transforming nse, page-36

Thank you cmonaussie!

It's a bit hard to see your numbers but I do follow the logic. Not sure if you've seen this but came across an interesting interview the Carrizo CEO did on Mad Money earlier this year.


http://video.cnbc.com/gallery/?video=3000150441

2 interesting points I noted. From minute 3 he stated, that the price of crude they receive is Brent pricing at Gulf Region refineries. Is this quite common in the EFS? It would make quite a difference to the IRRs with the $13 premium Brent enjoys over NYMEX.

Secondly, he goes on to state that per bbl margin is $75 with the cost basis of $30 made of the following.

F&D Costs - $20-22
Lease Operating Costs - $8 which includes taxes.

The $105 net revenue interest would presumably be Brent minus NGL and Gas.

Now if NSE goes ahead with this what are the chances of net costs being around say $35-40? Assuming Brent is at $113, less the 25% royalties gives us net revenue of approx $85 per bbl. A netback of at least $45/bbl. Do you think this is feasible?

I think there is a good chance if the SP stays around these levels that this corporate transaction will be voted down. Management do not own a substantial amount of shares. A quick glance at the top 20 sees quite a few players that would have experienced large losses on this. Buru, Phoenix, TC Inv et al must surely be annoyed if they only invested for the Canning. I doubt these guys will be happy with the dilution and the large stock and Board positions Magnum would receive.