Ann: Third Quarter 2018 Earnings Release, page-23

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tt2000

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21/11/18

10:54

Post #: 36584089
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Originally posted by cmonaussie ↑

Anyone here remember Sugarkane Field? This will add a bullish upside case

"XXXX" paid $38.7 million for a 3,084 gross / 2,706 net acres in the Sugarkane Field in DeWitt County, Texas from Sabine Oil & Gas Corporation (and an affiliate) and Alerion Gas AXA, LLC. The properties, 95% of which are operated, currently produce 800 boe/d from 20 wells. Estimated annualized EBITDAX from this level of production is $6 million.

Can we call it 6.45 multiple of EV/EBITDAX?
and $48,375 per flowing Boepd

Internal estimates that Proved reserves associated with the acquisition total 13.0 MMBOE, 3.2 MMBOE of which is Proved Developed Producing. 100% of these reserves are associated with the Lower Eagle Ford Shale. Based on the NYMEX Strip on November 15^th (the day of closing), the Proved reserves have PV-10¹ of $77.0 million

Can we call it $2.98/Boe for EV/1P (cheap ... or $12.09 if 1P PDP ... those PUDs need capital)

Plug in the numbers to the "Recent Eagle Ford Peer Transactions" slide and
EV'19 = EBITDAX x multiple = $262.5M x 6.45 = $1,693M
subtract debt'19 ($375M??)
leaves Equity at ~US$1,318M
and
Stock Price at US$1,318M / 6.868B (?) = US$0.192 = AUD$0.255 (at 0.75 FX conversion)

Since not all "BoEs" are equal using EV/1P or flowing Boepd might not give a representative answer unless normalized. Product mix is important as it a major determinant of Margin.

Under the flowing Boepd metric the EV = $48,750 x 21,500 boepd = $1,040M (almost directly matching the EV/EBITDAX number from the Recent Peer Transaction slide).

Under 6cps might be too tempting to pass up.

Expand

I’ve bought my fill today

Fundamentals have aligned with technical analysis

Fundamentally, based on EV/2p ratio this should be closer to an EV of $1,000M.

Technically, you can draw a resistance line at around 0.055, plus the CR was at 0.058

I think there is limited downside from here, with good upside – the catalyst being the IP 30 day rates and production update for the month of November – I see this coming mid Dec

SEA Price at posting: 5.8¢ Sentiment: Buy Disclosure: Held
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Ann: Third Quarter 2018 Earnings Release, page-23

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