Based on the currently issued 477m fpo's and a shareprice of 35.5c, we have a market cap of $167m.
Based on the last quarterly we hold $40.3m in cold hard cash, with only $1m forecast in outgoings for the next quarter. This gives us an enterprise value of $126.5m.
And what do we get for that? - 2 gas discoveries in NT/P68 (100% MEO) - Large target in WA-361P (35% MEO) - TSMP with approvals (50 - 100% MEO) - 12Tcf high grade target Artemis, interpreted to be extension of regional gas fields. (70% MEO)
If the SOTP is $126.5m, and we value all the projects except Artemis at salvage value, I'd say we would be looking at $50m+ easy. Remember this is salvage value, we could get this for any one of the projects!
Therefore MEO's 70% interest in Artemis is currently valued at $75m by the market.
Unfortunately the market in the short term is not about price discovery, but rather a case of supply and demand. Due to the delays in announcing the formal farmin, we have seen no new demand, but the impatient are selling so very high supply.
Judging by the size of some of the offers that were rejected for WA-360P, the size and calibre of the farmin will speak for itself. It will also allow us to calculate a price-floor based on implied valuation of the farmin interest.
I'm betting on a cracker of a deal for MEO, free carried across multiple appraisal wells and a hefty promote premium. Look at the new board. These guys are not tryhards! At 45c this was a very good buy, at 35c it is exceptional. Given drilling is now firm, there is a firm value crystallisation opportunity coming up where the value will not go unrealised.
A $1 target is a starting point as far as I am concerned. A calculated, logical, patient approach to buying and holding is certain to generate significant wealth in my personal view.
Nevermind the trend-riders, I got news for you . . . in the coming days, weeks and months, MEO is going to be the trend setter!
Later y'all.
MEO Price at posting:
35.5¢ Sentiment: LT Buy Disclosure: Held
