I personally think a lot of Keendog's risk discounts are fairly appropriate, but totally agree the valuation for Walyering is wrong. The rule of thumb I follow for risked NAV is 10/BOe for inground resource, 15 for successfully discovered reserves, 20 for appraised FID reserves, and 30 for production reserves. Energy content between oil and gas is about 6GJ to 1BOe, and the oil/gas price used to reflect the 6:1 ratio but it has been closer to 10:1. So even using 10:1 conversion, Walyering reserves should be valued at a minimum of 3/GJ.
The thing with any modelling is one is free to use any risk discount, pricing assumptions etc. At the end of the day, an obvious test is the smell test. Valuing an asset that is generating 70mn revenue and most of that as positive op cashflow at 50-60mn obviously doesn't pass the smell test
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STX Price at posting:
16.0¢ Sentiment: Buy Disclosure: Held
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