Hopefully this might help the new ones.
Oil companies often judge an Oil play as a simple Risk vs Reward scenario. <--- this is known as Expected Monetary Value (EMV)
Which is basically - what is the cost and chance of the Risk vs what is the Value and probability of the Reward.
Refer the below image to see how they calculate it.
View attachment 122039
Now as you can see in the above image, the Probability Of Commercial Success (POCS) multiplied by the Potential Value is the number we need to be BIG.
The potential value is determined by the amount of recoverable Oil and the expected Oil price... Both of these we cannot change.
But what we can change, is the Probability of Commercial Success!
How do we change the POCS?
By getting more data!
Better information, Drilling a hole down there and seeing what is there and being able to say - "Yup this really looks like it will work, and here is all the data to back it up!"
Other things that improve the Probability?
Things like existing 3D seismic (which we are planning to buy), New 3D seismic on specific areas (which we are planning to contract), and information on other nearby wells (which we need to sweettalk to Great Bear about) AND... Drilling more holes (like the 10x Wells they refer to in the above image)!
BUT for the moment, the big main purpose of ICEWINE#1 is... (drum roll)
To go through and Increase the Probability Of Commercial Success!!
This will be done through the Data analysis and Modelling of the Drill Core results.
View attachment 122035
Why? Why is it important to improve the POCS at this stage?
Because Drilling holes is expensive, Acquiring 3D Seismic is expensive, just about everything in the Oil industry is damn expensive!
Where does that money come from?... Well we could do a Capital Raising every 6 months and dilute the hell out of the stock until we have enough money... But that certainly sucks to any Early investors, or the small guys who can't just keep topping up each and every time.
So Instead... we Increase the Reported Value of our Holdings, so that we can do a Joint Venture (JV) wherein they Put forward $350m in cash, to pay for a drilling campaign that will cost them $87.5m (after rebates... because they will get 75% of the costs back)... and in return we give them something like 10% of our acreage (the % figure of the acreage will actually be determined by the calculated value based of the POCS).
So Icewine#1 is about gathering the data to increase our POCS.
And thus our $20m company, with 212,000 Net Acres (that we bought for ~$30/acre) will hopefully have the data to show that we have something like $655m worth of Oily Acreage (based on 30% POCS), with the potential to increase to upwards of $1.8b!
WoW !... Yes but it is all based on probability and Data analysis etc..
Sounds easy right... Well actually it is some pretty deep data crunching required.
Check out the below image to see exactly what type of Data analysis they have to do... and that is why it takes months of Lab tests to get the Data and then need to model it.
View attachment 122036
So... is this a Guarantee winner?
Nope! Dave Wall (CEO) himself said that there is a 75% chance of Failure!
And hopefully each stage of things will help to bring that chance of Failure down until it is just 1 big chance of Success!
And... if things do lineup in the right sequence... well then 20-30-+++ multiplier is definitely possible!
Not Investment Advice, just my own Analysis and Opinion on things.
Good Luck to all Holders!
(20min delay)