the farm-in fallacy

The purpose of this post is not to dump on MEL. I'm heavily invested and hanging in despite the NSW government knee wobbles.

Peter Henderson referred to finding a like minded farm-in partner to develop MEL's gas fields. He left out the like minded farminee has to be stupid as well.

Just some rough numbers which I happy for anyone else to challenge or refine.

Assuming a minimum cost to develop MEL's fields to produce 90PJ per year? $500 million (excludes gas pipelines). That figures probably way too low.

MEL's market cap today $189 million.

MEL would be looking for the farminee to fund the field development or at least a substantial part of the $500 million to earn an interest in MEL's tenements.

How much of an interest will the farminee want for their $500 million?

Yep, about 100%.