pel92 joint venture profits

If what the CEO of Cooper Energy alluded to in the Boardroom Radio discussion today, the Callawonga oil field is larger than everyone thought, which should translate into an increase in 2P oil reserves (at 30 June 2009).

Let me take you through some my back of the envelope calculations as they apply to the whole of the PEL92 JV:

Production from the PEL 92 production area was recently boosted to over 5,000 barrels of oil per day (COE share 1,250 bopd) following a series of successful well workovers and the recent commissioning of the Parsons-to-Callawonga and Callawonga-to-Tantanna flowline (Source: COE ASX press release yesterday).

Using the publicly available information from the Beach AGM slides (COO presentation, pages 15 and 16), from its share of oil sales revenue of about A$90/bbl in the PEL92 JV, COE is left with a before tax profit of A$52/bbl ... meaning that COE is expected make about A$2.0M profit before income tax (A$1.4M after income tax) each month ... assuming oil price stays about A$90/bbl.

In theory, assuming oil price stays about A$90/bbl and the fields in the PEL92 JV continue to produce on average 5,000 gross bopd, COE could be expected make about A$23M profit before income tax (A$16M after income tax) for a 12 month period just from this one joint venture (PEL92).

To date BPT (with COE as a JV partner) have invested in PEL92 around A$75M ($27M on exploration to discover 6.4 mmb of oil; another $42M to bring this oil into production; remainder on Callawonga-5 and 6 development wells).

I am comfortable assuming 5,000 bopd (gross on average) for the next 12 months given the fact that the PEL92 joint venture is anticipating up to 6,000 gross bopd in the near future (per COE press release yesterday).

In addition, using the publicly available information from the Beach AGM slides, the costs to produce and transport oil from PEL 92 to date have averaged about A$27/bbl. So, going forward, the transport costs for PEL92 should be lower (even assuming additional amortisation costs for the pipeline) given the new Parsons-to-Callawonga and Callawonga-to-Tantanna flowline.

Food for thought!!

Cheers