as I posted before, the last trade of BG assets was April 09 in the middle of the GFC when oil was $45
that trade valued PSA share at $US40million
My view is they would get $80million for their share now, around 34c a share pre tax
under the BG back in deal they get reimbursed for past costs, from memory around $25million. This comes out of cash flow once developed. CAPEX is around $37million .
I would say they only need to raise $10million for BG. The bulk of BG will be debt financed.
In addition PSA have written off some GOM reserves due to the low natgas enviromnent
These can be reinstated in a higher natgas price enviroment of $7 to $8MMbtu
currently shale gas needs $4 to $5MMbtu to breakeven. Shale gas is considered by natgas bears to cause the low price. However commercials have the biggest long position in natgas futures ever. BHP are investing. They see higher prices in the future.
I am a natgas bull and believe we will see prices above $8MMbtu within 12 months. GOM fields are cheaper to operate than shale gas developments. Last time oil was over $100 natgas was $10
If PSA ever got back to the position of having at least 6 years reserves and 5BCF annual production you will see this stock valued at $150million to $200million
I assume shares on issue go to 300 million, thats 50c to 70c a share. For me this is a realistic target, after that its a question of exploration success , commodity pricing and deal making
If they do a rights I am happy to take them up. I have 300,000 shares right now. Thank you recent seller at 20c.
PSA Price at posting:
23.5¢ Sentiment: LT Buy Disclosure: Held
