I like the "kis" approach ... keep it simple. Look at the combined market cap of the QGC/SGL entity assuming the takeover is successful .... it is abt $320mill give or take a mill or two. The combined entity has P1 and P2 reserves of abt 360PJ.
EPG has GiP estimate of 979PJ for just 15% of the area of one of their permits in France. Despite being based on high quality data, EPG cant call it a reserve because they are not yet a producer. A management pointer on this was a comment in a recent ASX announcement that they expected abt 50% of the GiP to be recoverable ... ie reserves abt 500PJ. Gas in Europe is priced abt 3 to 4 times higher than here in Australia. Unlike coal bed methane resources in Australia, EPG's Lorraine resource is smack bang in the middle of high population areas in France and significant gas distribution infrastructure is already in place.
So EPG could be valued at 500/360(reserves multiple) x say 3(gas price multiple)x $320m(mkt cap of QGC/SGL)divided by 138m (EPG shares on issue I think) = $9.66 per EPG share x say 0.5 (bugger factor) = $4.83 BUT SAY $4.00 per EPG share.
I would be very interested to see someone value it on assumed gas reserves and European gas prices if possible.
The above share price obviously assumes that EPG smoothly morphs into a production company ... that could be several yrs away if development milestones of QGC and SGL in Australia are any guideline. However, I understand that the French Govt is very supportive of EPG's efforts and, given current uncertainties for gas supplies imported from Russia, I wouldnt be suprised if the French Govt steps up soon to expedite investigations, production trials, permits and full on production.
Ramblings these may be, but I suspect not. The demand for EPG shares for the last 8 wks or so has been strong and last wk was just sensational ... all the while there has been bugger all interest on hc for anything to do with EPG (akka KBO) and I think that is a good reflection of the lack of ASX interest. Buying is from overseas imo and I am sure there is a ten bagger run still there for the taking for punters with a sense of adventure.
Cheers Poyndexter
EPG Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
