnts.
d.
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