Given your comment, I thought I'd better have a look at the StockAnalysis numbers:
Dempsey 90% SGC, 10% XST
Alvares 75% SGC, 25% XST
Shares 132 M SGC, 622 M XST
SA assumes that 80% of Dempsey will be farmed out, leaving SGC and XST with 18% and 2% respectively. So SGC will have 9 times as much of Dempsey as XST and also 4.7 times fewer shares on issue. So on a per share basis, a positive result at Dempsey should be 42 times as valuable to SGC versus XST, ie the multiplier effect of 9 x 4.7 being 42
So far so good. However with Alvares, it does look like SA have made a mistake.
With Alvares, SA assumes 60% farmed out which would leave SGC and XST with 30 and 10% of the project respectively
The differential between S and X then reduces 3 fold to 3 x 4.7 =14
Alvares has a gas resources potentially twice as large as Dempsey (ie 1680 versus 780 BCF). When you do the sums, the increased resource size and increased percentage held still leads to the $1.45 figure for SGC on success (happily)
The mistake seems to be with XST where the success figure should be more like 10 cents rather than the 3 cents given; it looks like they have used the 42 x differential instead of the 14 differential
SA have used 75 cents / GJ
I'm relieved that the figures seem to be roughly correct for SGC but if anyone can see flaws, I'm happy for them to be pointed out,
ta V
SGC Price at posting:
8.1¢ Sentiment: Buy Disclosure: Held
