RE: RE: I thinkJulien,
You argue a pretty good case and I do agree with you that TPL has not performed in terms of share price development post Doris-1 discovery (pre Doris-1 we were at also around 1 CAD). As I wrote earlier on this matter, the main reasons for that is 1) Not being able to deliver test results along market expectations (i.e. like Doris-1) and 2) Lack of visibility on prospects and plans going forward. Add to that a rather high burn rate, and you have the ingredients for a poor share performance, especially in today’s risk-adverse market.
However, for someone who follows TPL as closely as you seem to do, I think you are very conservative in your views and some of the statements you make are in fact not correct, which I would like to point out.
At the beginning they let us dreaming that Doris was 60km2 so around 150MM to 200MM barrels of oil reco. Then few months ago we discovered that their is fault..... so it is a lot more smaller, around 30MM reco.
It’s not as simple as this, first of all, the 150 number which I have stated previously is for both Cret and Jur, with a split of 90 / 60. Secondly, when TPL refers to 90 MMbbl connected volume, they are talking specifically about the Doris-1 well, and not the Doris “field”. The way I see it is that this area is more complex than initially thought and that the map has to be re-drawn based on this new concept of fans and stratigraphic trapping, which in the end of the day is a positive factor. We are still in very early stages and several more wells need to be drilled in order to have the full picture. Just so every one is aware, 90 MMbbl connected volume is very significant, and constitutes an area about 10-12 km2. If 30 or just even 20 MMbbl can be drained from one well, we are talking about world class reserves per well! Previously, Max Petroleum has been mentioned here, and I have followed that Co for many years, but never bought in. Part of the reason is that the Caspian post-salt play has a very low reserve density, and low production per well, rate and total. If you look at their latest presentation, you see a case example of what I’m talking about on page 17. Reserves per well is 0.8 MMbbl and NPV/bbl is 8.8 (well above the number you’re throwing around Julien, but probably on the optimistic side. I prefer 6-7 USD/2P, especially in a corporate setting)
Dero is dry for now and first zones of Kalypso are dry too. Hopefully we still have last zone to test.......
Dero Jur was drilled close to the OWC, so that is clearly not dry. Drill updip, and you will find oil, simple as that. As for the SS, this well has been placed on the edge of the Cret “Doris-fan” and possibly other fans as well. With the new mapping, the next well will be able to penetrate the fan where it is thicker. And again, these are appraisal wells, some of them are bound to be dry, and should be! The main zone of Kalypso remains, and we have no way of telling if the POS has decreased or not based on lack of released info on shallower target. In my book, this is bonus, and I don’t think the share price should drop more than a few percent if it’s dry, since so little of TPL exploration value seems to be factored into the SP.
During that time they raised more than $150MM and they prepare to raise again some money in 1 or 2 months
This is purely your speculation and you don’t know that they are planning to raise money in 1-2 months. Fact is, end of Q1, they had 50 MUSD working capital, and the burn rate in Q1 was 20 MUSD, of which 16 was investments. With increased cash flow going forward and completion of 2nd phase test facilities, revenue should be up and spending down. I would think any new capital raising should be able to be postponed well into Q4, and hopefully in a better market than today’s. To go to the market now would be crazy, and any raise should also be smaller than the previous one. The big capital influx is needed post FID in 2012, hopefully through a partner.
When you look at TPL CEO he is paid at more than $5 million almost the same salary as the CEO of Shell or Total
I agree that the good doctor is (too) well paid. In Q1 statement, TPL paid 765,000 USD to Vazon, which is Robson’s company. It would be interesting to know which other staff are included in that remuneration, since it stated “services of Dr.
Robson and other Vazon employees are provided to the Company”. On an annual basis, this is close to 3 MUSD, and must be considered very generous. I would like to know what the institutions that funded the 100 MUSD in October thinks if this…
On the top of that all the discovery are in Kazak (very fiscal term) with a very expensive pipeline to build up.
Fiscal terms in Kazakh are harsh, but not very different from other well established petroleum provinces like Russia, Norway or Angola. According to my sources, a discovery of around 30 MMbbl is subject to a government take in the order of 70%, give or take 5% depending on the discount rate used. The building of the pipeline is in my mind almost a luxury problem, because that means we have too much oil to be able to truck it out (+10,000 bbl/d). When that day comes, Chinese co’s will be lining up to fund the development…
The only positive thing I see is Tajik but it can take many years before we see any reward here.
Agree that Tajik is a great asset, but I don’t see why it should take “many years” before we see any reward. We have a recent discovery that within a year should be in test production and generating revenue. We have a huge prospect inventory and we have a farm-out process ahead of us which will kick off when more seismic data have been collected. The clouds should lift on this very interesting asset in the coming year I believe.
What TPL needs now is to release news that phase 2 on Doris has started, release positive test results from the acidized Jur zone on AKD-05, release a positive test on East Olimtoi Alai, and hopefully announce discoveries in EO Bukhara and Kalypso. This should bring us back to firm ground around at least 1.5 despite the terrible market sentiment.
The glass always seem to be half empty with you Julien…
Best,
Darcy