independant valuation

Found it hard to concentrate through this today.

On the negative, not confident Brent oil will average over US$100 at all in coming years.

On the other hand:

Cashflows discounted by over 9% pa, and using 75c Fx rate to AUD

Kettleman only valued at $5m – IPM believe there is a lot of upside possible. Time will tell, but big upside and minimal downside imo.

Selmo therefore accounts for the bulk of the valuation. Long life field that apparently has a good prospect of doubling production to a peak of 3,000 bpd (costing $30m over 4 years).

Just for comparison, the average prod’n for the first 3 quarters of this year is about 1,330 per day, for NPAT (my cal'c) of around AUD $13.5m (over 9 months). Scale that up for increased prod’n, allow a reduction for the USD barrel price (though it might remain similar in AUD terms) – US$170m field valuation doesn’t seem unreasonable provided we don’t fall into a depression style scenario.

The market is way too gun shy to re-rate atm. IMO value is likely to be accrued by holding these shares, not selling them. I know this is psychologically difficult to do in this environment, when the world seems to be falling around your ears.

The fiscal regime bar graph is VIP (p 20 of directors section). Much harder to make NPAT if the government takes most of your revenue when you are successful in finding the stuff. The single most important financial reason that IPM is so profitable, and able to turn 30% of revenue into NPAT.

Cooper will play the fear factor to the hilt, with more select comments in the vein of today’s response. Somewhat ironic when they must be the riskier play (in terms of definable long-term financial success, not short-term cash position).

Regards
PE