TSV/TMK entry point, page-95

Cloz,

That's easier asked than answer. My GUESS is too far to be "analogous" ... their lands ARE NOT as liquid rich as the results for CE1, Saguaro. Most of their land looks like its bordered by Progress & Pony and some of Crews less liquid eastern areas around Altares. Earlier in the thread was Crew's sale of Goose which would be more liquids rich than what Canbriam has IMO and that transaction was $2,657/acre.

Every has their price, and PO&G may well pay a premium to be "vertically integrated" - who knows. If done solely for methane production to turn in to LNG (and selling the liquids to lower the raw material cost), maybe this is a better return than say buying at spot Station 2 pricing or AECO which has averaged less than $2/Mcf for past couple of years.

Consider the sellers perspective for a moment. Warburg Pincus are shrewd and demanding (I worked for a company for which they provided initial equity). Doubtful they are in anything for less than 18% required rate of return (even activist investors would look for at least 15%). This is a very rough way of looking at it, starting with the $300M invested in 2008.



So if they were looking for 18% CAR then Equity should return $2,093M and EV of Canbriam = $2,441M

At that price, if undeveloped is worth $2,500/acre (IMO that is high),
then the developed acreage is selling for $1,843M or ~$49,875 per flowing boepd (way too high)
Even if they were at their 60,000 boepd production target its still high at almost $31,000 boepd.

Maybe for whatever reason the equity partners accept a lower required rate of return. If it were 15% the equity value drops to $1,676M (a reduction of $417M) which pulls down the numbers all things be equal to around $38,500 per flowing boepd.

This is an interesting acquisition. Just love to know the cash price it was sold for.