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Chilly, Huge amount of gratitude coming your way, not just for...

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AussieBarracuda

464 Posts.

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29/07/16

15:34

Post #: 18400996
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Originally posted by Chillaxed ↑

Hi 88e’rs, this is from my memory and in no particular order of importance, so take it at face value and not as gospel (there were a few beers involved after all). Its a bit long, so take your time

Seismics
On track. Initial results in August as announced. Seems it may still be a few weeks away though, so my previous guess of being released on 8/8 might be out the window. 88E is actually running this interpretation process, which is different to what I thought, as I had assumed PB and BEX would have been doing it. DW said that as 88E is operator, our job to do and he has various specialists in Alaska, England and Perth working on it. A more detailed seismic report is likely to be put out in September, covering the whole acreage. DW still upbeat on conventional potential. Clearly wouldn’t say anything about it and out of respect we did not ask, so no icing to report just yet. He did relate to Repsol quite a bit though and their recent finds and how close we are to them, as well as Prudoe. We might get further insight via Otto at some stage, and this could offer unexpected news and an uptick at anytime, as its not in our control (one to keep watch for as we know).

HRZ formation
DW said it is pretty consistent in thickness all the way across the acreage and we have the best of it in terms of thermal maturity sweetspot. Two fairways in particular and the seismics have focussed a bit more in these areas and so you will see extra lines that were run in these locations. We had a bit of a laugh about the chequer board area. Seems like first in best dressed here if no joint agreement made over this area. If no agreement with GB to work over this area, DW said best to whack some holes right on the boundary and suck the life out of it. But my personal opinion is something will be worked out there.

Acreage
Purchase now complete of extra acreage as we know. No hurry or intention to further increase this at the moment. No interest in acreage to the south regardless, as it is outside the sweetspot. Acreage to the west and east are on trend for the sweetspot, but thinks we have enough ground at the moment and need the cash for Ice2. If someone else buys these adjoining acres, then they have to negotiate with us anyway, as they would need to gain access across our land. If that happens, we are in a strong position for working out some type of deal, whatever that might entail? If the acres aren’t picked up, then something that could be looked at further down the track.

Ice2H
Spud March 2017. Spud date reverse engineered from date that optimal flow back testing needs to be done, which is late spring/early summer. Flow back testing April/May. Saves $1mil in not needing to bring specialist heaters on site (needed if the weather is colder). Drill will go NW direction. As known, tenders for drilling and fraccing commenced. Slumberger and Halliburton only 2 fraccers on the slope. Currently negotiating with both to achieve best outcome. Only 1 fracc stage now after discussions with these companys. Will make it cheaper and enable the same flowback test to be done. 3000’ Lateral to be drilled. Shorter section to be fracced, and results then extrapolated to reflect flowback that would come from a 10,000’ lateral. Modelling predicting approx 3100BOPD in the mid case as detailed in the economics announcement a month back. Expect flowback rate from Ice2H to be 250BOPD due to the shorter lateral and shorter fracc length. If it comes in around that, then that extrapolates up to equivalent of 3100BOPD. Discussions ongoing with SOA over the Franklins Bluff multi user pad for future use. Might be able to use this more in future just for AEA, and build another replacement pad nearby for others to use as the multi user pad (Like dept of roads and other seismic companys who currently use it from time to time)

Fraccing
A bit of discussion about environmental issues of fraccing. DW said all wells in North Slope are fracced, even the conventionals. So fraccing is well understood and accepted as standard practice. No issues with govt approvals for this. Fracc fluids normally ground down and reinjected, so no storage or discharge issues for field development in the long term. Propant for Ice2H has been chosen. A ceramic material to be used, cant recall the commercial name, but well known. Less susceptibility to be ground into fine particles that can eventually clog or reduce flow in the bore. Costs more, but better long term performance than sand.

GALP
Still no contact from GALP. Wont be chasing it either. If they come looking for anything in the future, it is put aside and already accounted for. GALP may have written it off anyway, as DW has rejected the claim on basis of not being kept informed of cost escalation. The GALP dept involved no longer exists and the staff are gone as well, and likely to be considered as small change for them, so could well have been written off, in which case they would not inform 88E of that decision anyway.

SOA and the Gov’ner
Rebate from SOA from past expenditures will be delayed until later next year. SOA obligated to pay, but timing of payment not definitive. If rebates not paid by late next year, then we will have to pay BOA interest, but no issue for the time being. Rebates expected from Ice2H costs likely to be delayed as well, whilst the Gov’ner maintains his current stance. Interest not payable for 2 years though on those costs after they are drawn.

Funding
Nothing new. In good position. Reduced cost of drill means we are nearly fully funded but still need to be prudent. DW very focussed on running a lean ship. Keeps overheads low. Has a very small but extremely competent team here in Oz as well as Alaska. He speaks very very highly of the teams skill and motivation. Costs for admin in the last qtr higher because he has prepaid a few things that are one offs. Next qtr as detailed in the announcement.
So as already known, a small amount will either be raised or placed to a maybe a cornerstone type, if a Farm Out deal doesn’t come to fruition. DW pretty clear that a Farm Out will only happen if the deal is accretive and good for shareholders. Still in discussions, didn’t want to ask anymore, but seems like still a way to go if that is to come off. All holders voiced their willingness to be part of a raise if that’s the way it goes. DW hoping not to dilute much more. Very cognisant of the shares issued already, so will looking to absolutely minimise any dilution. No intention of consolidation, as he fully understands the normal impact from that process.

Creaming the Curve
DW describes his relationship with PB as being like brothers. Highly respectful of each other, but they do disagree on things and fight from time to time, but they do understand each other well and always work out an agreement. Says to me that DW is very loyal to his shareholders and is doing absolutely what is in all shareholders best interest.
Seems PB is supremely confident of the oily postcode we are in. PB tells DW not to worry about whats in the ground all the time, so to me and as others I think believe as well, we might have more of the gooey stuff than most expect.
DW confident of creaming the curve. $70 - $100 POO very possible in the timeframe we will be monetising this oily little baby.
Resource value at the current POO $45USD is around $15BN USD. Therefore you can extrapolate yourself what the resource value could be with POO in the 70’s or higher. DW said you have to leave money on the table for the buyer, so don’t get expectations of monetising at the full resource value. I am confident he will do a good deal in the end, which also takes into account getting the best outcome for 88E from the NPI deal with BEX (he is already strategizing this).
Seems confident of his 100 bagger plus call still, even though we didn’t use those exact words, but we did talk about possibility of $ type SP in the monetisation process. I think we are looking at a year longer to do this, so maybe later 2018 is the timeframe or even 2019, unless one of the big boys sees a rising POO and jumps us!
Who knows where the US dollar is going and we chatted about that, as it will reflect in the ultimate return we get? But if it strengthens against the Aussie and the Pound, then it will also have a positive impact on the monetisation value (come to your own conclusions on that one, way too hard for me, even though I do think the US will strengthen no matter who goes into govt).

There is probably more? If I think of anything I will add it later. If any of the others present have anything to add, please feel free to make a contribution.

And by the way, yes DW does have a HC account, but says he rarely looks. So Dave, if you are having a peep , thanks very much for your company, we all thoroughly enjoyed the night and appreciated your candid conversation and hope to do it again whenever you have time.

All IMO, DYOR, MUYOM (Make Up Your Own Mind) and all that jazz
Cheers
Chilly

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Chilly,
Huge amount of gratitude coming your way, not just for your organization of this, but the relaying on of the summary of discussions.

You've always been a on my long list of posters whose dedication and research will have a bottle of your chosen drop coming your way as a token of appreciation from myself once we reach an end game.

Look forward to catching up at one of these meets in the future once I relocate back to Melbourne next year.

Massive shout out to DW too, to have a few drinks and a chat with some retail investors, I am lost for words. Particularly given the unfortunate attitudes MDs/CEOs often have while presiding over smaller miners/explorers.

We are extremely lucky to have a such a down to earth and experienced team behind this as well as the support from the LTH here. One of the few companies I can firmly hold close to my chest as a proud long term owner, unlike the other "flings" that are in my portfolio.

GLTAH!

88E Price at posting: 3.4¢ Sentiment: Buy Disclosure: Held
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