We have discussed this before here on HC. I don't think the...

We have discussed this before here on HC. I don't think the market hasn't completely missed it, the market is across it, but the market also realises that the oil for SXY is chump change in the scheme of things because the volumes just aren't there.

SXY's market cap already more than takes into account the future oil discoveries you speak of and then has a hefty blue sky built into the gas price.

As speculator pointed out, the success rate for drilling is more like 40% for exploration wells (which is still very high).

Here is a post I wrote on 10/12/13:

It's 40% of drilled prospects. Not 40% of 450 leads and prospects.

Obviously only some of those leads will progress to being drilled. How many depends on a lot of factors. SXY didn't tell us how many are leads and how many are prospects but I think realistically you could write off at least half of the leads as unlikely to progress to become prospects, and then not all those prospects will be drilled (they might have unattractive economics and/or low COS).

It's a good result though, especially considering a 42% success rate on wildcat drilling. Even if only 100 of those prospects are considered drillable, and 80% of those are oil, you'd have 34 successes at an average of 2.1 MMbbls (presumably OIP, not EUR).

With 25% recovery factor, you could be looking at
71 MMbbls OIP and 18 MMbbls of recoverable oil.

So SXY might get another approx 20 MMbbls of 2P out of these leads. That's a nifty asset by anyone's standards but it's not a company maker (there will be more in tight oil but margins will be much lower there). If you use the standard $10/bbl valuation the oil business could be worth another $200M odd. With SXY currently worth $900M it's easy to see that the market hasn't missed it, the market just knows that while oil is good stuff, there isn't enough of it out there in the Cooper - SXY's future lies in gas, and the Cooper is literally awash with gas. The oil will provide the cash to develop it, but the gas will provide the volumes to make some serious money.

As just one example - SXY currently has about 10 MMbbls 2P of oil, and we're talking about potentially another 20 MMbbls. Hornet is 1.9 TCF of 2C and 5.5 TCF of 3C, which is 325 MMboe and 914 MMboe respectively - nearly a billion barrels of oil equivalent in just ONE prospect in SXY's Cooper acreage.

And there are potentially dozens of gas prospects out there for SXY.