Rifici, The company is examining the opportunity for an asset sale or JV but onlty for a modest part of the field say 10-20%. The value of the filed when fully assessed at the new pricing formula is probably going to exceed $2billionUS. The project was always going to be too large for Sino to go it alone so their looking for a partner is not unexpected. Sino will receive 100% of all revenue streams until the capital share of the Current chinese partners is paid back. But even after that the share of the net revenue stream will be substantial. refer recent research reports issued by brokers and their presentations.
The valuation of the company on a comparative basis to its peers in this field is estimated at around 60c share ( pre new gas price uplift). With a potential $10 plus gas price by the time production kicks in over 2013 onwards the net revenue stream should be over US$5 per 1000 cu ft. based on a net cost for delivery of $4.7 per 1000 cu ft.
I doubt that the company is looking for further equity issuance to fund the next phase of development as they consider that the price is far to low and substantially undervalues the company assets and profit potential. Thats why they are assessing partial asset trade/sale and JV partner opportunities.
SEH Price at posting:
3.8¢ Sentiment: LT Buy Disclosure: Held
