I would use the same/similar that was used for PES. The main difference with PES was that they also had the Cameron field which is a monster. While DJ is no Cameron, BOW also has some great prospects in their other two permits that we are not far away from drilling. I think when we only have three more holes in Comet North before moving to Norwich Park block to test the CSG-ability of those coals.
PES had massive upside, clear to see from their contingent resource and massive acreage. I dont think that BOW has the same upside, so I would expect that as they prove their reserves up they will increase their value at a decreasing rate..if that makes sense : )
I would be happy with an end state valuation of 30c/GJ 3P for the current campaign which has a target of 1900 PJ. So my expectation is for the MC to be around 570m with a share price of $2.46 that assumes an additional 10% dillution towards the end of next year. This doesnt account for future upside in exceeding the reserves targets. Comparatively, PES had an additional contingent resource of 5000 and a 3P reserves of 2510PJ. With 124m shares on issue and going on the final cash offer from BG for 1.024b values them around 40c/GJ on 3P. I think the better PJ metric here is because of the contingent upside.
In fact, I have previously stated that the 3P-2P $/PJ valuation metric was meaningless unless it was put into context. In my opinion you really need to rationally factor in two important factors: -the contingent upside of the company -the size of the company and the 'chance' of success
If you review the valuation metrics for all the transactions, the best value per PJ has been achieved by the majors. The deviations from this such as SGL/AGL are because of the contingent upside of SGL tenements.
I would like to think my targets were CONCEIVABLE as opposed to some of the other INCONCEIVABLE prices people come up with on HC. Though, generally those on the BOW thread seam to have their heads on tight.
Anyway, long answer to your question sorry mate.
SF
BOW Price at posting:
$1.26 Sentiment: ST Buy Disclosure: Held
