SEA Value Propostion

Now that I am on annual leave, I have finally got down to modelling the production curves and cash flows for SEA. (Probably should do this level of research before investing)

There is a fair bit to get through, so I will post as different "sections".

Value Proposition of the Acquisition

The announcement on 15 March contains a lot of information. Key points

1. SEA funded the acquisition by a loan of $250M, and has reserve lending of $122.5M (increased at Nov-18). So basically, SEA needs to generate US$372.5M before shareholders get anything (assuming the RBL facility is fully drawn down, which it isn't). Maturity is 2022 / 2023, which is good.

2. SEA acquired for purchase price US$220M. Based on Ryder Scott's assumptions (second attachment), 1P reserves of 65mmboe  are worth US$314M, 2P reserves are worth US$528. SEA's total 1P reserves of 88mmboe are worth US$650M, 2P reserves worth $875.

3. SEA has 690m shares on offer, so going off

Ryder Scott's​

2P PV of US$875M - this leaves US$500M or AUD$714M for shareholders = $1.03
(Ryder Scott's 2P PV is based on oil at $59 in 2019, $61 in 2020) - so as others have done, I have looked at what a lower oil price means for SEA