ac/l9 oil in ground value

June 09 Open Briefing>..(selective)
MD Ian Tchacos
The value of an asset like Longtom at its stage of development is determined by the range of its 1P (proven) and 2P (proven plus probable) reserves. We received a price roughly in the middle of that range.

In relation to the valuations that we consider appropriate for Longtom versus our interest in Crux, in our view the value potential of Crux is approximately THREE to FOUR times the value potential of Longtom. The difference is that Longtom’s value has been crystallised by taking the asset through development and is realisable now. The Crux value is going to be realised over time.

In a later para the MD related to the partial Crux sale “selling part of Crux to the right buyer at the Right Price”…. so the following is my assumption as to how Ian T is thinking on the "right price" …
Crux is 3 to 4 times the value of Longtom (A$310 million value attributed by AED)
3.5 X 310 = $1085mil (100% Crux)
NXS 85% of Crux = $922mil

So my guess Nexus are thinking around $10mil per 1% sell down.
Sale of 34% Crux = $300mil.

Crux Reserves confidence levels: 1P = 67MMbl 2P = 75MMbl
Using 71MMbl (the mid range 1P to 2P Reserves figures 67MMbl to 75MMbl)
Then NXS are valuing Crux light oil (in ground) at about $15 per Barrel (1085 / 71)


The following is my current best guess guide to indicate the value of Crux + wider crux:
. Extrapolated from Dec08 / Jan 09 Broker reports …Value of "in-ground reserves" A$/barrel
. Bell Potter... $11/bbl
. Pattersons.. $13/bbl
. Hartleys...... $23/bbl
. Wilson.......$10/bbl


*(NXS 85%) Crux 2P Reserves of 65MMbbl
. Use lowest the Broker valuation value @ $10 = $650mil

*Wider Crux (De-risked Resources)
. Auriga (NXS 85%) estimated 35mboe value @ $10/bbl = $350 mil
. Caelum (NXS 85%) estimated 26mboe value @ $10/bbl = $260mil
. Apply 60% discount to Wider Crux value = $204mil


* Crux + wider Crux value = $650 + $204 = $854mil

. Discounted value of Crux = $854mil

. Asset Sale of 34% Crux fields may yield = $290mil

. I think it is reasonable to justify the value of this high quality Crux asset; the hard part in this current financial climate continues to be finding a buyer to invest ($290m) a very large amount of money, effectively funding the NXS share of the Liquids project, remembering the buyer would still be required to fund their new share of the liquids project (34%) as well.
If a Sale happens somewhere near the above scenario, then the current SP will look ridiculous...

Good Luck….
SharpE

DYOR