While we wait for the flow testing equipment to be setup (I'm assuming it's not yet given there hasn't been an announcement) & then for the flow test itself (c. 2 weeks for final result) I was doing some work on a possible takeover target amount last night that I want to share.
The clear & obvious comparison is the "Waitsia" discovery by AWE in 2017.
AWE owned 50% of the project (Origin Energy which was ultimately Beach Energy owning the other 50%) which attracted 3 separate, independent bids from different companies.
The 3 parties who made bids were:
- Mitsui (eventual winner at $602m all-cash)
- Mineral Resources ($526m)
- China Energy Reserve & Chemicals Group ($463m)
Note that these offers were for 50% of the Waitsia discovery -
The discovery itself wad an estimated 844BCF of gas and flowed at 90mcfpd (90m cubic feet-a-day - from the Waitsia-4 well)
Compare this to WGO/STXDiscovery
The size of the WGO/STX discovery had pre-drill resource estimates greater than 1TCF of gas (i.e. larger than Waitsia)
The drill results Exceeded their pre-drill estimates and when comparing to the Waitsia-4 well the Gross/Net pay zones are as follows:
Column 1
Column 2
Column 3
0
Waitsia-4
WE-2
1
Wagina Gross/Net (m)
107/0
79/10
2
Kingia Gross/Net (m)
42/21
97/58
3
HC Gross/Net (m)
54/
22/10
4
Porosity (%) - Kingia/HC
>11
14/10
5
Permiability (mD) - Kingia/GC
>10
102
The major positive differences with WGO/STX vs Waitsia is that the net pay zone in the Kingia zone is 276% larger!! (i.e. 58m net pay v 21m net pay). The net pay zone in the Wagina for WGO/STX is just an added bonus too
Also, the porosity / permeability readings compare very favorably against the Waitsia discovery.
The only variable outstanding is the flow rate - for which we are about to test.
Now... Speculation Time...
WE-2 was larger in pre-drill estimates, exceeded those estimates and has more net pay than the Waitsia discovery.
50% of Waitsia was sold for $602m in an all-cash offer.
Arguably, WE-2 should be worth at-least $602m (or 85 cents per share)
The other very bullish part about where we are in time is that the first Takeover Offer for AWE's Waitsia project came 3 days after the successful flow test
Now is absolutely the business end of the adventure!
All IMO & DYOR
WGO Price at posting:
31.0¢ Sentiment: Buy Disclosure: Held
