Market cap at a SP of $5 is around 3.8-4 billion. So current market Cap is actually not close to 8 billion, it is around half of that.
"To be on the conservative and safe side let's say QGC eventually gets to a 2P resource of 4000PJ."
QGC is already at 2400PJ and that figure increased 60% in the last 6 months alone. The deal with BG Group involves proving up 7000PJ by 2010 of which QGC owns 80%, ie 5600PJ. At the current rate of reserves upgrades this should be easily achieved if not exceeded (some may question this statement but I can think of no substantial reasons to believe otherwise). If you have your doubts go back over all of QGC's reserves upgrades, look at the trend, take into account the dramatic increase in drilling expenditure and draw your own conclusions.
You assumed $4 million per PJ. Current east coast gas rates are more like $3.5 million, but export rates as LNG are more than double that already. Demand in Asia is increasing much faster than supply so there is plenty of room for even more upside beyond $7 million per PJ as exported LNG. (With obvious substantial capex required.)
Another way of looking at it is Petronas paid Santos roughly $5 million per 2P PJ. That pricing is the reason why Origin turned down the takeover offer from BG Group. At that pricing QGC is currently worth around $10 billion, or around $12 per share. To some extent this is comparing apples and oranges but it is worth considering.
I am not saying that this is what QGC is actually worth or whether QGC is currently over or under valued, just offering a perspective on the potential. You might also like to look at where QGC was priced before and after the Petronas deal...
QGC Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
