As mentioned previously, I have modified my valuation model to incorporate both a DCF and Risked NAV model, with the final valuation being the product of a blended weightings. Given STX is currently mostly an exploration company in the process of transitioning to a producer, valuing its key assets (WE, SE and Walyering) strictly on a DCF basis doesn't do it true justice as the bulk of the cashflow is 2-3 years away. So I have assigned a weighting distribution of 40% DCF and 60% risked NAV for now, which I believe is a fair reflection of where STX is today. In 2 years time when SE peaker is online and WE is nearly online, that would become 60-70% DCF and 30% Risked NAV. Hope that makes sense.
I've increased ED's dollar per barrel equivalent from 10 to 15 reflecting the confirmed discovery resource post successful flow testing, and increased its COS to 70%.
Note: This is general information and not specific financial advice. Please DYOR.
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STX Price at posting:
22.5¢ Sentiment: Buy Disclosure: Held
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