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Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

Proselenes
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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170200

Postby Proselenes » September 30th, 2018, 5:52 am

Internal CoS for WH-1 is actually 20%. So the Elephant discovery of 2018 boils down to two last chances, CHAR with Prospect S and MATD with Wild Horse-1.

Success case upside is greater on MATD as the prospect is 100% owned and the PSC terms are superb.

A mere 150 million barrel recoverable size find on Block IV for MATD would have an NPV10 of 1.27 billion US$ thanks to low cost of development wells, easy trucking and very good PSC terms ** (that value will be higher now due to rising oil prices)

NPV10 based on Economics run at Dec ‘17 Forward Curve prices: 2018 $63.67/bbl, 2019 $60.58, 2020 $58.56, 2021 $57.62, 2022 $57.25, 2023 $57.22, 2024+ 2% Esc



Well Name: Wild Horse-1 Block IV

Targeting 480 million barrels recoverable (mid case) 100% owned

Additional follow on prospects of 750 million barrels rec. (900 million rec. high case) derkisked in the Wild Horse area if Wild Horse-1 is a success.

Internal company estimates give 20% chance of success for Wild Horse-1

Wild Horse-2 appraisal well already permitted for, in the event of success.

Wild Horse-2 would drill into the other side of the WH lead in the event of a WH-1 discovery.

Due to analogous basin geology across the border in China there is a higher than frontier chance of success for frontier levels of potential

Notable Chinese productive basins include: Junggar Basin 10 Billion barrels recoverable, Songliao Basin 20 Billion barrels recoverable and Bohai-S. North China Basin with 40 Billion barrels recoverable.

Well defined 4-way dip structure and amplitude anomalies that are indicative of hydrocarbons. (Soft amplitude anomalies which conform to structure)

CEO Mike Buck comments that it is “A must drill well”. Royal Dutch Shell have told MATD they want to see Wild Horse-1 drilled.

Endorsed by Wood Mackenzie by their inclusion of Wild Horse-1 on their “one to watch wells in 2018” placing Petro Matad on a list alongside super majors like ENI and Repsol. The only onshore well to make it into the WoodMac list.



** PSC terms (the important bit to value any discovery with)

0% Corporation Tax

Royalty: Block IV 8%

Costs of Exploration, Development, Operations and Transport can be recovered in the success case. The implication for this is that on any success, when coming to arrange finance, this puts the company in a very strong position as it can demonstrate it can repay debt out of Gross revenue rather than profits. Yes, that is remarkably excellent, even transportation costs to sell the oil are recoverable. Pretty much WOW.......... The whole lot, explo, dev, op, transport...all recoverable.

Contractor Profit oil split: Block IV 50% to 57%

You cannot really value an oil discovery unless you also know clearly the PSC terms, then you are able to get a real good read on the NPV10. Given the present oil prices and forward curve the NPV10 value stated above is actually low and should be considerably higher now. The economics and IRR get better the bigger the find, so that is based on 150 MMBO, in the event after any discovery and appraisal that Wild Horse lives up to is Pmean of 480 MMBO recoverable, the figures are mind blowing, thats why its a "well to watch".

dspp
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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170276

Postby dspp » September 30th, 2018, 3:29 pm

Proselenes wrote:Internal CoS for WH-1 is actually 20%. So the Elephant discovery of 2018 boils down to two last chances, CHAR with Prospect S and MATD with Wild Horse-1.


Prosolenes,
Ignoring POS for a moment, and assuming expectation volumes, then what are your NPV (or NPV/share) numbers for WH1, and for Fox-1 ? Then what are your POS for each of these ?

I can appreciate you might not want to pup your numbers in the open, so if that is the case then please do me a favour and PM me a response.

I appreciate it is quite a cheeky ask that I am making. But I'm short of time. And I have shared my workings on other E&P things :)

Pretty please
- dspp

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170390

Postby Proselenes » October 1st, 2018, 4:01 am

Hi dspp.

Do not have the internal figure for Fox-1 but by my estimates its around 27%, whereas the internal for Wild Horse-1 is 20%.

The companies own workings for NPV for finds on Block IV and V are below (WH-1 is Block IV and Fox-1 is Block V)

Image


If you are looking for POSc for WH and Fox, then WH is 9% and Fox is 15% in terms of POSc

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170398

Postby Proselenes » October 1st, 2018, 7:22 am

Operations Update.

They are behind where I expected them to be, however, they are confident they can spud and complete Wild Horse-1 this year, with spud now being later this month.

https://www.investegate.co.uk/petro-mat ... 00054310C/

.

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170399

Postby Proselenes » October 1st, 2018, 7:28 am

Looks like they have joined Twitter too, finally.

https://twitter.com/Petro_Matad

.

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170456

Postby Proselenes » October 1st, 2018, 12:05 pm

Reworked............ Fox-1 COSg comes out imo at 33%.

So WH-1 COSg (Pg) is 20% (Pc 9%)

Fox-1 COSg (Pg) is 33% (Pc 15%)



Proselenes wrote:Hi dspp.

Do not have the internal figure for Fox-1 but by my estimates its around 27%, whereas the internal for Wild Horse-1 is 20%.

The companies own workings for NPV for finds on Block IV and V are below (WH-1 is Block IV and Fox-1 is Block V)

Image


If you are looking for POSc for WH and Fox, then WH is 9% and Fox is 15% in terms of POSc

dspp
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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170475

Postby dspp » October 1st, 2018, 12:44 pm

Prosolenes,

MATD mkt cap is £44m at a shareprice of 6.5p (£0.065).

NPV for Block IV (WH-1) + Block V (Fox-1)

Fox-1 POS is 33%

WH-1 POS is 20%

****** what is the volumetric split block V vs block IV ***** ????

must dash,
dspp

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170671

Postby Proselenes » October 2nd, 2018, 2:49 am

WH-1 is Block IV.

Pmean recoverable barrels potential for WH-1 is 480 MMBO.




Fox-1 is Block V

Pmean recoverbale barrels potential for Fox-1 is 200 MMBO

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170673

Postby dspp » October 2nd, 2018, 3:38 am

Prosolenes,

Thank you very much. So being simplistic as always:

MATD mkt cap is £44m at a shareprice of 6.5p (£0.065).

NPV for (Block IV (WH-1) + Block V (Fox-1)) = $451mln @ 50MMBO; or $1270mln @150MMBO

Fox-1 POS is 33% & Pmean recoverbale barrels potential for Fox-1 is 200 MMBO

WH-1 POS is 20% & Pmean recoverable barrels potential for WH-1 is 480 MMBO.

Pmean total = 680 MMBO

(eh, is there an error of 10 here ?? Pmean tot = 680 MMBO vs cases of 50 MMBO or 150 MMBO ??)

On face value at a mid-point case of 100MMBO it would be an NPV of approx $860mln. For simple calcs just use 25% POS on average. That yields $172mln.

On the face of it $172mln expectation value vs £44mln mkt cap is fair.

But drilling a successful exploration well does not derisk to the NPV numbers given above for an instantaneous farmout. You farmout at a discount, that's the nature of the game.

Using my HUR $/bbl numbers 2C might be (say) $1/bbl whereas 2P might be (say) $10/bbl. So a factor of 10 difference. So take that $172mln and reduce it to $17.2mln. Versus a mkt cap of £44mln. Not so fair.

So two questions:

1. What is the explanation of the disconnect of 680 MMBO vs (50 or 150) MMBO ?
2. Is there a good reason to assume a lesser farmout discount ?

Regards,
dspp

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170726

Postby Proselenes » October 2nd, 2018, 10:20 am

Hi dspp.

The NPV cases were only done for 50 and 150 as it was said "if you do one for the big wells the figures just become mind blowing."

They are actually drilling 5 more wells.

So :

WH-1 Pmean 480 MMBO Block IV/V
Fox-1 Pmean 200 MMBO Block IV/V
Red Deer Pmean 43 MMBO Block XX
Gazelle Pmean 13 MMBO Block XX
Heron Pmean say 15 MMBO ? Block XX

Total Pmean is 751 MMBO

NPV10 for Block XX 71 MMBO circa 400m US$

NPV10 for Block IV/V 680 MMBO circa 3600m US$


Total NPV10 4000m US$.

Apply 25% POS = 1000m US$

So even at this stage if you apply a factor of 10 discount after the 25% POS - you come to 100m US$ as a pre-drill target market cap. At the moment its 57m US$ so in reality it should be around the 9p to 10p range at the moment.

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#170764

Postby dspp » October 2nd, 2018, 11:52 am

Prosolones,
Thank's for the answer. I could see I was not understanding something. That explanation makes perfect sense. I will watch with interest.
Regards,
dspp

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#171289

Postby Proselenes » October 4th, 2018, 6:17 am

Looking at the RNS history you can see clearly the change from when the new CEO Mike Buck was brought in.


5th July 2017 Ridvan Karpus (RK) CEO

Plan to drill Snow Leopard-1 (50 day drill) and then Wild Horse-1 (20 day drill).

(The regime of RK wants to drill SL-1 and then WH-1. We know from presentations that SL-1 has no amplitude anomalies and is supposed to be self generating. WH-1 has amplitude anomalies and is based on migration from nearby massive kitchens).
________________________________________________________________________________

19th Sept 2017 Ridvan Karpus (RK) CEO

Plan for restructure of the management team with experience being bought in (RK will step down).

Rig for proposed SL-1 and WH-1 still not certified and not likely to be until at least October (maybe later) and so, with mobilization from East to West then drilling cancelled until 2018. Both ongoing permitting.

New 3D seismic over Tugrug basin. New 2D based on comments from potential farm in partners.

________________________________________________________________________________

21st November 2017 Mike Buck (MB) CEO

Drilling rig is now certified, finally. Contract amended.

________________________________________________________________________________

19th January 2018 Mike Buck CEO

MB drops Snow Leopard-1.

New drilling program will be Wild Horse-1 (always drill your best first) and then Falcon-1. WH-1 has bright amplitude anomalies. Falcon-1 has live oil in nearby core hole.

At this time both wells are in the process of permitting, only SL-1 is nearly completely permitted but now dropped like a lead balloon.

________________________________________________________________________________

13th February 2018 Mike Buck CEO

Plan is to drill WH-1 and Falcon-1, permitting is in progress for both. Wild Horse-1 is now a 30 day to 45 day drill.

________________________________________________________________________________

12th April 201b MB CEO

Bugger..........the new 3D has revealed the Falcon-1 prospect is very much smaller due to faulting now apparent with the new 3D. In view of this Falcon-1 is dropped and while they work on the 3D for a new prospect now seen (later will be known as Fox-1) they will now put Snow Leopard-1 back into the drill program.

Its the only well nigh on permitted for and Wild Horse-1 is still waiting for a few final permits.

________________________________________________________________________________

My comments/opinions = At this stage Mike Buck is feeling stressed.

His drill program is now a well he wanted to drop (SL-1), then the big prospect Wild Horse-1 he wants to drill, then 2 small wells on Block XX. Not very awe inspiring at all. He knows there are good other targets from the new 3D and 2D.

Drill program now :

1 Potential duffer SL-1 he dropped.
2 Great Propsect WH-1
3 Small low risk Block XX drill
4 Small low risk Block XX drill

________________________________________________________________________________

14th May 2018

SL-1 is fully permitted for. WH-1 still does not have all permits in place.

New exciting Fox-1 prospect from the new 3D which replaces Falcon-1, but which has to start the long permitting process.

________________________________________________________________________________

13th June 2018

Placing to raise money to add 2 more drills. Directors buy in to the placing at 10p a share price.

New drill program :

1 Potential duffer SL-1 he dropped.
2 Great Prospect WH-1
3 Excellent Prospect Fox-1
4 Significant Prospect Red Deer 1
5 Small low risk Block XX drill
6 Small low risk Block XX drill

________________________________________________________________________________

My comments/opinions = At this stage Mike Buck is feeling much happier. Even though he still has to drill the SL-1 well he dropped initially (has to drill as its the only well fully permitted for) he now has 5 excellent prospects to drill after it. Wells 2 and 3 being high impact, well 4 being excellent size and then wells 5 and 6 being good in that they both individually are worth more than the current share price on success and are relatively low risk.

________________________________________________________________________________


The rest is then very much near term knowledge. WH-1 finally got the chemical permit during SL-1 drilling last month and so can go ahead. SL-1 drilling was a duster but a good stratigraphic test well in effect, lots of data obtained.

So, MATD have drilled the well that Mike Buck dropped initially, and the next three wells are the ones that he really wants to drill. Wild Horse-1 then Fox-1 and then Red Deer-1.


Thats the hindsight after the event read of the operations RNS's and what happened in terms of the operations program. You can see why MB is pushing to get WH-1 done this year, its the well he really wanted to drill first, with both Fox and Red Deer being new prospects and wont complete permitting until Q1 2019.

Whilst some people may bemoan the 2nd placing - my view is that Mike Buck turned the company around at that point. Going from (ignoring SL-1) one prospective big drill and 2 small ones, to then three prospective big drills and 2 small ones. That second placing at 10p in which directors purchased lots of shares, is what has left MATD so exciting now with lots of back up. If they had not done it then things would not be so much lower risk now.

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#171321

Postby dspp » October 4th, 2018, 9:00 am

Proselenes,
Many many thanks for that historic account. You've just saved me a lot of time trying to figure out how they got to where they are.
Regards,
dspp

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#171328

Postby Proselenes » October 4th, 2018, 9:18 am

Your welcome.


New tweet.

Image

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#173919

Postby Proselenes » October 15th, 2018, 4:00 pm

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#175499

Postby Proselenes » October 22nd, 2018, 12:49 pm

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#175668

Postby Proselenes » October 23rd, 2018, 7:15 am


Proselenes
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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#175669

Postby Proselenes » October 23rd, 2018, 7:21 am

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#177785

Postby dspp » November 2nd, 2018, 12:30 pm

Edison note
https://www.edisoninvestmentresearch.co ... 1491&LANG=

"Petro Matad offers investors exposure to a fully funded exploration campaign targeting near-field, low-risk prospects as well as basin opening,
high-impact potential. The 2018 two-well programme in blocks IV and V will test the yet to be drilled Baatsagaan and Taats basins in the heart of
Mongolia, targeting 570mmbo of mid-case prospective resource. In Block XX, close to existing production, two low-cost wells will test extensions of proven plays in H218. In 2019 drilling returns to the Tugrug Basin to test a 200mmbo prospect, close to live oil shows and mapped on 3D seismic, as well as a 48mmbo target on Block XX analogous to producing fields to the north east. Attractive fiscal terms and the scalability of developments enable relatively small oil discoveries to be commercialised in the current oil price environment. Our risked valuation post assumed farm-out value dilution is 30.8p/share at 70$/bbl Brent long term. Valuation remains highly sensitive to oil price assumptions and exploration outcomes"

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Re: Petro Matad - Fully funded 6 well campaign for H2 2018/H1 2019

#178332

Postby Proselenes » November 5th, 2018, 9:10 pm

Excellent timing for the rise yesterday..........as we know from Snow Leopard-1, on day 39 just as they entered the upper secondary target and got C1 to C5 gas shows.......big volume day.

And now, just as they should be entering the upper of the 3 targets (largest at the bottom), we get some good buying coming in.

So, looking good......nothing is certain, but looking good. Need to see sustained buying and a rising price, with lots of fall backs as people sell for a quick profit, followed by more buying.........repeat and repeat.


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