Hi Bert.....you are right....we should not get too far ahead of ourselves. A lot of speculation is used as the foundation for these prognostications.
That said, IF 2D seismic identifies points of significant interest and it coincides with good results from GB's drilling in Q1 2017, I suspect that our conventional play will not have a problem in getting a farm-in partner pretty quickly, to fund targeted 3D in the following winter season. Given that 88e still states that the unconventional HRZ/Hue play is the main target and any conventional is icing - I can imagine that we would try and structure any farm-in on conventional to provide us funding for further appraisal work on the unconventional. Who knows....but definitely conceivable I think.
So, I agree that they are distinct plays, in that the cake is distinct from the icing. But they are related in that the icing adds to the cake.
As to the point about not excluding us ever being a producer - of course! The moment we exclude the possibility, we lose many degrees of leverage with farm-in partners and eventual buy-out terms. I think the way to think about it is - we don't want to be a producer, unless it is in shareholder interests to be a producer. Therefore, option always on the table.
In terms of dilution via CR vs farm-out....I think all that matters is the value of the share remaining in our hands. I would rather 10% of a monster than 100% of a minnow (assuming monster is more than 10x the minnow). My working assumption is that a farm-out is more conducive to getting to the monster than a CR is. Farm-out doesn't just bring $$$, but operating experience.
All IMO.
88E Price at posting:
4.6¢ Sentiment: Buy Disclosure: Held
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