RE:RE:txp vs Recon On top of goa's comments, lets say they hit on all three of their wells.
- What do they do if they find gas versus oil? Oil atleast could be trucked, however gas has a risk of becoming a stranded asset.
- In an oil scenario, they still have massive logistics challenges. Its not like their is a storage depot for their oil at the railway line 140 miles away.
- If the oil needs to be processed, is their a refinery nearby? If not, how do they get their product offshore? Reminds me a bit of the early days of Bankers Petroleum except no brownfield redevelopment, all greenfield.
All the above to me represents a massive capital spend. So whatever they find needs to be gang busters good. And even if the wells are good, because of the capital we're likely to be able to get in on the next raise 50% higher where they need to try and raise another 50 million.
With that all said, I am impressed that ReconAfrica made it this far. Good on them for pushing through. I saw this deal before it was public. I hope they hit and I hope I can get over my ego to give them a fair shake on their next round of financing when they do. I have to say I did not think they would get as far as they did. The Team is impressive. Just too much risk for me on the exploration. I prefer assymetric risk. Which is why I am here in TXP.
We're sitting on a number of prospects that have already been drilled and have gas/oil, potentially exceptionally large amounts. In a company that is significantly undervalued based on their current finds in Cascadura and Coho. With a broader thesis that is working and has another 20-30 follow up locations. I know it sounds a bit ridiculous right now but TXP has the potential to find a couple TCF. Use a $1 for the market value of an MCF and we could be talking about a couple billion dollar market value for TXP (no guarantee mind you). All that being said I think TXP has maybe 20-30% downside on an operational issue on Chinook and a potential 200-500% upside on both Chinook and it's future drills. I like that balance of risk / reward.