Noticing a subdued feeling on the board regarding our prospects. We learn that there is enough cash for one frac while fracs 3 and 4 were remaining before last's week turmoil. Does that mean XOM had burned beyond budgeted and thought it would be a waste to spend more ? As some have mentioned the other two partners have forced Exxon's hand and let's hope this frac yields a better result.
For sure we are all contemplating our prospects if the testing result is similar to Frac 1 & 2. The news this week mentions :
This operation will use the remaining balance of the Initial Work Program budget. The parties will address next steps after evaluating the results of the Stage 3 fracture stimulation operations.
Next steps can only mean two things :
1. XOM abandons (To avoid interpretations, XOM walks away completely ! )
2. The partners still believe there is potential and XOM moves to the next phase.
1.) would mean a complete devaluation of the SP. Hate to predict a future sp unless FO and MOL are busy lining up a replacement partner in time.
2.) Wishful thinking maybe but would prove that despite the results, XOM remains positive on the larger picture and this puts the whole project back on track except that we will need to extend our expectations on success. SP could stabilise on the 0.30's.
Although it feels like roulette right now to hope that this last frac will yield spectacular results, maybe just maybe the falcon and Mol engineers know what they have strongly recommended to XOM. Cross fingers !
Anyways I still hold as if no partner is found and there is a delay (if and if FO finds another partner), I just say to myself, at this stage we are in, selling at 0.25 or 0.10 is not really a big difference. Mako still has the gas after all.
