What will be the market answer to the 26 times (!!) raise in Proven&Probable reserves that could be the next BIG surprise to the market?
Caspian Sea rocket VPC.V have been trading in stupid low interval CAD 11,3-16,48 last weeks (despite NAV CAD 15)
This gives THE opportunity I think one at least should consider (see below).
Through the the North Irael field acquisition, the Company added 0.75 million of proven and 2.4 million of proven plus probable reserves net to Valkyries some weeks ago almost not noted by the market.
In an attempt to somehow clarify the numbers:
An agreement 2 weeks ago to purchase the North Irael Field in the Komi Republic in the Russia maybe looked small at a quick glance, but never the less it raised Company proven reserves by notable 5,8% and proven plus probable reserves by a good 7,1%.
Net 12,840 million of proven reserves +0,75 million now equals 13,590 million of proven reserves
33,746 +2,400 million of proven plus probable reserves net to Valkyries. This is 36146 million of proven plus probable reserves net to Valkyries.
These numbers exclude the Lagansky Block. And they will most probably be revised upwards given positive drilling results this spring yielding a high portion of sand with porosity above 16% and permeabilities ranging up to 80 millidarcies. This permeability figure is significantly better than the 10 millidarcy figure used in the most recent third party reserve report. Hence I believe there will be a significant shift in the possible reserves to the proven and probable category in the next update.
MOST IMPORTANT is:
This summer the company will drill an offshore exploration license in the Lagansky Block with a very high potential which will likely prove to be the main value driver for the Company’s upside. Almost ni dry holes or few dry holes (only two - by Lukoil) were drilled in the Northern Caspian Sea and the average proven reserves size stands at a staggering 830 mln bbls.
With only some success in upcoming Lagansky drilling reserves could skyrocket according to calculated numbers in third party report by DeGoyler and MacNaughton where "Best Estimate" a hit in East Morskaya and Northern Laganskaya could mean some 940 million bbls giving the Company a huge raise in reserves and production. To check the 940 million bbls estimated by DeGoyler and MacNaughton: VPC have filed the D&M Lagansky report on SEDAR and I do encourage reading the report in its entirety for additional information. Said report by DeGoyler and MacNaughton estimated gross oil resources on two prospects on the block generating a range of estimated-unrisked gross prospective oil resources from 472 million barrels to 1.5 billion barrels, with the best estimate of 940 million barrels of recoverable oil.
If this comes true Company reserves will jump some 26-69 times compared to their actual reserve numbers (also available at SEDAR) 26-69 depending on classified as 1P, 2P or 3P.
I would say this might be THE "once in a life time" chance.
Of course there is a always risk they will not find any oil in several attempts this and next summer, or less amounts. This I personally doubt.
The adjacent discovery by Lukoil at Rakushechnoye recently discovered an 80 meter column of oil testing 11,000 bpd. Lukoil estimates 600 mln bbls of reserves based solely on the first well thus likely to be significantly expanded as further drilling gets underway. |
