little downside big upside

Be warned the following is highly speculative, but a bloody good story all the same


Tolhurst noall released a research report on ssn today with a fully risked 48c valuation. They valued the proven and probable reserves at 48c and expect to raise the valuation by 4-5 cents as a result of the last few wells drilled at Amber field and increased compression at Look Out Wash.

Unrisked valuation is 81c.

If the Baxter shale is successful they estimate gross npv5 per well is in the range 3mill -31mill. They estimate 170 - 640 well locations ( 160 acre - 40 acre spacing ).
This gives them a potential unrisked value of 530 mill - 2,150m (using a low end of per well npv estimate).

They didnt give a high end valuation but using their numbers it works out at between 5.3 bill - 21.5 bill

That is approx between 100 and 400 times the current market cap. ($25 - $100 npv per share).

After doing these numbers the stupid id.ot downgraded it from a buy to an acumulate.

The way I see it is Samson have a number of high potential targets. Over the last 12 months have had a number of failed wells, they seem to have slowed their approach and will hopefully reap the rewards.
So far SSN have been unsuccessful in several attemps at the Baxter Shale, However the Baxter Shale has successfully produced gas on nearby acreage.
Questar has applied to drill 4000 wells. One well flowed over 4 mmcfpd from one well that was producing from the Baxter, frontier and muddy formations ( Samson has also acheived flows from these other zones). Samson are looking to replicate such results as Questar has been acheiving.
They plan to fracture a small section of the B S in Dec to see how it goes with a view to doing multiple fractures if it works.

If proved and probable reserves have a npv of 48c per share, then there is very little downside as the share price is currently 25c.

If they can work it out the upside could be amazing.

Cheers Davo22

DYOR This is just the way I have interpreted things.