RE:Trillions of gas/ billions of oil in Magallanes Basin of Arg"Timing is Everything" one wise person once said and to quote another wise person, good fortune isn't a matter of luck but rather being prepared when the opportunity arises .. That's just where we are now ..
Prepared: RPT over the past two years has cleaned up their balance sheet to the point of no debt and close to $5,000,000 of net revenue coming to the company annually.
Though they had to suspend the long horizontal well due to mechanical problems, they encountered the target zone exactly on prognosis .. This confirms an excellent understanding of the offshore resevour by RPT and it is now simply a matter of going and getting it. You never learn anything from the easy stuff and RPT has certainly learned from this experience. Potentially,the resevour could be drilled vertically with a jack up rig which likely would only be marginally more expensive than the long horizontal and technically much less complex. This also would likely be much more interesting to a joint venture partner, the reason being, one of the most significant costs of drilling with a standup rig is mobilization of the rig to the site .. Thus, drilling multiple wells helps the economics substantially .. RPT has 3 development locations and additional exploration targets. This brings the cost per well down substantially, improves economics even if we share the opportunity with a JV partner and substantially reduces the risk in drilling.
These off shore wells as well as the re completions are all conventional well, so no need to ride a steep learning curves as to how to develope the fields unconventially. T will likely take the better part of a year and a half to evaluate and re complete the existing wells and drill the three offshore well, horizontally, or with a stand-up rig. What happens in that year and a half .. Lots.
The President of the country who has been unpredictable in her energy policies will be gone as she has been in office for two terms (Similar to the States, presidents can only be in office for 2 terms). Argentina is spending great sums of money importing oil and gas and from articles on the topic, understand that they need to have international companies come and develop and monetize their resources. In recent months, Argentina has put into place a much improved environment for oil and Ges development in the country.
RPT can, over the next year and a bit do the engineering work and capital raise to expand and optimize their 100% own gas plant which could increase capacity substantially as well as net backs per GJ. This alone could substantially increase the value of the company.
So in say six months we have the re completions done and have added 800 boe's of production, bringing the company to over 1000 boe/day,
In the six month to 18 month window we have three offshore wells drilled and completed with a rates of between 2000 to 5000 boe/well .. Assume we have to share half of that with a partner, we will have added an additional net 3000 boe - 7500 boe's to the company.
At the same time, the plant expansion and optimization can be completed, substantially increasing profits form gas that will be coming on stream from us and our partner(s) as well as third parties.
at the same time, the existing administration will be leaving and likely a new and more progressive leader will be put in place, improving the environment for oil and gas development in Argentina.
As another wise person oce said, there's a time to buy and a time to sell .. With still a great deal of unconventional lands to be developed owned by RPT, this might be the time for the company to sell.
The fascinating part of all of this is that is can all be done with the company's existing cash flow, with the exception of the plant expansion which can likely be financed in Argentina.
Now get your pencils out and see what 22 million shares would be worth with all of the above in place .. In a year and a half .. It looks like $7.00/share to me of course as always, IMHO.
Do your own due diligence people, always, cal the president, talk with him to get a better read on it all .. The question is, can they implement this plan .. The directors and management are all seasoned oil and gas professionals .. And I suspect they were a little embarrassed by the first goaround .. They have spent a lot of time cleaning this company up and getting prepared for when the timing is right .. And that time is now.
All the the best to longs,
Doc