valuing exoma

Following the release of the preliminary drilling results for the Katherine-1 and Bessies-1 wells in December, I have used a couple of methods to ‘value’ Exoma shares. As more drilling results become available I will update these valuations.

Method 1. $20.20 per share using US sales of equivalent Bakken Shale land.

Method 2. $28.30 using the Sum of the Parts - Katherine Oil plus Bessies shale oil plus Bessies shale gas plus coal seam methane.

Hopefully the gap to the actual share price closes as more results become available. Any comments or suggestions for alternative valuation methods are welcome.

Notes to calculations-
570 million shares on issue, assuming all options are exercised.
Exoma share of production is 50%. Balance being earned by CNOOC.
Shale covers 20,000 square kilometres and coal seams 13,000 square kilometres of Exoma leases.

Method 1: Land Value.
Recent sale price per acre of US Bakken Shale US$4,655.
Exoma’s 20,000 sqkm is about 5,000,000 acres.
Thus 5,000,000 X US$4,655 = US$23 billion or A$23 billion.
Exoma share (50%) = A$11.5 billion.
Hence value per share = $20.20

Method 2: Sum Of The Parts
Part a: Katherine Oil play – oil in place estimated at 635 million barrels
Assume 33% of oil is ultimately recovered = 200 mb
Present value of in-ground resource is say 20% of a barrel = US$20
Hence 200mb X US$20 = US$4 billion.
Exoma 50% share = US$2 billion = A$2 billion
Estimated present value per share of Katherine oil is $3.50.

Part b: Shale Oil from Bessies Results
Estimated 2.2 million barrels Oil in Place per square kilometre.
Thus 20,000 sqkm X 2.2 m barrels = 44 billion barrels
Assume recovery of just 3% = 1,320 million barrels.
If present value of in ground oil is discounted to US$20 per barrel, then
value of in ground oil is 1,320 mb X US$20 = US$26.4 billion.
Exoma 50% share = US$13.2 billion = A$13.2 billion
Estimated present value per share of shale oil is $23.10.

Part c: Shale Gas from Bessies Results
Estimated 20,000 square kilometres @ 4 billion cubic feet per square kilometre = 80 trillion cubic feet (TCF) of Gas In Place (GIP).
Assume recovery of 5% of gas = 4TCF.
At $450 million per TCF as per recent sales of 3P, then 4TCF= $1.8 billion.
Exoma 50% share = $0.9 billion
Estimated present value of shale gas is about $1.70 per share.

Part d: Coal Seam Methane – insufficient info provided so far to ascribe any value.

Suggestions, comments?
Gasman.