It will all depend on how the mkt reads the newsflow when Cl-ST1 flowrates r announced.
There r plenty of stks on the ASX with NPV valuations for their projects, yet their SP languishes way behind these estimates, so no point in discussing discount rates, POG/POO etc.
One would expect CL-ST1 to derisk itself to an extent after the flowrates r annc'd (eg: 20-40 MMcfd). After which the mkt would ask what nxt, when's the nxt well planned etc.
For now we'll just have to use the back of envelope calc's for CL-ST1 that's on their broker reports on the website.
Cua Lo:
Best estimate 3.9 tcf x 25% NEN's equity x 50c/mcf x 25% risk factor divided by 555mil shares
From a development perspective for CL-ST1 in years to come, analysts reports will have to address the following questions,
- how big is Cua Lo(eg 3.9 Tcf gross recoverable gas)
- how soon can it b commercialised, ie timeframe (eg 2016)
- what's the gas/condensate ratio (eg: 4-8 bbls/mmcf)
- what's the CH4:CO2 ratio (eg: 80-20%, 90-10%)
- what's the devlpmnt cost (eg: DF phase-1 cost USD 394mil in 2003, phase-2 in 2006 cost extra)
- what sort of infrastruc is reqd (eg: 22" pipeline, 1 or 2 unmanned platforms, no. of appraisal wells)
- future gas sales agreement (eg 20yr GSA like CNOOC's)
- where r they going to pipe the gas (eg: Vung Ang I or II Power station 105kms west on mainland Nam or 40-60 kms northeast to the main DongFang platform hub via a 22" subsea pipeline & sell it to China - which I doubt).
- Price of gas & tax regime in Vietnam etc
NEN Price at posting:
40.5¢ Sentiment: Hold Disclosure: Held