Sounds excellent. But what are the economics of 15 wells? You are implying around 1,667 BOPD per well, and even though your recovery cost is relatively low, I doubt you will actually pocket USD 80 per day (someone here posted a number closer to half that recently; perhaps someone can correct me, but I think it was net USD 35/bbl, which is net of transport and other costs for heavy oil out of the northern oil belt). That's USD 21.283 million per year (AUD 33.255 million approx.) of which MAY's share is 30% (i.e. AUD 9.976 million, per well, per year). Multiply by 15, and that is around AUD 150 million per year (probably an EV of around AUD 2.25 billion, if you allow for decline over 30 years, etc. etc.). So my question is - what is the sunk cost (to MAY) of drilling those 15 wells?, and/or how will those be funded? (I sense that dilution of interest in exchange for contribution, etc., may be on the cards?).
Either way - if you are right - the net benefit to may (in NPV terms) is well north of AUD 2 billion, assuming you are correct. So in effect you are saying that even little 'ol A2 could be worth north of 60 cents per share?
Can you please let me know if you have better numbers than this (my are thumbnail dipped in tar estimates).
Many thanks. Kit
MAY Price at posting:
6.2¢ Sentiment: Buy Disclosure: Held
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