Okay, so let's assume the 2nd well is the 1st development well where we do not get a free lunch but we're drilling now for revenue.
Is the maths still worth getting excited about today?
NAMPOA (Namibia Petroleum Operators Association) says it can
cost N$1.5 billion per well (almost AUD$5 million):
https://thebrief.com.na/index.php/component/k2/item/893-oil-exploration-companies-pump-n-30bn-into-namibia (Although I read in a report that it costs Australian companies around $130 million per offshore well. Some among you know these figures better than I. But for the sake of this exercise, let's just go with NAMPOA's figures 'til we know better; as an academic exercise, investor-to-investor.)
Total development cost, including building offshore and onshore infrastructure,
N$300 billion (almost AUD$1 billion).
20% of a well cost = almost AUD$1 million (PCL's share of costs)
and/or 20% of total development = almost AUD$200 million (PCL's share of costs)
INFERRED REVENUE:Current
price of oil per barrel is US$76.59 (at the time I looked):
https://oilprice.com/oil-price-charts/#WTI-CrudeAssuming
production cost of each barrel is $24, as worked out by kjartan.
Read his post to see how he arrived at them:
https://hotcopper.com.au/threads/ann-woodside-enters-into-exclusive-option-on-namibia-pel-87.7261414/page-18?post_id=66547786So, US$76.59 - US$24 =
US$52.59/barrel inferred revenue.
20% of $52.59 x 1.3 billion barrels =
US$13,673,400,000 billion.
Bottom line: PCL's 20% stake is potentially in the billions.
So if the economic returns are confirmed by the survey and exploration well, then PCL can either take that to an investment banker or Uncle Albo or even downstream company for a debt facility which can be paid off in a relatively short amount of time with those figures...
Or PCL does a CR.
Or PCL gives Woodside 10% more shares, to hold a free-carry
10% share of revenue. (US$6.84 billion)Or PCL do like Impact was rumoured to try to do and
sell its
20% stake for US$500million-$1billion, prior to results coming in.
Or PCL takes its
1.5% (US$1.03 billion) royalty interest of revenue
+ US$2.5 million from Woodside and go find another field to play in.
It makes for some exciting share price movement and share price target and possible dividends,
which is the speculative game that we're playing here.
DISCLAIMER: DYOR. I do not stand by the accuracy of above figures. They're plugged in to build a picture. Need further Anns to refine.
(20min delay)