Hi All,
I must confess... I am suffering from some major takeover fatigue. And I know I'm not the only one... come'on... bring on the drills already!
But in all seriousness, I have long ago made my decision, which, as I wrote over 4 weeks ago... I'm not accepting and I'm not going anywhere.
Yes, it is indeed comforting to see quite a few posters electing to stay on the NWE train, much to MINs/CE's annoyance. At the same time I respect anyone's decision to accept or sell on market - this really is a big and for some, life changing decision.
But in an effort to take me to a happier place, I decided today to re-visit the events of LD-1. That is, I re-read all the ASX announcements, as well as some of the key posts of that time.... and I can guarantee I felt a whole lot better. Highly recommend others try it. In fact, all I am doing going forward is focusing on the upcoming 2 drills of LD2 and NED1 and pushing out the noise from the unwanted MIN takeover. Consider it meditation, of sorts.
Got some mail yesterday from MIN and the last bit I had a chuckle... Commenting on the final stages of the takeover, Ellison said: "I'm encouraged that so many Norwest shareholders have accepted our Offer and now have exposure to MinRes's world-class portfolio of diversified assets. Norwest shareholders will receive extraordinary value by accepting our offer and joining us in one of Australia’s fastest growing companies."
Hmmm... I thought I'd try to edit with my own interpretation from my NWE LT shareholder POV... think of it as CE's first (honest) draft....
"I'm disappointed and downright annoyed that so many Norwest shareholders have rejected our offer and have decided to retain 100% exposure to (potentially) the largest onshore gas discovery in Australia. Norwest shareholders will instead likely receive extraordinary value by not accepting our offer and remaining 100% focused on this outstanding Perth Basin Permian play".
All in jest.
So anyway, I revisited some notes of mine from last year... IR presos etc... some key points I thought of interest...
- Next 2 wells (LD2 and NED1) are critical to narrow the wide range of potential Lockyer resource size to be able to accurately quote an independent contingent resource figure - this is critical.
- Plan is to drill LD2 then NED 1 back to back.... 55 days and 50 days respectively, spud to rig release. Efficient and effective.
- The good news is we will have flow testing immediately after the wells are completed (btw this was Iain's words not mine)... so no painfully waiting for 6 months like with LD1. Market will appreciate the immediacy of knowing the flow rates etc. Will they beat the record breaking 117mmcfsd of LD1? My money is on a big fat yes. After all, didn't someone at MIN say LD-1 wasn't even the most prospective hole? lol
- Of the 2 wells, NED 1 is the most critical to confirm potential size of the Greater Lockyer structure given it is 7-8 kms away from LD1. If pressure data etc. confirms what the geos believe then NED1 will confirm size on the upper end of estimates (3TCF+...) and hopefully no field compartmentalisation.
- Also note they expect to encounter oil at NED1 in the Arranoo/Dongara/Wagina formations. Don't discount this... just ask @alexei ii
Maiden contingent independent resource figure likely to come after the next 2 wells. This is significant as I recall it was @jctrout who spoke to Iain at the AGM and he said he was honing in on a maiden resource estimate after both wells (LD2 & NED1) were flow tested. So for me personally, this is a significant milestone event. If we can get a reasonable grasp on size of the Greater Lockyer resource, we can confidently argue and dare I say demand a fairer valuation of NWE, be it from MIN or the market in general.
Now for arguments sake, if we could prove up a 2C of anywhere b/w 400-600 PJe net to NWE then, given recent WGO transaction implied valuation of $2/GJ, we could reasonably argue NWE is worth $800m to $1,200m or ~11.5c to ~17c per share. And this is not including any value for oil or the other highly prospective leads. Food for thought.
The other point of concern of late is funding. Iain confirmed in Nov last year that they are fully funded for the seismic survey and the next 4 wells. He also said the 3D survey cost is ~12m... and from memory each PB wells are now around $15m spud to completion. As we know, this BS M&A will unfortunately eat considerably into NWE's liquidity. But by my calcs we have enough in the bank to cover the $8-9m for 2 wells and 3D seismic. It will be tight but that's cool by me... then we can revisit potential funding required for the next 2-3 wells (LD3 & LD4 + 1 other). As I said before... happy to dip into the brobel piggy bank and help fund this appraisal program. Just not happy to fund any freeloaders on the board...
Next point... t
imeline to production?... from the Nov 22 IR preso... MIN have done heaps of work on this behind the scenes... still looking at FY25 and this was confirmed in today's preso from MIN. It will likely be a phase 1 & 2 development... like what BPT has done with Waitsia... started with a 40TJ/d gas plant phase 1... then step up to 250TJ/d phase 2. There was even talk of the MIN/NWE JV processing plant size being "super-sized"... they see LD being a base case 250TJ/d plant... 375TJ/d likely or even higher if they gain export approval.
The main takeaway from all the above is to realise how significant this resource is and how determined MIN is to get 100% ownership and make a fortune for their own downstream processing needs and for the markets (domestic and LNG export) needs. I encourage you all to cut through the noise, cut through the fear and mis-truths, back your research and trust your gut.
Personally, I am looking forward to the next 3-6 months journey. It might not be easy... but the destination will be worth it.
GLTA
