acquisition of oil & gas assets, page-64

Purchase price is 64c per GJ ($35M for 53 bcf which is ~55PJ).

That's probably fair value for gas Reserves IMO. There's not much left in Palm Valley, but in its heyday it was a ripper of a field, one well tested at something like 140 million scfd which I believe is the highest ever recorded in onshore Australia (and possibly offshore for all I know). But the infrastructure is there so development costs will be minimal.

Dingo on the other hand is undeveloped so the purchase price of 64c/GJ is for a mix of developed and undeveloped Reserves.

A lot of CSG M&As went through at much higher prices than this and they went through on 3P Reserves, not 2P like this. Magellan don't seem to report their 3P so it's hard to compare directly but on the other hand, 3P may be more appropriate for CSG because there is potential for reserves expansion (ie a lot of ground is 3P but will eventually be upgraded to 2P with more exploration). But interestingly, Cottee's deal with BG saw QGC go for about 67c per GJ 3P, which is almost exactly the same as this deal per GJ 2P.

Stockrocker - where did you read PV will produce 3 bcf per year? From Magellan's 2013 annual report I read: "Based on current gas sales contracts, the Company expects that Palm Valley will be selling gas at a rate of approximately 1.3 Bcf per year by the end of fiscal year 2014 and 1.5 Bcf per year by the end of fiscal year 2015, at which point Palm Valley will be selling at its full productive capacity."

So looks like 1.5 PJ a year is its capacity. They also say that net of royalties, the price is $4.80/Mcf, so that would be revenue of about $12M p.a. at full capacity for PV. The NT is isolated from the eastern Australian gas market so I wouldn't expect to see the same sort of price increases to $8+ that we'll see on the east coast.

I think there is actually more to this than just the gas sales - I think RC is trying to get a stranglehold on gas in the Amadeus, and I think he wants the pipeline in case Mt Kitty etc come in, and possibly even Ooraminna if they go back with a tight gas focus. It's kind of risky because the Amadeus is fairly stranded, but perhaps he has bigger ambitions to connect it into the Cooper, which really would be a game-changer if CTP can find the gas.

Anyway, this is a rambling and somewhat disjointed stream-of-consciousness post so I'll wrap it up. All in all I think this a very interesting development. Probably much more significant from a company-maker point of view than Surprise. Oil is nice but tends to come in small volumes - gas is low margin but monetising it is the way to big money.