valuation metrics

I have been a holder of WCL for a month or so now and have just doubled my position at 50c

I undertook alot of due diligence and analysis prior to committing more capital and heres why I decided to

WCL 110m shares @ 50c Mkt Cap = $55m
Cash $25m (note the last qtrly does not include options and placmeent funds, see the presentation a few days prior where cahs was stated at $27m)

EV = $30m

*******ATP 769 50% jv BG Group*************
This is the better of the 2 permits primarily because of its proximity to the Santos/petronas Gladstone and the BG/QGC Curtis LNG facilities

GIP ranges from 1TCF down to 1000ms up to 3.3TCF down to 1500ms, with a 50% recovery factor and a 50% interest WCL can expect between 250BCF - 825BCF in Gas Reserves
At a 3P level this is worth $1/PJ = $250m - $825m = $2.25-$7.50 however this is assuming alot, it should be noted were these reserves 2P then you can double the value as 2P recieves roughly $2/PJ

The intial Net Reserves Target by June (ie this month) is 72PJ at $1/PJ 3P - $2/PJ 2P = 65c-$1.30 WCL

I will assume that the intial reserves being preliminary in nature will be 3P so 65c is the value per share I will attribute, but note if it is in fact 2P this figure doubles!


*******ATP 688 50% jv BG Group*************
This appears to have a much much larger resource and is also not that far away from the Santos/petronas Gladstone and the BG/QGC Curtis LNG facilities

GIP is 3TCF with 0 attributed to the Fort Cooper Coal Seams where AOE in their adjacent permit have been having great success, with a 50% recovery factor and a 50% interest WCL can expect between 750BCF
At a 3P level this is worth $1/PJ = $750m = $6.80 however this is assuming alot, it should be noted were these reserves 2P then you can double the value as 2P recieves roughly $2/PJ

The intial Net Reserves Target by June (ie this month) is 80PJ at $1/PJ 3P - $2/PJ 2P = 70c-$1.40 WCL

I will assume that the intial reserves being preliminary in nature will be 3P so 70c is the value per share I will attribute, but note if it is in fact 2P this figure doubles!



******** Valuation **********
Cash $22m = 20c
ATP 769 72PJ's Net 3P = 65c
ATP 688 80PJ's Net 3P = 70c
Target Value = $1.55c

Note if intial Reserves are 2P this valuation rises to $2.90



******** Conclusions **********
With $25m in the bank the company won't need to raise funds for at least 12months given they share the bruden of costs with BG 50:50

ATP 769 is stragically positioned in terms of proximity to Gladstone and Curtis, and given BG already own 50% of it I suggest its a matter of whn not if they pounce

The Reserves certification due for completion this month should highlight $1.50+ of value with around $10 per share of GIP upside

Remember PES was once a 30c stock and finished up being taken out for $8.25c by you guessed it BG

Thoughts?