Moosehead and BeyondWe now turn to well number three of what now looks like a three well drilling campaign for Namibia. Based on the 2012 DeGoyler & MacNoughton (D & M) report, the final prospect, “Moosehead,” has a slightly higher chance of success than that for Murombe and slightly lower than Baobab and Wingat. Unfortunately as we read the press report and the assessments of those with industry experience, it looks like the Brazil geological model does not translate to Namibia. With that, our chance of success looks lower than previously speculated.
On the Helios Chariot website, the chance of a Moosehead commercial “oil” strike was listed in a June 10 posting at 12.5% with the chance for reserves between 1.5B (D & M) and 5.5B (HRT) at a P50 level. The estimated likelihood of P50 oil was a 6% chance of success. If you include commercial gas in your mix, the possibility of success increases to 25%, but that would require substantially different infrastructure for future production. So for those who bought based solely based on the Namibia data, our pre-Wingat prospects have dwindles from a near 100% statistical chance of one in four oil and/or gas successes to 25%.
While we are in the dead of summer, it is time to take off the shades to focus on the future. Many on this board were critical of the July 1 announcement that the BOD was establishing a team to consider alternatives. At the time I said that I believed the BOD acted responsibly in moving in June rather than waiting until September when all the results were in hand. Frankly, if our share price changes are any indication of the dates that we hit Baobab and Murombe, we can only speculate that by the date of the late June BOD meeting that they had log confirmation that Baobab was a bust. With back of the envelope planning, BOD members began developing alternative plans. Again, I say good for them.
Market forces are brutal and reality is often like a cold slap in the face. Even with that, we still have some positive aspects at HRT, which include national pride. As I recall, HRT was referred to as the largest or one of the largest ever offerings in Brazil. With a struggling national government, we can hope that national pride will encourage government assistance in facilitating a deal for the Solimões gas field.
On top of that, Polvo can float us at some level – assuming it closes. More farm-in options can help with the Solimões field. Finally, Moosehead might just work – it is our 6% solution.
Before Monday, each of us need to consider our risk tolerance and timelines. With enough time, gas and Polvo could salvage my $1.50 basis for a 2-3 bagger. Before then, another duster at Moosehead could also allow me to sell now and reenter like some of you at a lower basis. Frankly, I bought this security for the Namibia drilling campaign, and I will hold until it is completed.
I enjoy reading most of your posts, and if anyone has access to management, I would greatly appreciate their input. For a while it sounded like Ogo had such access, and I hope he can post again in the near future.
GLTA