artemis independent valuation, page-2

I also noticed the MOG announcement on Friday 27 Nov with their new independent valuation of Artemis.

MEO also released their eplanatory memo, on the same day, regarding their method of valuation per share for the Artemis prospect as published in their RIU Good Oil Presentation 2 September 2009:

http://www.meoaustralia.com.au/icms_docs/59925_Clarification_to_2nd_September_2009_Good_Oil_Presentation.pdf

The original calculations published by MEO on 2 Sept put the value per share (VPS) at $3.65 unrisked (UR) and $1.17 risked (R).

Since then, after the CR, the number of shares have risen to 477.2m. The fx rate has also increased to US$0.90 so in the calculations from now on I will use those factors. This would change the original MEO's figures, after CR, to $2.83 UR and $0.91 R.

However, after the CR, MEO may go it alone with their 70% interest. On the downside this would mean that MEO would have to fund further development but on the upside, if drilling is successful, a future farminee would find a buy in much more expensive. If MEO go it alone with a should happen then the VPS figures, using the MEO variables, would be $3.18 R and $9.93 UR.

Now for the table shown in the table on P137 of MOG's 27 Nov ASX release (identified in rontsieb's post). The independent report was produced by SRK Consulting Ltd.

I have used the input variables shown in the MEO clarification release and combined them with the estimated gas resources table in the MOG Explanatory Memo. One glaring difference, of course, is the Geological Chance of Success factor. MEO set this at 32% and SRK 13%. For this excercise I have averaged the two figures and used a factor of 22%. The other two changes are still as noted above - number of shares 477.2m and the fx rate at US$0.90.

SRK also use the term Prospective Gas Resources (as opposed to MEO's Mean Prospective Resources). I have presumed that SRK are also referring to Mean Prospective Resources but may need to be clarified in your own research.

The results are as follows:

High Estimate @ 14.9Tcf - 20% = $ 3.47 UR and $0.76 R
High Estimate @ 14.9Tcf - 70% = $12.14 UR and $2.67 R

Mean Estimate @ 9.15 Tcf - 20% = $2.13 UR and $0.47 R
Mean Estimate @ 9.15 Tcf - 70% = $7.46 UR and $1.64 R

Best Estimate @ 8.9 Tcf - 20% = $2.07 UR and $0.46 R
Best Estimate @ 8.9 Tcf - 70% = $7.25 UR and $1.60 R

Low Estimate @ 4.9 Tcf - 20% = $1.14 UR and $0.25 R
Low Estimate @ 4.9 Tcf - 70% = $3.99 UR and $0.88 R

So there you have it. The figures above may be increased or decreased depending on which success factor you use outside the 22% factor used. Also the fx rate may alter so the figures, of course, are dynamic, as can be seen by the original 2 September figures.

The above figures do not include the value of the estimated 25-145 mmbbls of oil which SRK included in their tables. There is also the value of MEO's other assets to take into account. Some posters say they aren't worth anything. I disagree but that is something you have to decide for yourselves. The market values MEO at 40.5c at the moment but I am sure that will increase leading up to mid December.

Of course this is a speculative stock so there may not be any gas in place at all, but that is the nature of the beast. If the farminee negotiations are successful then MEO's coffers should be increased by the re-imbursed cost of the seismic, the value of the %age farmin and would mean a free carry for additional wells. There may be other sweetners too but we will have to wait and find out what they are, if any.

DISCLAIMER - The resources I have used are from ASX releases by MEO and MOG. My calculations are hopefully accurate but please DYOR.

Also, after reading earlier threads by some respected posters I must say I am not affiliated to any company, thank goodness, so therefore have no ulterior motives for my posts apart from having fun and sharing information which is available to everyone. I do hold shares in other companies but do not disclose them here, as this is the MEO forum.

Good luck to all holders:))