RE:RE:RE:RE:RE:ellis martin interviewBertie - thanks as always for all of your keen insights. My impression was that the issue with the Well 1 & 2 field is not cost (see prior statements from DME about it's ability to monetize the non-helium noble gases found there), but one of timing. The removal and processing of those non-helium noble gases requires additional processing equipment that now will require (due to supplier delays) additional time - a bit of speculation, but I'm guessing we won't see the Well 1 & 2 gas being processed and sold before 4Q2021.
All of that high grade Well 1 & 2 gas is still there. The development of the Well 4 field allows extraction, processing, sale and revenues to come online more quickly. I also like that DME first effort to stand up production and processing will be a simpler process, which should derisk that effort (which will be more complex, but more valuable) by DME, which has never
actually done this before.
As I see it, original story and value is still there, but that timeline has been pushed out. Added to that is this nearer and simpler opportunity to develop and sell helium at the Well 4 field.
Bertie20 wrote: Hi goldenarm. It's a worthwhile debate. My view was that the news was perfectly good if the company was valued at $2 or so a share, but not for a company that was at $4.30 a share. In my view, the value reflected expectations of strong profits ($200m a quarter had been mentioned by Don Mosher), and fairly soon. So, essentially, a combination of time and money.
With the company stating that it was prioritizing wells near this 1% well, my expectation is that the wells will not be as profitable as when we were assuming 1,2,4,5 and 6 (or even 1, 2 and 4) at start-up. Wells 1 & 2 will eventually come on line, but later. So less money, and a longer wait. The high nitrogen content helps, but there's an implicit
negative that is not heard mentioned previously--namely, that the gas in wells 1 and 2 will cost more to produce. And a higher margin helps, but the much lower helium concentration in my view probably more than offsets that.
Of course, I don't, however, have any actual detailed numbers for the potential returns on well 4 and its offsets. So my assumptions might all be wrong. But that, I hope, explains my reaction on the day of the news release. All 100% my point of view.