RLE update

An update based on my conversation with RLE this week.

No reserves until July IMO. RLE has been instructed by its consultants to go back and flow their wells again in order to establish reserves. This will add to the flow rate, well decline, pressure build up data and give enough confidence to declare reserves. I asked if this was due to worse than expected results so far but RLE indicated it was the consultants being ultra conservative.

The plan is to conduct extended flow tests again in June, then proceed to reserves (hence my July estimate).

I have no doubt this extra work was the reason for the cap raise. RLE indicated they would have run out of cash prior to the OA exercise date which is why they called the raise when they did.

I asked about the pressure at T3 and it was 'the same' as at T2. Pressure build ups observed were good and well decline was also 'good'. I asked what RLE expected and they indicated about 2/3 of the initial rate after a year. I.e. ~1.4mmscd at T2 after a year of flow.

All cultural and environmental work for the pipeline was completed at the time they submitted the application. The application was on public dislpay in QLD in Feb 2019. RLE has no idea when they expect approval but noted the government overall is very supportive of gas and that they haven't received any objections as part of the public display process.

GSA candidates have been shortlisted. Any agreement will be subject to conditions precedent i.e. funding on hurdles such as pipeline approvals and reserves. Pricing would be fixed between the $8-10/Gj range IMO.

SB is the largest OA shareholder so any theories about management not rewarding shareholders are bogus IMO.

So many positives, gas prices etc but i'm more sceptical than ever. I've sold my heads but still have way to many options. Sadly that includes OAs. This is such a good story and i'll probably be back into the heads soon but i see light elsewhere until July. I honestly dont think a GSA and pipeline approval will move the SP above 10c right now. Reserves are where its at and i may just wait until that announcement.