Something else to consider is commercialisation. Even if this is 5TCF+, it has to be at least that size to be commercial (depending on associated liquids). This is LNG, not domestic gas (there is no market in Vietnam for domgas).
That means cash flow is 10 years away. So - selling 15% or so is the only way to commercialise in the short term.
Even at $0.50/mcf (which I do not disagree with as an indicative value) - 5TCF equates to $2.5 Billion - which at 25% is say $650M to NEN. Market Cap is now +/- $180M??
Don't get me wrong - so far the news is good - but on a risked basis - $0.30-$0.35 now seems fair. Positive production test should see $0.50-$0.60, then expect the big CR before a slow steady rise towards $0.80 - which after a hefty CR will have them capped at pretty much full value.
$2 is a fantasy, but hey, we can all dream.
NEN Price at posting:
29.7¢ Sentiment: Hold Disclosure: Held
