Ann: Company Update & Capital Raising, page-33

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28/12/15

15:10

Post #: 16691176
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Originally posted by BlackPeter ↑

Just reviewing my somewhat "damaged" holdings (TAP being one of them) and updated my DCF calculation (based on gas contracts and Manora). Assumptions:

* Income from gas contract until end of 2016 at current levels;
* Debts as per recent announcement (US$43.5 plus US$8m (worst case they need to pay all their share of the disputed cost overrun)
* Oil price developing as per world bank assumptions (I took the Q3/2015 numbers assuming a slight further dip next year (year average) and afterwards a very gradual improvement form $51,40 to $88,30 in 2025)
* cost overhead growing with rate of inflation (2%)
* Manora production dropping 15% pa
* debt facility repaid by end of 2017 and assuming interest rate of 8% (just a house number, I have no idea what they really pay)
* TAP will eventually recover the monies owed by the Thai gentleman ... and if its by withholding their payments to NPG
* requiring for the purposes of my DCF a return of 12% (hey - its a high risk investment after all).

Ah yes - and I didn't really look into cash flow ... i.e. there might be another "tight moment" when they need to repay the next installment of the debt facility.

Anyway - based on these assumptions (and assuming that their other assets are sort of revenue neutral) do I come up with an NPV of 81 Australian cents (59 US cents) per share.

Maybe RISCO knew what they are doing when they accumulated at slightly above 20 cents?

I guess a (partial or full) takeover offer in 2016 might be in the books. Question is - when will they move? If TAP has problems with the debt covenant around end of Q1/2016, than this (or shart after) might be good timing to get the company really cheap.

DYOR.

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BP
Problem is oil price becomes less relevant if they are forced to hedge around these prices.
Your decline rate is extremely generous - we have seen that decline in last 6 months
You ignore development drilling which will cost a lot in years to come
You ignore corporate costs

The thing is with number crunching if you include only the things you want you get the output you want. It's nowhere nearly as good as you say. Also did you work out those NPV numbers post dilution

TAP Price at posting: 16.5¢ Sentiment: Hold Disclosure: Not Held
1 Upvote

0 Great analysis

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