Good to see you back on the board...as you point out MPO's ground amounted to a few wells which hit a commercial rate of about 1.5mmscf/d from memory and then fines blocked pumps..and basically the company led by ex BHP big shots went after shale in Quebec after selling out of Gloucester basin csg early. Petrochina got a bargain but as you say it is not prime csg ground which means it is risky and costly to develop. Technology is all important and this is where WCL are so integral to getting a return. Not only do they need the knowhow they also need the compressors On this basis you could subtract all the field infrastructure and existing prodcution at Meridian from WCL's market cap and cionsider what is it worth to buy this company and get the experience and capability to make the Mungi field work efficiently. Two years ago I wondered about why Karroll and the board chose J B..but as time goes along you see it is that stored knowledge and determination which they contracted from what a big coaler.
Again what is that worth across over 600 pj of 2p gas- Mitsui don't have the people to develop it, petrochina definitely don't , yes they could have studied the data to pinch some ideas, but if they are smart they will go with the team who know from experience and also know the area. And for a bonus they get to use the infrastructure which WCL has to offer.
Working it out this way- infrastructure is worth $80 million, WCL reserves are worth even on a sad MPO metric $40 million, existing production is worth $ 40 million and the management ability makes it all viable over a short time frame and thus go some way to derisk a billion dollar enterprise - that in itself is worth 5% of the LNG project cost imo. Brings me to an totally unconventional valuation of about 80c a share.
It amazes me how the market can sleep on these things but with over 2000 stocks and a generally nervous environment these things happen.
WCL Price at posting:
38.0¢ Sentiment: Buy Disclosure: Held
