Just finished dinner with a friend. He said
Triangle acquired AWE's 57.5% in Cliff head announced 20 June 2016 with 3.8 million barrells of remaining reserves for $3.2 million. Then in March 2017 the remaining 42.5% was purchased for $4.9 million. All up Cliff Head was worth $8.1 million to the previous owners. Now it is 2020 and the fall in the oil price means that the reserves have dropped to zero because the cost of production is higher than the price paid for the oil. He said that they a saving money now but eventually something will breakdown needing a big spend to fix. He also said to pretend the abandonment costs don't exist because the story would be really bad.
Traingle announced the Cliff Head Cliff Head Renewal project on the 23 April 2020 and I asked how would they action this. I am told they would need to drill at least 2 wells and they can't be cheap. $40 million was mentioned over the drinks and BBQ. My friend says that maybe someone might value Cliff Head at $5 million (but he laughed). Using that number and needing a further $40 million suggest the shareholders would be diluted to just 12%. Everyone can say that the State Gas shares have value and yes maybe but it would just cover abandonment costs. And the other permits are worthless in this market.
I think this is a stock to watch as you see the final death throws unless they are put out of their misery with a mojor breakdown at Cliff Head
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