Hi All,
Just a short estimation attempt at Sasanof and by extension PRM's value if the drill hits.
I'll assume P50 hit for the estimate, but include low-side and upside. We'll look at one of the more expensively priced gas discoveries, and on the flip side, one of the cheaper discoveries. Keep in mind, the estimate is just for Discovery stage, if we get to development (if we find something), then the valuation increases a few times over.
Norwest EnergyThis was Norwest Energy, pre-drill, they believe they've hit high side of estimate. Or 224 BCF.
Norwest is still testing and firming up the discovery, but it's worth currently, 248M. With 18M cash on hand, their EV sits at $230M.
Assuming a 224PJ discovery at Lockyer, Norwest is valued post discovery at roughly $1M per BCF.
Warrego at West Erregulla
West Eregulla has upside with drilling next month to firm up the contingent and prospectives into the reserves. On a PJ basis,
They have 36M Cash on Hand. Also some value has to be given to the upside of West Erregulla, though in comparison to Norwest, it's not being given much by the market. Assuming 30M for upside.
On a 2P basis, Warrego is valued at $0.62M per BCF.There's good reason to believe their EPA-127 and Spanish properties are not priced in at all as they're early stage, and non-value add respectively.
Carnarvon at Dorado/PavoTo get some perspective on Liquids/Oil rates.
Carnarvon have 36M barrels at Dorado, 13M at Pavo North, and 17M Prospective at Pavo South. They also have 200 BCF of gas, but I believe no value as being ascribed to this right now, as it's a decade out until any of that gas is tapped in the best case (if it is recovered at all).
Carnarvon will have roughly $38M post Pavo drilling just completed. This puts their EV at 385M.
On a 2C basis, Carnarvon is valued at $7.7 per Barrel (ignoring gas as per above).
So what is Sasanof Worth?
Well going off the high side and low side for the gas discoveries -
WGO - $0.62M per BCF, and NWE - $1M per BCF.
However, it's important to note, both are land based discoveries, with the higher cost of development offshore, it's prudent to add a 50% discount.
So I see valuation between $0.3M to $0.5M per BCF.
For the Condensate, once again, i'd discount Carnarvon's Valuation slightly to around $6 as they have higher value oil components in their liquids.
That gives for a P50 discovery:Lowside - 4131*0.3+100.4*6 = $1.84B
Highside - 4131*0.5+100.4*6 = $2.67B
Net to PRM of $230M to $333M or 9.5c to 13.7c share price.
I think probably at the lower end of the range, unless we hit any surprising bonuses.For P90:Lowside - 600.5*0.3+13.8*6 = $263M
Highside - 600.5*0.5+100.4*6 = $383M
Net to PRM of $33M to $48M or 1.3c to 2c share price.
These numbers are somewhat sub economic offshore unless the plan is to tie back to a neighbouring development, and even then it's a bit touch and go, so even though I've given numbers here, I would say, it's a write off if it's P90 side hit.For P10:Lowside - 9253*0.3+234*6 = $4.18B
Highside - 9253*0.5+234*6 = $6.03B
Net to PRM of $522M to $753M or 21c to 31c share price.
If we hit and say it's at top end like Norwest, I'd think we'd be valued to the upside, realistically, this is very unlikely of course, with less than 3% aggregate chance of both a discovery and it being P10.
(20min delay)