gerfovitch, AWE sold to Mitsui for around .71c (2p+2C), with the...

gerfovitch,

AWE sold to Mitsui for around .71c (2p+2C), with the 2P component around $1.2/GJ in ground. They were not producing the asset when it sold. It is widely suggested it sold way to cheaply in hindsight given the size, production characteristics, and low cost nature of the asset. (It isnt really comparable to SXY CSG assets as they require large capex around the drilling of scores of wells to delineate the gas. I am not qualified but you would need to understand the value, particularly to an acquirer, of a CSG field over a potentially massive conventional field. I would suggest it is a marked difference.

It also isnt just about the capex spent and current revenue. The market looks through to what it would cost to replace resources and bring them to market.

You cant beat very large conventional resources that sit under a pipeline and are very close to a large market. STX's asset(s) will be lowest cost globally (inline with globally cheap Qatari gas).

Using the low metrics of the AWE T/O we would get $420m for STX's 50% share of WE (based on STX's 1185 bcf 2C). Once they drill another well or two some of this will start to convert to 2P. That will mean some of that 1185 will switch to a more likely $1.2-1.5 or more/GJ rate (in ground).

Also WE-3 could add 500+ bcf to the 2C number - as potined out by rperrss

Then you have South Erregulla and the greater Erregulla project. I dont think you are right about it being 3-5 years away. I am hoping they may be able to bring SE forward into the back end of this current drilling program.

I can see a path to a 750-1b company in the next 6 months if the next few wells prove the model of Structural conformity / Amplitude response in seismic analysis as this will point to the COS on their other PB projects.

As I said in my last post, I think STX will end up with more than 3TCF proved up in the PB, and as the market becomes more comfortable that this number is attainable we will see much larger and sharper share price gains ahead of us.

Side note: I was doing some reading this morning and came across this snippet from Bridge Street Capital just prior to the drilling of WE-2. Have a look at the assessments from RISC (guided by Warrego) as to COS of the well. It coincides with their view of the resource size as well.

Who proved correct on COS ? They clearly thought the Wagina wasn't even going to be a factor.

I think Basal Wagina alone will be massive for STX across their acreages.

"Probability of success uncertainty: The two reserve assessors have arrived at significantly different estimates of geological probability of success(GPOS) (a.ka. geological chance of success, GCOS). Strike assessed the “chance of discovering gas and proving a developable resource size in the Kingia and High Cliff Formations” at 69% and in the basal Wagina formation at 12% [1]. This results in a P50 resource size weighted average GPOS of 57%. RISC concurred with Warrego’s earlier assessment of a GPOS for the Kingia formation of 21% and of 12% for the High Cliff formation, with the Basal Wagina formation not risked. If one applies a GPOS of 12% to the Basal Wagina formation this results in a weighted average GPOS for the RISC assessment of 16%."

IMO