Thanks for your analysis.
For myself, a number of problems with your review:
a) You say Borba is not a Tcf asset:
"I was holding SGC for a chance of a proportion of a TCF asset in Borba 1-7, not for a proportion of 26bcf.
"
Borba is a TCF asset. Borba opens up the play. GJ has mentioned this ad nauseum. The Borba channel systems are located to the north and to the west. They have to prove the channel reservoirs flow, that they are gas saturated and that gas is commercial. If gas flows from the Guinda resevoir - then that opens Guinda for all plays. They have four other plays mentioned already in acreage that they have secured.
So this is all about growth. Why discount this?
b) "You never get the full NPV reflected in a pre-production company share price.
":
That's right. So why apply a financial ratio that depends on cash inflows and outflows to an junior oil/gas explorer that has little revenues to speak of and relies on share placements to survive? Oil and gas juniors are incredibly speculative. An NPV on a speculative growth company is ill-conceived.
c) " 19.5bcf over 5 years at $5 per MMbtu with a 10% discount rate is a NPV of $74M. That becomes $60M when you factor in 80% chance of commercial success.
":
But Borba would have opened up the play. Why quibble with the full life of an evaluation of one well - that is entirely subjective? The potential growth is enormous because the play has not been explored in the deeper reservoirs, other than Dempsey well. It is very similar to the Perth Basin experience in 2014 (Source Mitsui E & P webpage).
And key here:
c) "As of right now I don’t hold any but I am watching for a possible re-entry. My sentiment is hold":
Hang on..you sold this morning? How can your sentiment be hold when you sold this morning and currently don't hold
, all in a 10 hour time frame?
Put a sell on. Why? Because that what's transpired. This would be more truthful.
If you held, you would be holding for these reasons. That is, an expectation the shareprice would appreciate for any of these mentioned:
i) Share price rise before or on spud ann.
ii) Share price rise during drilling.
iii) Gas shows are encountered.
iv) Announcement of mud log tests.
v) Encounter various pay zones.
vi) Ann of commerciality of discovery.
vii) Further information regarding profits and well output from the Canadian Oil plays.
In sum, this is an incredibly speculative company. Whilst it is important to understand costs and liabilities, look what transpired in the Perth Basin in 2014. Here, a 2C best estimate was for 290 bcf. Subjective comparisons can be made to Borba. AWE was eventually sold for over $600 million to Mitsui as it's 50% stake in Waitsia was considered the jewel in the crown.
Thanks again for your input.
Above is not financial advice and my opinion only.
(20min delay)