I think CVN is slightly under-priced but not drastically so...If...

I think CVN is slightly under-priced but not drastically so...

If you want to TO CVN or even buy some shares you'd want to at least double your money over 7 years, or make about 15% p.a. on your investment

Assuming the field can be 75% depleted after 7 years, CVN will net about 30 mmbls on current 2C.

For oil price of $90 and 45% net to CVN is $90x0.45x30mmbls....$1215 mil USD (net to CVN)

Less CAPEX of $550 mil (CVN share) and neglecting pre production financing cost, and post production amortisation etc etc.

Net cash to CVN over 7 years (from start up) is 1215-550...$665 mil USD or $900 mil AUD @ 0.74 exchange rate.

$900 mill divided by 2 plus $120 mill (current cash)....and you could pay $570 mil AUD for CVN or 30.5c/share and reasonably expect to double your money over roughly 7 years. This is what I think a TO offer could be at if it came at this stage or just after FID...all else being equal.

The current SP mererly reflects risk with FID timing, POO, exchange rate, and financing IMO