Ironbark

Here is the story on Ironbark (IB)

1. In February 2018, Origin wrote down the value of IB by $360M to $280M.
2. IB had 2P reserves of 249 PJ, which got revised down to 129 PJ (in line with the asset write down).
3. The table below shows at 37.5c, SXY is trading at EV multiple of $0.97M / 2p PJ. Applying this to IB's 2P reserves of 129PJ, means we wouldn't want to pay more than $125M. Even at the 249PJ - we couldn't afford to pay more than $240M, without it being dilutive.

Even at 50c, I can't see SXY paying more than $163M.

I think Origin are dreaming if they think they are getting the book value of $280M, unless someone was going to pay them for reserves they wrote off, which would be bizarre.

If we are even entertaining $280M - I think that is a stinker for SXY. It basically tells the market, we need more 2P reserves to support our EV. I really hope the sell off last week wasn't because this rumour has some truth to it....

On the other hand, if we can pick up for sub $100M, then I like the upside here.




Sourced from Origin ASX annoucements