valuation on upgrade resource?, page-4

In response chriss/nihilism - an update of an update of an old post of mine:

In October 2011 Linc Energy (LNC) completed a purchase of ~13,400 net acres of oil leases in the same region that Maverick is operating, containing 20.5 million barrels of 1P and 22.3 million barrels of 2P oil, while producing at a rate of ~3,300 BOPD. The deal cost Linc US$261 million.

This means they paid US$873.4 per acre per million barrels of 2P oil.

MAD currently hold ~3600 acres of Blue Ridge, totalling 72.9 million barrels of 2P oil; along with ~2700 acres of Nash, totalling 41.8 million barrels of 2P oil, and ~4500 acres of Boling, which is unassessed.

Assuming (a big assumption) that the Boling reservoir has similar 2P barrels to Nash (15500 bbl/acre) and Blue Ridge (20200 bbl/acre), then your Boling acreage (assumed 15500 bbl/acre) gives you another 69.7 million barrels of 2P oil. This totals to 184.4 million barrels of 2P oil all up for MAD.

184.4 million barrels of 2P oil on ~10800 acres at Linc prices gives a market cap of US$1.74B, however since we produce much less oil per day than Linc at the time of their deal, I'm just going to divide that number by three. This gives a US$580m market cap, or A$563m, or $1.51 share price.

What you have to ask yourself is:
- will Boling be adjudged to have similar 2P reserves (per acre) to Blue Ridge and Nash?
- does the market care more about reserves than flowrates, such that my blanket "divide by three" for the flowrate differential is unfair? Assume the market goes crazy for MAD (still a lol) in the long term and ignores that and you get $4.52ps.
- what will the upcoming Blue Ridge reserves upgrade look like..?

Tea leaves are tea leaves people, see em for what they are. Personally, I'm still reading em at around $2 or so.