If you have been following closely the permit applications...

If you have been following closely the permit applications displayed on the NEATS website, you would have noticed EPP41 and EPP42 have recently been rejected on the 09/02/2021. These permits were trying to make a variation to their work program. Similarly PEP-11 is also trying to make a variation to its work program. If the regulator and Keith Pitt are willing to reject these EPP permits, then it is quite possible the regulator and Keith Pitt could reject the PEP-11 applications.





We already know that a NOPTA representative has informed us that "On the other hand if the application is refused, the titleholders will be in non-compliance in relation to the Permit Year 4 work program commitments. This may be grounds for cancellation of the permit under section 274 of the OPGGS Act. In that scenario NOPTA may initiate cancellation proceedings." 50641754 (correspondence from NOPTA as described in Kansaskiwi's post)

If you would like the black and white rules for applications to NOPTA and to look for yourself if PEP-11's current condition is compliant see this NOPTA guide: Offshore-Petroleum-Exploration-Guideline-Work-bid.pdf

The main problems are in this below extract:

Work program:

1.16.Permit years 4, 5, and 6 are referred to as the secondary term. Each year becomes guaranteed upon entry and the minimum work requirements must commence and be completed within the permit year. (this would mean the drill and the 3D seismic would become "guaranteed" if it were not for the suspension of year 4 during the NOPTA application)

Past Performance:

1.38.Past performance of the applicant, parent company, where applicable, and/or directors is a factor the Joint Authority will consider during the decision making process unless the company and directors have a current Good Standing Agreement – refer to section 4 of this guideline.

1.39.Past performance refers to the applicant, parent company, where applicable, and/or company director’s history, against the publicly available Titles Register over the previous five years, such as cancellations or expires in default under the OPGGS Act.

1.41.The Joint Authority may not offer an exploration permit to an applicant on the basis that the applicant’s past performance indicates a history of non-compliance with permit conditions or the applicant does not demonstrate a proven ability to significantly advance the assessment and understanding of the petroleum potential of permit areas.(PEP-11’s first renewal program originally started in 2012and was meant to end in 2017, are they likely to get an extension which doublesthe original deadline? This would mean they essentially had 2x renewals(usually 5years per renewal) for the price of one, if this gets approved…)

i)Significant appraisal work over previous petroleum discoveries within the area, if any.

Refusal to grant an exploration permit:

c)Proposed work program is assessed to be inadequate to significantly advance the exploration status of the area.

g)Joint Authority is not satisfied the past performance of the applicant in Australia or internationally.

Applications made under the OPGGS Act maybe submitted at any time but should not be made later than 60 days before the end of the primary term or the permit year. It is the responsibility of the titleholder to ensure there is sufficient time for a decision to be made before entering the next guaranteed year.

Work equivalent variation

2.21.A titleholder may apply to replace a guaranteed work activity with an equivalent work activity (Are Advent replacing the 3D seismic with an equivalent work activity? If not, this should fail according to the rules.)

2.22.The Joint Authority will generally only agree to a variation if the proposed replacement work program activity is a similar or superior technique and the activity meets or exceeds the objective of the original work program commitment.

2.23.It is the responsibility of the titleholder to ensure the Joint Authority has agreed to the work equivalent variation before commencement of the work.

2.29.An application should be supported by exploration results from the primary term or previous permit years and technical evidence as to why the work program should be varied.(The variation needs to be 1)supported by exploration results 2) include technical evidence as to why the work program should be varied. Notice, that saying “the community doesn’t want3D seismic” is not a valid reason according to the rules.)

Renewals of a permit are only meant to last 5years, it has currently been 3114 days since the renewal or 3114/365days = 8.5years. In the interests of fairness, it is common sense that a permit term that is only meant to last 5 years should not magically be almost doubled due to non-compliance and a past history of not progressing the permit.

Due to this risk I have changed my size down to a 25% position to reflect the risk level which has now increased due to the recent EPP rejections.



The conclusion is, there is certainly risk investing with BPH, as much of its success is dependent on PEP-11, a rejection based on non-compliance and a past history of not progressing the permit to the point where the original permit length is almost doubled, will be a big problem. A healthy stock forum should include the most bearish points of the company and they should be met with mature discussion.