Thanks LR. The figure in the BCF royalty is incorrect but doesn't change the others.
The figures are recoverable so the risk factors are negated. It puts a simple value per share at a gross profit level. There are only minor costs after that such as transport etc to get to an EBITDA and then of course taxes and amortization etc to get to a final net profit. Flow rates would determine how quick they empty the well/s. They may drill further dills to empty quicker as they have indicated and therefore for capex.
Strachans estimates put in risk factors which of course have either been negated or not included in the spreadsheet as the amounts are recoverable and priced at well head. Prices can change either way which would change the figures however I simply used the figures provided by GJ as a guide.
GJ's language has become more subdued since Dempsey however I believe he is very confident of their modelling. Being an actual GEO himself gives me even more confidence. They previously quoted Dempsey as 1tcf over 7 zones (one drill) and Borba being Dempsey on steroids etc. Dempsey and Alvares 3 TCF combined.
My research has led me to believe that GJ is trying not to overplay his comments yet still looking at a multi TCF delivery. The chart I put up using the numbers GJ has provided is just a bit of a blue sky look at what they are targeting. Some punters are afraid of the size of numbers in case posting these things can somehow change the result of the drill, the resource or the flow rates. Never any guarantees as we well know however I like numbers as numbers turn into dollars and we bank dollars. I am very happy to have the numbers looked at, pulled apart and replaced. (which did happen with the royalty error thankfully). I would love to read others peoples numbers and how they arrived at them. Hopefully we can all keep sharing. One thing to note also is that there was no multiple applied as we don't know what the earnings would be until we get flow rates etc.
Oil and Gas Drilling P/E Ratio
As of Q4 2019, the average P/E ratio of the oil and gas drilling sector is 16.98. The industry average includes the metrics of large-, mid- and small-cap companies.
Historically, U.S. stocks have had an average P/E ratio of 16.5, which puts the oil and gas drilling P/E ratio in line with expectations. However, many analysts argue that the P/E ratio is not the best-suited ratio for the oil and gas sector.
This view is taken mainly because the oil and gas drilling sector requires a lot of capital expenditure for the tremendous amount of machinery involved in the business. When oil prices are low, companies cut back on capital expenditures, when oil prices are high, they invest in capital expenditures.
This from a Next Oil Rush report in 2017
As a natural gas developer, SGC has three key targets.
1), it wants to help California redress the balance of its skewed demand/supply outlook;
2), it is looking to add over 5 Tcf (around 2.5 Tcf net to SGC) in reserves over the coming years, starting with 1 Tcf from Dempsey; and
3) deliver to its shareholders, the commercial spoils of fast-tracking a natural gas renaissance in America’s largest state.
Flame on.
SGC Price at posting:
9.1¢ Sentiment: Buy Disclosure: Held
(20min delay)