There’s been such a fantastic rise in the MSMN share-price so it’s with a sad heart that I piss all over it. There are just too many unanswered questions which Mosman Oil & Gas (LON: MSMN) (just like the Mosman serial killer John Wayne Glover who took his dastardly secrets to the grave) have failed to answer. Unlike the serial killer, John Barr will at some point have to spill the beans.
I have to come out and state that I’m still unconvinced as to exactly what is going on here. So far we’ve had numerous RNS’ statements trumpeting discovery upon discovery yet we’ve had no quantifications or qualifications of exactly how much oil has been found.
Now let me educate those that believe that Mosman can walk on water. When an oil Company announce a discovery it’s meat & drink to stock-holders and the market. Buyers rush in and the SP blazes on the initial news. Usually we get the actual figures on the discovery i.e. the size. However when a Company withhold these numbers then this should “red flag the discovery” Because believe me John Barr & the Mosman Board know what the numbers are. It’s a simple question for John Barr & the gang. So I’ll ask it “How much oil have you discovered?”
Petroleum Creek Prospective Resources (SRK – 2013)
Unrisked OIIP MmStb Unrisked Recoverable Oil MmStb P90 P50 Mean P10 P90 P50 Mean P10 30.0 98.9 217.9 396.1 4.8 15.6 26.6 59.2
Take a good look at the figures above↑. Because what they tell you, and I’m no fan of these so called Competent Person Reports as I have seen too many of them over egg the pudding on many occasions, is that the CPR on an unrisked P90 recoverable basis is 4.8 million barrels of oil from Petroleum Creek. So SRK think there’s a 90% chance that Mosman Oil & Gas (LON: MSMN) could recover up to 4.8 million barrels. SRK think that there’s a 90% chance that there’s 30 million barrels of oil in various parts of the Petroleum Creek system/play. I think therefore I am! SRK believe that 25.2 million barrels of oil CANNOT be recovered! I repeat CANNOT be recovered.
Going through the raft of RNS’s it is abundantly clear to BMD that there is a subtle change of emphasis being made. It goes like this; Operations update, Access agreements, Project Update , Drilling contract award. All going swimmingly well, spud imminent. PLACING. Operations update 3rd well, Drilling commences, Drilling commences, Drilling update, Discovery, Weekly drilling update, PLACING. Weekly update, Weekly drilling update, Acquisition of Trident Energy, Discovery and Drilling Update, Weekly Drilling Update, Petroleum Creek Update. Can you see a pattern here? If you can’t then I suggest you read thus; Placing on the way.
The buzz words from the MSMN RNS of 13th June 2014. “an Oil Discovery” <sic> Company has been advised by its technical and legal advisors that in accordance with the New Zealand legislation the data from work completed to date meets the definition of a Discovery and the regulations require this to be reported to New Zealand Petroleum & Minerals (“NZPAM”). <sic> good porosity (10 to 20%) and significant moveable oil for a total potential pay of 17 metres. <sic>the well has now been drilled to 243 metres where the Cobden limestone was encountered. The cuttings sample from this depth had oil shows (cut and fluorescence).
The Buzz words from the MSMN RNS of 16th June 2014. At 241 m <sic> cuttings sample from this depth had oil shows (cut and fluorescence), <sic> install the Blow Out Preventer (BOP). Coring commenced on the 14th and continues. <sic> good oil shows to 248 m (cut and fluorescence) and this formation has good matrix and fracture porosity. <sic> Eight Mile formation met the definition of a discovery and was required to be reported to the Regulator, NZPAM. This report was lodged on 13 June 2014. <sic>suitable for production.
The Buzz words from the MSMN RNS of 20th June 2014. In light of the success at Cross Roads-1 <sic> additional seismic to define and delineate the Cross Roads-1 and adjacent prospects which may be part of the same oil accumulation. <sic> optimise exploration and facilitate well testing ,sic>to be utilized as production wells once appraisal and economic studies are completed. <sic> two additional proposed well sites. Good relationships <sic. maximize the 2014 exploration programmes. <sic.Business Development <sic> the Company is currently conducting due diligence on several potential acquisitions.
Now here comes the change of emphasis from Mosman.
The lowering of expectations RNS 23rd June 2014. Obviously this was AFTER the placings. The Cross Roads-1 well has been halted at 335m, for future re-entry and testing. The Oil Discovery in the Eight Mile formation means the exploration phase has been successful <sic> Meetings will be held next week to review the core and wireline log data obtained, and to consider the next steps. The team will also review the mapped extent of the accumulation and consider what additional information is required to determine contingent resources. <sic> Cobden limestone had oil shows in the bottom of the 8.5 inch hole at 241m and in the first 6m of core (242m to 247m). Evidence of fracturing then increased, significant mud losses occurred, and oil shows ceased. ,sic> logs for the Cobden limestone are inconclusive and further analyses and tests are required.
The lowering of expectations RNS 30th June 2014. Mosman is planning an extended well test to flow both the Cobden and Eight Mile formations. Whilst there is visible oil in the Cobden limestone core at Cross Roads-1, the wireline logs are not conclusive, and Mosman has determined that a flow test is required to determine whether or not the Cobden limestone oil qualifies as an additional discovery <sic>The Drill Force Rig #1 crew is moving the rig to the Crestal-1 location and drilling on this well will start in a few days. Anticipated activity this week is to drill to total depth of 250 m, complete wireline logs, and then suspend the well for future testing.
Then in the 3rd of July 2014 RNS. John W Barr, Executive Chairman of Mosman comments: On Cobden Limestone 240 – 250m. section of the drill which is 10 metres, has now been classed as an “official discovery” By whom? By Mosman. “This further positive result from Cross Roads-1 is extremely encouraging. As we have outlined, this is the first stage of the process as we now move into the appraisal process at Cross Roads-1. The next steps will be to carry out flow tests, additional seismic acquisition and processing work, and then complete the economic modelling required to determine commercial viability. This process is anticipated to take several months.”
7th July 2014 RNS. The change of emphasis continues. The lowering of expectations. <sic> These rock samples are collected as representative of every 2.5m of hole drilled. If there is no oil on the sample then there is no fluorescence shown in UV light. These standard site tests are useful qualitative indications and will be followed up with additional work, including wireline electric logs and flow tests before any technical and commercial significance can be determined.<sic> the team are encouraged by the early positive indications on our second well.”
Todays’ RNS 8th July 2014. John W Barr, Executive Chairman of Mosman commented: “It is important to put our progress into context as this positive news is the first step of the drilling programme which will be followed by the appraisal process. The next stage of which will be to carry out flow tests, additional seismic acquisition and processing work, and then complete the economic modelling required to determine commercial viability of our wells, which as previously announced is anticipated to take several months.”
So there we have it. The hollering of “Discovery, Discovery, Discovery”, is clearly changing. It’s as plain as the nose on your face. There is a change of emphasis away from the bru ha ha of “Discovery” I’ll ask the question once again to John Barr & the Board of Mosman. How big are these “discoveries?” And more to the point are they “Commercially viable?” Because I’ll tell you this Mr John Barr. Should these “Discoveries” turn out to be less than you have lead investors to believe or if they just scrap in with piss poor bopd flows then you Sir have a lot of explaining to do.