valuing a gas find

I think we have all belted our heads against the wall trying to value Ranau. To find information on the topic of valuing a gas find is exhausting to say the least. Today NWE issued a quarterly report and amongst the posts was one that said "1TCF = $8Billion". I find that hard to believe so I started "googling" again and came across this site.

(I hope this is helpful Cheers P)

http://members.pcug.org.au/~wildwood/05mar26mckee.html#conc

In the main, this might or might not be of interest to you BUT under the heading:------


Footnote proper

Barrel of oil equivalent (boe)

1 barrel of oil has the energy equivalent of about 6,000 standard cubic feet (scf) of natural gas. Therefore we can express quantities of gas as "barrel of oil equivalent" or 'boe'.


1 scf of natural gas has the energy content of about 1,000 British Thermal Units (BTU). 1 BTU is the amount of energy needed to raise the temperature of 1 pound of water by 1 degree Fahrenheit.


1 boe has the energy content therefore of 6 million BTU. This is useful to know, because as we will see below, the price of liquefied natural gas (LNG) is normally expressed in the world market as US$ per million BTU. However to keep things simple we will express the price of LNG in terms of US$ per boe.


Converting the Sunrise resource into boe.


1 trillion cubic feet (1 tcf) of natural gas = 1 million million scf of natural gas i.e. (10 raised to the power 12) cu ft of natural gas.


You can show that 1 tcf of gas = 167 million boe and therefore 8 tcf = 1.34 billion boe (to be sold as liquefied natural gas (LNG) in the case of the Greater Sunrise field)


1 barrel of condensate can be taken as 1 boe, therefore 300 million barrels of condensate = 300 million boe = 0.3 billion boe.


The Greater Sunrise field contains therefore 1.34 + 0.3 = 1.64 billion boe.


A barrel of crude oil is currently worth over US$50.



Therefore over the life of the Sunrise field, if all this energy were produced, and sold at the prevailing energy value of crude oil, then, by inspection, the total paid by the customer would be expected to be in the order of (1.64 billion boe) x (US$50/boe) = US$82 billion dollars, present day value.


That is the gross expected sales revenue at the end of the transportation line (e.g. as paid by customers in Japan or the USA in the case of Sunrise gas). All the initial costs of investment in exploration, production facilities, wharfs, ocean tankers, together with ongoing operating and maintenance costs of production and transportation need to be deducted to find out what is left over for the companies and governments to share as their final "booty". It is the split between the companies and the governments share that is often the cause of a lot of fuss by the companies who need to get a reasonable return for their shareholders in order for the project to go ahead.