What can we expect next from Mart First at bat is UMU9.
Looks like the company did a very good job on UMU9. This well is so important that the company should have and did take their time to drill it. The first part was drilled at 8,000 and the casing was done before they continued. My understanding is that they just did not do a normal casing but a very strong one. As they go deeper there is a lot of risks of high pressure and the last thing we want is for them to blow up the well. TD should be announced imminently. Monday sounds good to me, please.
It will, I hope, include some production numbers. My guess is around 12K BOPD. It takes time to move up to 15K. Pipelines are a bit tricky in load balancing since it is like a spider web down stream.
I stated before what it could mean if they found news zones with 9. It could be as many as 6 of them if you prorate it to the depth, the new zones may go back to where 6 is just like the upper zones and maybe as far as where 12 is planned. That's about 3 km away. I need to stop drooling on the reserves numbers.
We may be seating on a very very large deposit.
We should get a spud of UMU10 in about 2 weeks.
Next is the Shell deal. (2 weeks time frame IMO)
Now, one more time to set the pipeline expectations. My understanding is that the Shell deal is not a pipeline deal. It is a crude purchase agreement. I hope everybody got that one straight. The agreement is the first step to getting a pipeline.
To make it simple in order to be able to finance a pipeline you need production "check" and somebody to buy the crude on the other side "Shell deal, almost check" You also need a deal to connect to a larger pipeline (pumps, equipment etc.)
The 40 or so km pipeline would cost about $60 to $70M and be financed at 80% with 51% going to a partner and the local government (IMO) just like the AGIP pipeline. My understanding from a long time ago is that the cost would be eligible under the JV as a reimbursement with oil. What a deal!!
Time of construction would be short but with all the land and permit deals we are talking 14 months total time frame.
Next is the restricted cash reversal.
It's very large and complicated. It is taking a lot longer than I anticipated but it's coming. It's a big number. At least $20M in my forecast. No time estimate but soon.
Next during Q1 is Reserves
Q1 will be the time to work on the reserves assessment due first week of April. The 51-101 report will be for reserves as of December 31st 2011. It means that UMU9 will not be included but 7 and 8 will be included. However, if you read the rules you can do an update any time as long as it follows the same format. I would anticipate a release of the 51-101 in early April that would include a February or March update at the same time.
How big will the increase be? Beats me but expect a very big jump of the 3 digits percentage kind.
Next, Year end results.
We will get that at the end of Q1 and it will show a very large increase year over year. We all know that of course but the new to Mart investors do not.
One more item for Q1 will be the $6M payment from the insurance company. Nice chunk of change.
Of course the other one is the special dividend.
A quick calculation will tell you that a 10c divy is affordable at the end of Q1. It is a hot subject and I feel the company will deliver.
Forecasting Mart.
If the expectations of UMU9 prove to be true it is obvious that the company will need a much accelerated drilling program. New rigs should be in the forecast for mor drills around the UMU9 area, re drill around UMU6 and go for the formation where UMU12 is planned. One pre requisite is that Shell deal. The rigs are $3M or so a month to operate and you have to book them for a long period of time. You want to make sure that you have a good plan in place before you do that.
If all goes well this field could produce 30K to 35K by year end.
Anybody wants to put a valuation on that? :-)
A wild card is the sell of Qua Ibo field with 29.6 Mb of probable and possible. Not sure what it is worth since it is hard to get to.
I also think that other corporate actions will be necessary but that's another discussion.
The company is moving to being a dividend paying company. They could afford 20c a year or more by the end of the year!!!!
GLTA it is going to be fun.
Oullins/Digi