3p valuation

It seems many people in the market were disappointed with RS certifying the Grieve reserves as 3P and the market is currently placing no (or very little) value to ELK’s 3P reserves of 18.6MBO.

It seems not so long ago that CSG/CBM was not very well understood by the market and subsequently placed very little value on these resources. In the last week we’ve seen three of the world’s biggest LNG operators (BG, Petronas and Shell) buy or try to buy CSG 3P reserves at around $1 per gigajoule. This equates to about $5 or $6 per boe.

I remember reading somewhere that there is no LNG plant in the world based on CSG, yet here we have three of the biggest players in the world valuing 3P at $5 per boe.

How times change!

When CO2 injection becomes better understood within Australia, ELK will be revalued by the market. Using the same valuation as the big 3 above, Grieve reserves are worth about $100M, even with them being classified as 3P.