Very good news today - confirms my best hopes - moving north

Yep still in these!!

Net value to LRL $1bn v Mkt Cap about $50m (LRL have $42m cash). Put some in my ISA today. gla

Going up again!

What is ? :-))

After 9pm please. lol

:-0)

I have learnt you have to be very careful with your words on here. lol.
Thats not allowed a 15% rise, well done

I am still at a loss as to why Camac made "all the same excited noises" as the recent LRL RNS for their ZJS-02 and ZJS-03 wells and as far as I can see they struck on appraisal well ZJS-04 gas again....... but then they decided to flog it off cheap to LRL.

They obviously think it has a little potential, because they wanted 10m LRL shares as part of the deal (at the time worth about 1.2m GBP) as well as cash of 2.5m US$.

But if the license were so prospective why did they sell it so cheaply.... one minute saying it has up to 3TCF of gas in place which would give 300 BCF of recoverable gas, and then next minute they flogged it to LRL cheaply, straight after appraisal well ZJS-04 it seems ??




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All looks a bit rampy to me............ pump and dump feel.

I mean, Camac drilled 4 wells and then gave up drilling ZJS-05, they sold it to LRL who have just drilled it, and made the same excited noises Camac did before.

Why are there no porosity figures in the results ? They just say "relative" high....... relative to what ? And also no permeability figures........ permeability is the key to flow.

So I am at a loss as to why so little information and so much ramping of a share in a company who just purchased the license area cheap from Camac who claimed there was 300 BCF recoverable gas from up to 3TCF of gas in place - but then after drilling 4 wells and finding gas, which was not commercial, they flogged it off to LRL cheaply ??? Who have now just drilled the 5th well.

Pointers all pointing to noncommercial flow rates ? Who knows - just it all looks funny to me.

Proselenes; I suppose Camac's statement probably explains why:


"CAMAC Energy is pleased to execute this definitive share sale and purchase agreement with Leyshon Resources for the sale of our Chinese assets," said Chairman and CEO, Dr. Kase Lawal. "In addition to providing a cash infusion and a shareholder interest in Leyshon, this transaction also eliminates the Company's future financial obligations for overhead and exploration expense in China. All proceeds and savings will be reinvested in our African exploration projects. Finally, I'd like to thank all of our employees in China for their years of dedicated service, and I wish them well as they join the team at Leyshon Resources."

Not really, one minute you are saying 300 BCF recoverable in the license, the next you drill 4 duff wells which include 1 duster and 3 with exciting gas pay which ends up as nothing - the next you are divesting of it to focus on Africa.........

No, the 300 BCF where you hold the license would be more interesting than Africa, if you really believed it held 300 BCF recoverable of gas from the 3TCF of gas in place potential.

They seemed happy enough to take 10m shares in LRL.

If you look at upsides then taking the previously stated Camac figure of potential 300 BCF recoverable in the whole license area and that this is going to be compartmentalised then :

Each well might target around 50 BCF recoverable pockets of gas - could be less or more, less is more likely but lets go with 50 BCF for each pocket.

50 BCF valued at 2 US$ in the ground with a 60% work in for LRL (lets ignore 30% tax on profits/royalty etc..)

50 BCF x 2 US$ in the ground = 100m US$.

60% work in = 60m US$

Convert at 1.61 = 37.2m GBP


So the value of ZJS-05 based on it finding a 50 BCF recoverable pocket of gas with commercial flow rates is around 14.9p a share.

I think its fair to suggest that they hit one sixth of the estimated recoverable gas in the license area (300 BCF total recoverable and that is a fair figure from the previous license owner considering tight gas plays like this have very low recovery factors, multi TCF gas in place ends up as hundreds of BCF recoverable) The work plan for LRL is drill, log, case, frac and flow test for each of its 3 wells, and so you cannot expect a single well to extract a lot of gas, it will have a very limited drainage area. (Yes they are planning cased hole fraccing)

Add on 12p cash per share and you get 27p a share so there is some upside to the share price from the present 19p.

As much as finding one pocket will derisk other leads, this is tight gas territory and so (as Camac found out who drilled 4 wells, had 3 with gas and those 3 all uncommercial and then they sold this license to LRL for the equivalent of 2.7m GBP) its not easy to hit net pay.

Of course, I may be using overoptimistic figures on a pocket of 50 BCF, it might only be 25 BCF or 10BCF, which brings the share price projection downwards, but even at 25 BCF there is atiny amount of upside to the current share price (25 BCF would give 7.5p +12p cash = 19.5p a share)

But everything hangs on can they get commercial flow - and if yes - then how big is this in RECOVERABLE gas terms ? Is it 5 BCF, or 10 BCF or 25 BCF or even 50 BCF ?

Do not get fooled by the ramping of TCF figures of "GIP" thats "Gas in Place". This is tight gas territory and the recovery factor is very low (recovery being how much gas you can get out of the ground from your GIP figure).

The downside is protected somewhat by cash, so if they get poor results from this ongoing well under testing now (results due year end) the downside is perhaps a 45% fall from the present price and then recovery back to around 12p a share level).

Below is from Camac (the previous license owner when they were all excited by the license, prior to selling it to LRL after their many failed wells).



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Surrounding fields were multi TCF finds. Drill crew that made those discoveries left those fields to join LRL and are currently leading this drilling campaign.

lizard, many surrounding fields of multi billion oil finds are puddles of oil. This is generally why the big boys are in the surrounding ones and the little boys play in the leftovers which the big boys are not interested in.

You see above, the slide from the owner of the license who drilled 4 wells in it. They claim "possible 300 BCF recoverable". But they did not find it.

Have you seen LRL make any claim to "recoverable gas" ? When nobody is saying anything you have to take the public available data as your lead, here is the past owner of this license saying "possible 300 BCF" recoverable - which they then sold this whole license for circa 2.7m GBP equiv.

'big boys are not interested' LRL's partner is major PetroChina. The fields surrounding Zijinshan are Multi TCF which would attract any major energy business.

Their partner is not PetroChina as such.........

LRL hold this 100% and PetroChina have back in rights. This is the way China works, their big state owned companies have back in rights everywhere.

You hit paydirt, they back in.

You find uncommercial gas they let you pay 100% costs........... Its called "risk free" exploration for PetroChina - they spend no time and no money exploring, if someone else gets lucky then they get 40% thank you very much.

Simple.

That should be the way... not like Egypt with Centamin... no wonder they are always protesting.

Interesting, a poster on III has said that on average Sino quote 2 BCF recoverable per well.

So using that figure lets work it out.

2 BCF from ZJS-05

After back in LRL are left with 60%.

60% of 2 BCF is 1.2 BCF net to LRL.

Lets say taking off uplift costs they get 6 US$ per MCF.

1.2BCF is therefore worth 7.2m US$ before tax and royalty.

So lets say 5m US$ after tax/royalty which is 3.1m GBP or 1.2p a share.

So its looks that ZJS-05 success = 1.2p a share to LRL.

So cash + 1.2p a share = 13.2p a share - then why is this at 18p a share BEFORE success at ZJS-05 and flow rates.

Each well they drill, that has success and can flow commercially will add a further 1.2p to the share price it seems, if they can get the "average' of 2 BCF recoverable from it.

And given Camac drilled 4 dusters - success is not a given.

Thats the trouble with very tight gas area's, the fraccing can only work so far from the well bore - and so you get very limited recovery per well drilled.

Wonder how the market will react if LRL say we have good commercial flow and can now extract 2 BCF of gas from this well - will it trigger mass sell off ?

All eyes should therefore not be on flow rates - all eyes should be on the company coming up with a recoverable figure for the ZJS-05 well.

Will they say the expect 2 BCF recoverable from it ? or more ? or less ? or will there be silence on it and nothing said ?