wcl in the news, page-21

If WCL can lock in an offtake then I think a forward p.e of 15 is totally possible. Not comparable in size but STO is on a p.e of 25 and AWE is on a p.e of 35 so I can't see why

Better comparisons would be companies like SXY, BPT and DLS, which are at similar points of the production curve to what you are talking about (ie solid production but small scale). They are at PEs of 7 to 12.

AWE is in an interesting situation because it has good reserves and prospects but is generating almost no NPAT, which is why its PE is so high. If you assign (hypothetically) WCL a good NPAT as in your calculation, you would need to use a lower PE or else you'd be double dipping.

But hey, you can use whatever you want, it's your calculation. :) I just personally would use 10.

Remains to be seen if they can deliver on that promise but you can't really use old wells drilled by Anglo coal as a benchmark.

I'm not using the old wells as benchmark - if I included those the average would be much, much worse than 250 Mscfd. A lot of those wells would produce well under 100 Mscfd.

The fines will always be an issue to some extent IMO and there will be workovers required, which means at any given time, a portion of wells will be offline. There will also be wells struggling to ramp up as the perm of these wells is so low, it takes time to dewater them.

So even if the average well has a peak gas rate of 400 Mscfd (split the difference between 300 and 500) the average production per well over the entire field at steady state will be maybe 70% of that even in a good field. Then in a case like this there will be wells that just don't perform, through no fault of WCL. Either geological or wellbore stability issues.

So I expect even a few of the new wells won't do much better than some of the old Anglo wells, even though the AVERAGE per well will be much better. But that's where the older wells can actually be a blessing. They may only produce 100 Mscfd or whatever, maybe even less, but they're sunk costs and only require minimal opex, so if you can keep them online (until they conk out and require workover) they've effectively free gas flow.

But you're quite right that we shouldn't use those flow rates as a basis for calculations of future development. The average will be much better - the problem is we don't know if the average will be 200 Mscfd or 500. My personal feeling is closer to 200 because of the issues I discussed.

WCL are much better than some companies in their well performance disclosure but there's still a lot we don't know, unfortunately. That's where the educated guessing comes in.

Overall though, I think that Meridian is very marginal at $3.60/GJ (which is what they're getting now) but it'll be a very different story at $8, which they will get soon. Improvements in well deliverability and $8/GJ should ensure a rosy future IMO.