Here’s my 2 cents worth.Kumbarilla is a 2C class reserve which...

Here’s my 2 cents worth.

Kumbarilla is a 2C class reserve which generally means the gas is there but they have to prove they can get it out of the ground in a commercially viable manner. Part of that means they need a high enough flow rate from the well to make it commercially viable. So the announcement the other day mentioning that productivity is lower than expected is not a positive result. It also doesn’t mean its bad (they did say there were strong gas shows) it might mean they will have to drill horizontal wells or frack to get a high enough flow rate but that means it costs more but these techniques are also very common. So all is not lost and there is one well to go, time will tell. The share price of small O&G companies are highly sensitive to their drilling prospects and results so its not surprising that an average announcement sparked a sell off especially in the current market.

All in all the main value in the company (as others have mentioned) is in the Glenaras Project and while that is progressing slowly there are indications they will make it work (see OilGasPlannings various posts here on HC), plus its big, 2500PJ is a huge reserve. So the share price hopefully reflects the value of this asset the most over time. There has been plenty of support at 40c in the past for GLL before Kumbarilla came on the scene so the current price level might hold.

As for the PoO, while gas is linked to oil they are different markets and often don’t correlate. See OilGasPlannings link (below) to another company’s announcement that assesses the current gas market. Its written by Richard Cottee and he knows the gas markets extremely well I’ve found his assessments to be very good over the years, he says the current situation could provide opportunity in the asia/pac gas market.

https://hotcopper.com.au/threads/ann-letter-to-shareholders.5345497/?post_id=44070382

Anyway I’m not a geologist or exploration specialist just been around O&G for a ling time and thought my views (hopefully at least partly correct) might be of interest in the current situation.

Do your own research.