Unsure what the point is even discussing this. Pull up any...

Unsure what the point is even discussing this. Pull up any online NPV calculator and plug in 130mn capex, 11% discount rate, 25 year expected FCF of 40mn (revenue of 45mn and opex of 5mn), and see what NPV it gives. Hint: it's approx 160mn, or 6cps, which is what my DCF model had also derived.

Macca stated their unrisked valuation for peaker plant is 2cps (1cps risked at 50%). How they derived at a valuation of 57mn from the numbers above is beyond me. Also, they have a separate valuation for SE and the peaker plant. That makes zero sense. The SE reserves will be used to feed the peaker plant. It's like counting a bit of the chicken and the egg.

The fact that they are still going on about the high inherent risks associated with Permain wells (quoting SE and Trigg) and how they are reluctant to ascribe any exploration upside value is just ludicrous. The basin has produced a drilling success rate of over 90%. What weed is this dude smoking?

The fact that they are continuing to discount Jurassic play (Ocean Hill) because of SE (Permian) is also totally irrational. Consider this, if it makes any sense to discount Jurassic plays because of 2 failed Permian appraisals, then why stop at Jurassic plays? Why not just discount every other onshore exploration wells in Australia to zero because of SE2 and 3?

Has Macca downgraded all the other Permian and Jurassic players in the region? I bet not. The only way this makes sense is if Macca is applying an operator discount. In other words, Macca is writing off STX, not because of the type of plays.

Look, the author is entitled to his opinion since it is his research note. But it is up to us whether we waste our precious time reading that crap. TBH, I wouldn't use it as toilet paper.

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