Ann: Maiden Resource Estimates Offshore Angola, page-25

Following up on your points I asked AI a few questions

"What would the 135 mmbls of oil in place at killanoola be valued at"

ChatGPT said:

To estimate the value of 135 million barrels of oil in place (MMbbls) at Killanoola, we need to go through a few steps. Here's a breakdown:

Step 1: Clarify What "Oil in Place" Means

"Oil in place" refers to the total estimated oil in the reservoir, but not all of it can be recovered. So we need to apply a recovery factor.

Step 2: Apply a Recovery Factor

The recovery factor depends on the reservoir type and technology used. For conventional onshore oil fields:

• Low estimate: 10%

• Medium estimate: 20%

• High estimate: 30%

Let’s calculate based on all three scenarios:

	Recovery Factor	Recoverable Oil (MMbbls)
1	10%	13.5
2	20%	27
3	30%	40.5

Step 3: Estimate the Price Per Barrel

Let’s assume a conservative average oil price of $75 USD per barrel (you can adjust this based on current Brent or WTI prices).

Step 4: Calculate Gross Value of Recoverable Oil

1		Recovery Factor	Recoverable Oil (MMbbls)	Gross Value @ /bbl (USD)
2	10%	13.5	$1.012 billion
3	20%	27	$2.025 billion
4	30%	40.5	$3.037 billion

️ Step 5: Discount for Costs, Risk, and NPV

Not all that gross value goes to the company. Typically, a Net Present Value (NPV10) or similar discounting method is used. Consider factors like:

• CAPEX / OPEX

• Government royalties

• Discount for exploration risk, timing, and infrastructure

Rule of thumb: Net value might range from 10% to 30% of gross depending on development stage.

So:

	Recovery Factor	Net Value Estimate (USD)
1	10%	$100M–$300M
2	20%	$200M–$600M
3	30%	$300M–$900M

Final Summary:

135 MMbbls of oil in place at Killanoola could be worth anywhere from $100 million to $900 million USD, depending on the recovery factor, oil price, and project economics.

Would you like me to model a more specific valuation using assumed costs and discount rates?

4o

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You said:
"Yes"

ChatGPT said:

Great! Let's build a simple discounted cash flow (DCF) model to estimate a more specific valuation of Killanoola's oil resources. Here's how we'll approach it:

Assumptions

You can adjust any of these later if you have more accurate data.

Oil Resource Assumptions

• Oil in place: 135 million barrels (MMbbls)

• Recovery factor: 20% (medium scenario)

• Recoverable oil: 27 MMbbls

Price and Cost Assumptions

• Oil price (Brent): $75 per barrel

• Operating cost (OPEX): $25 per barrel

• Capital cost (CAPEX): $200 million (initial development)

• Royalty/tax/host government take: 20% of revenue

Financial Assumptions

• Production life: 10 years

• Production rate: 2.7 MMbbls per year (evenly spread)

• Discount rate: 10% (NPV10)

Step-by-Step Model

1. Annual Revenue

• 2.7 MMbbls × $75 = $202.5 million / year

2. Annual OPEX

• 2.7 MMbbls × $25 = $67.5 million / year

3. Royalty/Tax (20%)

• 20% of revenue = $40.5 million / year

4. Annual Net Cash Flow (before discounting)

$$\text{Net}=202.5M-67.5M-40.5M=\text{\$94.5 million/year}$$

5. Discounted Cash Flows (NPV10)

Let’s calculate the NPV of $94.5M/year over 10 years at 10% discount:

NPV=∑t=11094.5(1+0.10)t≈94.5×6.145=$581 millionNPV = \sum_{t=1}^{10} \frac{94.5}{(1 + 0.10)^t} \approx 94.5 \times 6.145 = \text{\$581 million}NPV=t=1∑10(1+0.10)t94.5≈94.5×6.145=$581 million

6. Subtract CAPEX

Net Value=581M−200M=$381millionUSD\text{Net Value} = 581M - 200M = \boxed{\$381 million USD}Net Value=581M−200M=$381millionUSD

✅ Final Valuation:

⚡ Approx. $381 million USD (mid-case NPV10 for 20% recovery)

Let me know if you want a low-case (e.g., 10% recovery) or a high-case (30%), or if you want to build this into a spreadsheet or code format for tweaking.

4o

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You said:

"Given your model, the company has 5.5 billion shares on issue and is 100% owner. What would your model suggest a fair share price using industry standard PE ratios

ChatGPT said:

Perfect — let’s bridge the valuation model to a per-share price estimate using PE ratios and the company’s full ownership of the project.

Given:

• NPV10 (Net Value) from our model: $381 million USD

• Shares on issue: 5.5 billion

• Ownership of asset: 100%

• Currency: We’ll assume everything in USD (let me know if AUD is preferred)

• FX note: USD to AUD ≈ 1.50 (approximate, if we need to convert later)

• Industry PE ratio (exploration to mid-cap producers): Typically 8–12, we’ll model with PE = 10

✳️ Step-by-Step: Share Price Estimate

1. Annual Net Earnings from Project

From our earlier model:

• Net cash flow = $94.5 million/year

• Assuming this is similar to net profit after tax, we’ll use it for PE calculation.

2. Fair Market Cap using PE ratio

$$\text{Fair Value}=\text{Annual Earnings}\times \text{PE Ratio}$$=94.5M×10=$945millionUSD= 94.5M \times 10 = \boxed{\$945 million USD}=94.5M×10=$945millionUSD

3. Fair Share Price (USD)

Fair Share Price (USD)=945M5.5B=0.1718USD (≈17.2cents)\text{Fair Share Price (USD)} = \frac{945M}{5.5B} = \boxed{0.1718 USD} \ (\approx 17.2 cents)Fair Share Price (USD)=5.5B945M=0.1718USD(≈17.2cents)

4. Optional: Convert to AUD

Using exchange rate of 1 USD = 1.50 AUD:

0.1718×1.5=0.2577AUD (≈25.8cents)0.1718 \times 1.5 = \boxed{0.2577 AUD} \ (\approx 25.8 cents)0.1718×1.5=0.2577AUD(≈25.8cents)

✅ Final Output:

	Metric	Value
1	Fair Market Cap	$945 million USD
2	Fair Share Price (USD)	$0.172
3	Fair Share Price (AUD)	$0.258
4	PE Ratio Used	10

I followed up with this

Given all of the above how far along is the company in developing this reseource

ChatGPT said:

Red Sky Energy has been actively progressing the development of the Killanoola Oil Project in South Australia's onshore Otway Basin. Here's an overview of their advancements:ListCorp+11redskyenergy.com.au+11Offshore Technology+11

Acquisition and Initial Assessments:

• In February 2021, Red Sky Energy acquired the Killanoola Oil Field (PRL-13) from Beach Energy, gaining 100% ownership of the 17.5 km² area.Investi+6redskyenergy.com.au+6NS Energy+6

• Subsequent evaluations identified additional oil-bearing zones, notably a 37-meter pay zone in the Sawpit Sandstone, enhancing the field's potential.Investi+3redskyenergy.com.au+3Investi+3

Resource Estimations:

• An independent report in April 2023 revised the Best Estimate of Petroleum Initially In Place (PIIP) to 135.5 million barrels, a 45.7% increase from previous estimates.ListCorp+4Investi+4redskyenergy.com.au+4

Operational Developments:

• In August 2023, Red Sky finalized an agreement with Viva Energy Australia to purchase all crude from Killanoola, with delivery planned to Viva's Geelong refinery.Investi+4redskyenergy.com.au+4Offshore Technology+4

• By December 2023, the company received approval from South Australia's Department for Energy and Mining to commence production from the DW-1 well. Preparations for an extended production test began shortly after.Offshore Technology+2Petroleum Australia+2redskyenergy.com.au+2

Current Status:

• As of the latest updates, production activities at the DW-1 well are poised to commence, pending final preparations and testing.Offshore Technology

• Red Sky is also planning further geological studies and potential new perforations to optimize recovery.

In summary, Red Sky Energy has made significant strides in developing the Killanoola resource, moving from acquisition and assessment to imminent production initiation.