Hi @tt2000Getting back to the earlier conclusion of 2L & HY...

Hi @tt2000

Getting back to the earlier conclusion of 2L & HY capital providers exiting and concensus that EM & SNDE would look at this as the "monetization event", what are you thoughts then on what that delivers to common stockholders?

In a scenario of an even 50/50 D/E balance sheet with a asset level IRR of ~24% using oil at $56 and the future development costs of $1.2B then I've calculated a measly $45M for the equity value of SNDE today - or around $6.50.

That sucks or I've made a major error in assumptions (like the pace of development as clearly the quicker its done the more valuable the cash in DCF but that needs a much higher oil price sooner ... no free lunch). Tried playing around with that without material effect. Probably due to not being able to model the greater production early and the remaining correctly.

Here is the attempt ... same amount of Capex ($1.2B) front loaded (assume $6M 1 well so its a 80,40,30,25,25 wells annually = 200) with rough attempt at a decline curve where the new wells produce the EUR (312.5 MBO note oil only) at 40%, 20%, 10%, 5% & 5% annually. Add in some for existing PDP ($100M, $80M, $60, $50M, $40M) and I end up with if paying $45M for SNDE equity.

		Y1	Y2	Y3	Y4	Y5	Y6	Total
1	Buy Asset	425						425
2	50% D at 10% Coupon	21.25	21.25	21.25	21.25	233.75
3	Dev Asset	480	240	180	150	150		1200
4	Asset Rev	484	464	396	338	328		2010
5	Asset Net Rev	4	224	216	188	178	75	810
6	Disc Rate		10%	10%	10%	10%
7	Asset NPV10	4	201.6	181.44	163.296	146.9664	75	772.3024
8	Project Net Return	-442.25	202.75	194.75	166.75	-55.75	75
9	~IRR	14.52%

In prior valuations like EV/EBITDAX etc we've been using what peers are trading at or how a BO is being valued. What if you change that to more of just I can invest $X into this oil project or $Y into this other project and compare my returns?

What prompted this for me was another stock I'm in that released a PFS with estimated NPV (8%) of $714M, annual EBITDA of $149M and IRR of 26% on the initial estimated capex of $377M (all equity balance sheet). IF IF IF we assume the risk of each project is about the same its obvious which offers the better return for the capital invested.

IF I'm even half right (so double equity value of SNDE) it still is not good price for the equity.