@gimo211 and
@618 Ive had a look both valuation posts you have made and have a few comments to make.
Valuations based on what the market paid/is paying for this type of asset can be dangerous. Transactions like this include company specific parameters which impact on the real worth of something. For example, if the market knows the main owners want to walk away and focus their efforts on caber tossing and experimentation with new haggis recipes...the market will play on this dynamic and low ball it...as they will be looking at desperate seller/fire sale scenario. They, wgo, have tried to do a dutch auction to counteract the dynamic, but when the SP is so far off what it should be, there is still lots of room to play with for the bidders.
I would not use those metrics to value STX.
To get a sense of what the STX business should be (will be) worth, I simply go to a simple cash flow forecast (which I have done) and look at the NPV of at least the parts of the business that are in effect ready to go to FID and construction, and revenue within 12-24 months. So thats, basically Walyering and WE. Im
not factoring in anything for:
- SE
- Ocean Hill and the Jurassic plays
- Other prospects...esp the LD lookalike, further east.
- Haber and other downstream processing
- LNG Export
I
am factoring in the additional resources at WE ( the ones in green and yellow colour on the map
65128849
) - to me, they are almost a given.
I have done the dcf, using dom gas pricing. And all i will say atm is that the above valuations (0.40-0.50) would fly for the above scenario, if I placed an
inordinate amount of risk on their ability to raise debt financing and their ability to successfully construct the plant and pipelines. i.e. I have to give them a 30% chance of doing both, to get my npv number to match those you have posted. But thats just for Walyering and WE. What about the rest?
What about the rest? How much do you think that is worth? atm, its bugger all, compared to the 2P/2C resources. So now, go and find some ground that has a SE discovery on it (easily 1TCF), and Ocean Hill, and Arrino etc. for bugger all? You wont. Anyone with half a brain knows they need to keep this stuff and progress it up the value chain before they get any recognition. And by the time you've done that? yep, well you may as well hang on to it and develop it too in due course. Why give it away??
The key point for me is, now is not the time for STX to sell. wgo is a different kettle of fish. Different dynamics at play there. STX should hold out and stay the course in order for SH to get the best bang for buck.
(20min delay)