classic antares

I thought I'd share this with you, so that you can see the way in which Antares seems to operate.

If you look at slide 26 of the AGM presentation, it talks about the "Northern Star Value Proposition" and refers to W&T Offshore's purchase of adjacent leases for US$366M.

When you do a little research on this you find out that W&T Offshore acquired 21,900 gross acres for its money or 21,500 net acres.

So I started to work out a value for Antares 12,400 net acres, on the view that this formation doesn't seem change very quickly and if that's the price for leases next door then Antares leases should have similar value and similar EUR's. That gave me a ballpark figure of US$200M for the property.

However the W&T property already had production of 1,900boed from 75 wells, so quite a lot of capital had been spent on it in wells and infrustructure etc, so the Antares price would be lower, there again it must have taken some time for the previous owners to build production upto that rate so some of the reserves would already have been drained from there leases, making the Antares ones slightly more valuable in that regard.

Now W&T are not going to pay that sort of money for leases unless they can get a reasonable rate of return on their investment so ultimately they must value them at far more than US$366M.

So I thought US$175-200M was a fair value for the Antares Northern Star leases or about US$0.66 per share once they had drilled a few wells and shown similar results to the W&T ones. Which to me made Antares look a real bargin.

Only when I looked at a W&T Offshore presentation did I see the catch.......

In the presentation it actually shows where the W&T purchased leases are, they are spread over 4 Counties, with 60% plus of the leases in Martin County.

In fact going by the picture less than 15% of its leases are in Dawson County and I'd guess that 500 acres at most or under 5% of the their leases are actually adjacent to Antares.

It doesn't even show whether any of the adjacent acreage is actually in production right now.

Yes the company want you to believe one thing yet the reality always seems to be something else.

This total stretching of the truth is a joke and how they get away with it time after time is amazing.

Needless to say it is now really difficult to know what to value Northern Star at until some sort of production history is known.