again, there is a lot of new blood here who dont fully comprehend the story....
rather than drag up every skerrick of research, a quick summary may be in order for the recent arrivals...
i recently used BPH as a comparison, simply because its the closest one on the ASX with a similar project....they're the same, but different......one project is bigger, but still conceptual, so the risk profiles are different, however i think its valid to compare several aspects of both....
firstly, NOPTA....many here dont get it, or think its the key to the treasury.........its simply a regulatory hurdle regarding O&G tenements. For EMP, NOPTA approval was simply to extend the terms of the tenement to Aug 2023. Its important as it gives security of tenure, essential for any potential partner to have, given the time required to plan for drilling..... Following on, there are still a plethora of hurdles to get over to get drilling approved.
The second important milestone recently was the acquisition of 3D seismic by CGG, over the Gippsland basin.....i believe now that EMP has that data, and will forward it on to prospective partners. Given a well is going to cost $30M+, anyone coming in will want all the data they can muster, very few major partners are going to sign off such a commitment without 3D data
So, we have 2 more points in the hunt for a partner, no doubt, they would have held back, not only due to the pandemic, but also due to the lack of security and 3D data....
Dilution.....its inevitable.... however, Carl has a history of only raising whats needed to avoid dilution of shares on issue, so, i dont have an issue with capital raising as it goes into value adding the Judith prospect....
Dilution will more likely come from a JV deal......a major will come in, take a majority stake in the project, and usually, operatorship, in return for.....
1.....a free carried interest
2.....or, take a smaller stake, but with reimbursement of previous expenses...or...
3....outright sale
its important to remember that the next well, which has been designed and costed, is an appraisal well....there is already gas there....however, they plan to drill deeper in order to explore and test the Emperor Formation, which has potential to increase the resource considerably, which is why i believe they are after another block, possibly adjoining, which will increase the coverage of that formation.
The big plus for EMP is that the gas field is in a proven province, supplying gas for more than 50 years....infrastructure is close by, with APA having a firm handle on the logistics for this project........and......importantly, APA has a processing facility, you simply can't pipe gas of a production rig into your Swap'n'Go bottles, you need a plant to strip off the condensate(hydrocarbons), CO2, helium and mercury. The plant is all there, established, meaning production can be bought online quicker than a discovery in a new area/province
EMP still has risk, but in a different profile to other O&G companies, as for value...theres many figures thrown around here, trying to establish a "comparable" value......a report bandied around gives a $5 target(whoa!!)....
A (very)simple comparison of MC to peers, can give a value of 50-70cents.
Currently, EMP is valued at a shell price, so i dont believe its unreasonable at attribute a simple value, today, with no "blue sky" of around 10 cents, or a 10-12M MC.....any speculation could(feasibly) see EMP move to 30M MC (25-30cents), but, only the market can decide that.....personally, i'm happy with my own thoughts of a value around 10cents, before any risk premium or market speculation gets thrown into the equation
The trigger for a rerate???.....more market acceptance as to the potential, and for the "Golden Fleece", an announcement of a binding deal with a partner, or partners.....nothing more, nothing less
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