Set for a massive rerating soon

Plenty of chatter going on at the moment regarding the recent capital raising, with some doom and gloom regarding the share price and the number of shares now on issue etc.

It’s always good to reflect on the value catalysts that we have, and I continue to be extremely optimistic moving forward;

1. Borba Size

In the recent webinar Gary Jeffery’s mentioned that they have been able to map out a channel system on the 3d Seismic for Borba, and that drilling is "imminent".

We are all eagerly awaiting the independent resource assessment for Borba, in the meantime we can only speculate on how big it might be.

“GJ mentioned that other industry people have suggested Borba could be in the 10tcf to 16tcf range based on amplitude anomalies but played this down as there is a lot more involved in modelling for the drill”.

https://hotcopper.com.au/threads/an...5430096/page-14?post_id=45039715#.XtiezeR7m70

Based on this, doing some back of the envelope numbers;

1 TCF is approximately 170 million barrels of oil equivalent.
10 TCF is over 1.7 billion barrels of oil equivalent !!
16 TCF is over 2.7 billion barrels of oil equivalent !!

XST 24% stake in Borba would equal between 400 million to 600 million barrels of oil equivalent.

SGC 50% stake (assuming 26% is farmed out) in Borba would equal between 850 million to 1.35 billion barrels of oil equivalent.

Using the number above and a conservative $10 oil price as a guide Borba could potentially be worth billions to both XST and SGC. Even if only 10% of Borba comes in (i.e. 1 to 1.6 TCF) it would still provide significant upside.

XST current market cap is only $5m approx.
SGC current market cap is only $12m approx.

Borba is only 5 kms away from Dempsey so they already know that there is gas and lots of it, and it is also adjacent to natural gas pipeline infrastructure.


2. Big Gas Big Upside

History shows that drilling big targets like Borba can cause a significant rise in a company share price, as the case studies for 88e and GDN demonstrate (courtesy of Magnum Gas and Power).






3. Market Cap relative to Perth Basin Operators

In the recent Webinar Gary Jeffery’s was bemused by the market cap of XST and SGC compared to Perth Basin Operators, STX and WGO, and looking at the following table it is not hard to see why.




4. Red Earth Oil Production

The settlement of the transaction is expected to occur before the end of January 2021.

It is expected that an additional 300 barrels of oil can be added to daily production in the near term by turning idle wells back on.

The operator has estimated that the infrastructure would be 100’s of millions of dollars to replace.

They see up to 13m barrels of oil remaining in the assets, and believe there is up to 30 years of remaining life left.