MEL is wellpositioned to move from Junior explorer status to the next level, as explorer / producer - Ken Aitken mentioned this in one of his recent podcasts. For me, MEL now need to “Deliver the Plan” to first gas, focusing on ticking off the milestones, strong capital stewardship and operational excellence. Equally important, is how well MEL move undiscovered Resources to Reserves to Production (R2R2P) in a timely manner and how well they replace Reserves once production has commenced. Combined, if MEL can achieve these outcomes, market confidence will grow and there should be a sustained appreciation in share price. I am a believer in what you measure is what you change, so below is a score card on “Plan Delivery” for MEL based on ASX announcements and Leadership podcasts as at the end of August 2021.
As a shareholder, like all of us, I am hoping for SP growth (dare I say dividend payments perhaps mid 2023…..) and trust that MEL’s Leadership Performance Rights / Incentives are directly tied to successful “Plan Delivery” and share price appreciation. To date, wehave four wells cased with gas behind pipe, one successful production test inthe Patchawarra (Vali-1 ST1) but are yet to successfully complete a well and havethis well readied for production. As we know, fracced wells in the Patchawarra Formation decline quickly, so the JVP must ensure we have ample excess wellhead capacity, over and above the planned plateau rate of 12mmscf/d raw gas to be confident we can meet contracted gas sales volumes on time. As a potential risk mitigation to more-then-expected decline rates in the Patchawarra, I have a strong view that the JVP must, as a matter of urgency, production test the Toolachee Formation to obtain gas deliverability rates from either Odin-1 or Vali-2. As we know, the Toolachee Formation is possibly a more-conventional reservoir and may not require fracture stimulation, but we do not know this in the ATP2021 or PRL211 leases. A Toolachee production well should not decline as quickly as a fracced Patchawarra well and if successfully tested and completed, the Toolachee could be an important gas production low side mitigation strategy, if Patchawarra production declines too rapidly thereby jeopardising our ability to maintain the planned plateau rate of 12mmscf/d raw gas. I will update, add to and post this score card at the end of each month to reassure myself andthose shareholders interested, in how well MEL are “Delivering the Plan”.
That’s my rantfor the week…….rip into this as much as you like - please be constructive.
Kind regards OldGeo
