Hi guys, I'm pretty new at HC, so please forgive this long...

Hi guys,
I'm pretty new at HC, so please forgive this long post.
I'm not sure if this is the right place to post this so my apologies if this is in the wrong place.

I've been getting excited and motivated to calculate my own evaluation of what the fair price should be for this stock (not knowing much about this industry or this stock particularly).
I'd welcome feedback and constructive criticism of my methodology here.

My main issue is; how do you estimate how much a company is worth based on oil in the ground?

I found a "Rule of Thumb" which goes like this:

And I wondered if it was true, so I applied it to a bunch of other companies that I *think* might be somewhat similar to Melbana - that is, Australian oil and gas companies that have a large portion of their value connected to their reserves (with some obvious exceptions and other factors clearly influencing their value too).
I came up with a list of Australian companies with Oil & Gas reserves, and went and researched each company's somewhat recent annual report on their reserves (eg. most reports I found came from somewhere between 2021-now).
The list includes these companies:

• Woodside (WDS)
• Santos (STO)
• Origin Energy (ORG)
• Beach Petroleum (BPT)
• Strike Energy (STX)
• Karoon Energy (KAR)
• Cooper Energy (COE)
• Tamboran (TBN)
• Horizon Oil (HZN)

For most companies, finding the "1P" proven reserves estimate was quite easy, but for some of the smaller ones it was very difficult as many of them do not really report 1P proven reserves but either 2P "prove and probable" or, unfortunately, their marketing-type slides with aspirational reserves that they plan to prove by the end of this year etc etc.

So obviously I may have somewhat wrong amounts for some companies, but what I found was fascinating to me:



Particularly when I plotted the Reserves-based estimate of Total Market Cap vs. the True Total Market Cap as it stands today:


It seems like, very broadly, the rule of thumb does work - there is a somewhat linear relationship between oil reserves proven in the ground and the value of the company.
The graph indicates to me that perhaps a company is slightly overvalued when a company is on the right/lower side of the line (i.e. their market cap is larger than their reserves value indicates it should be). Vice versa, the companies on the left hand side / upper side of the dotted line would potentially be under valued.
Woodside and Santos line up really nicely on the line - big companies, well trusted and proven track record(?) of converting reserves in the ground into $$. Maybe Origin is more complicated - it has a retail business and other things going on etc (?) so it may well rightly be valued at more than just its reserves.
If you wanted to bring each company onto the line, you would have to apply another factor of anywhere between 0.8 - 1.3 for most of the companies (the smaller companies have a bit more scatter, probably because of way more uncertainty and other factors?)

Turning my attention now to Melbana:
Melbana is the biggest outlier. It is off the line by a factor of 9.3.

If this Alameda-2 well is successful and removes uncertainty, then how much should the price move?
How much is fair? That's the big question I am trying to answer.

I looked back at their reserves (as calculated by that company McDaniel and Associates):


And used the same old rule of thumb to calculate the potential value of the reserves for each of those scenarios:



But I already know now that the rule of thumb doesn't quite work, and would need another factor to move it onto the line.
So if I apply whatever factor needed to move Melbana onto the line of best fit, these are the prices I get:

• Low reserve estimate (25.5mmboe): $0.14
• BEST reserve estimate (80.1mmboe): $1.21
• Mean reserve estimate (108.6mmboe): $1.78
• High reserve estimate (205.5mmboe): $3.37

So tell me if this is wrong and silly, obviously there are lots of factors and noone can be 100% correct. But if i've made a stupid newbie mistake let me know.
Is it fair to say that if this well flows, and if the next one (Alameda-3) flows, then we consider the reserves 'proven' and '1P'?

Thanks for reading, and best of luck to everyone in this share!