SSN 0.00% 1.5¢ samson oil & gas limited

http://www.bloomberg.com/news/articles/2015-03-11/get-ready-for-o...

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    http://www.bloomberg.com/news/artic...r-oil-deals-shale-is-going-on-sale?cmpid=yhoo

    "Buyers are ultimately after reserves, the amount of oil a company has in the ground based on its drilling acreage. The value of about 75 shale-focused U.S. producers based on their reserves fell by a median of 25 percent by the end of 2014 compared to 2013, according to data compiled by Bloomberg. "

    SSN Reserves (i.e. just the 1P) = 1,774MBoE of which only 12% is PUD. That was as of 31/12/14 so you would expect further increases to PDP+PDNP with the all the additional completions in Q1.

    The question is what would a buyer pay for those Reserves? Now this will always spark debate. The NPV10 provided by SSN is per Ryder Scott and references SEC pricing and comes in at $39.4M. Of course you do need to know what pricing Ryder Scott used and SSN isn't explicitly telling you - but you can find out.

    Even better if using some recent activity.

    American Eagle Energy (AMZG) - a Bakken producer - updated the market on Mar 2 as to production, guidance, reserves and liquidity. They also guided that they will not be making the $9.8M interest payment due on Mar 2 and will take the 30 days grace period to figure out what to do.

    AMZG reported 15,482MBoE of 1P Reserves - of which 59% is PUD. The reason I'm highlighting the PUD ratio is the higher it is the more capital needed to extract the reserves. The lower it is means most of the capital has been invested - but the upside would be more limited (in a rising oil price world).

    AMZG also reported NPV10 by Ryder Scott using SEC Nymex pricing and it was $277.4M

    So looking then just at the PD+PDNP Reserves (as AMZG sold some PUD in Jan) we have

    SSN with 1,562MBoE    vs  AMZG with 6,298MBoE
    SSN NPV10 of $35.61M   vs  AMZG NPV10 of $178.5M

    Now AMZG also reported NPV10 using "recent oil prices" in their update - "Oil price forecast based on $53 per barrel for oil ($43 per barrel net to the Company after an estimated $10 per barrel differential discount) for 2015 and recent futures oil prices using an estimated $8 per barrel differential discount for periods thereafter and SEC pricing for natural gas in calculating Pre-Tax PV-10."
    The valuation of 5,647MBoE of 1P (PD+PDNP) dropped to $98.94M

    Prorata that appears to have dropped by about 38%. Again not all BOE's comparisons are equal (some are more oily than others) and not all costs are the same. AMZG operates mostly in Divide county so their acreage would be nowhere as productive as SSN's

    You can read AMZG announcement at
    http://finance.yahoo.com/news/american-eagle-energy-announces-operations-210500125.html


    SSN has an EV of approx US$47.5M ($19M Debt + $28.5M Equity). If you were to "reduce" the NPV10 to a more recent price model and use 38% reduction then the "asset value" backing up SSN's debt becomes about $22Mish at this point in time.

    Just shows the sensitivity to pricing and to reporting of current reserves (quantity not $value thereof)
 
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Currently unlisted public company.

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