Still trying to determine where NGE sp will head post JV announcement.
I think the the JV funding of up to 6 wells has been built into the current share price in the high 20s. This would give us a market cap of approx 150m (at 27cents) which if the US90m rumors are true it gives us about 125 value (incl 5m Cash at bank). However the opportunity for the share price to run is in the perceived added value the JV partner. With a Marcap of 150m that only allows for 25m potential and synergies having a MN JV partner drilling up to 6 wells will bring.
The estimates on my last post highlight the potential if a resource is found. At this stage their is huge potential on adjacent permits and a 5bbls oil seeping from the ground along a 100km system but no proven reserves. The MN must be satisfied their is potential their and they are the experts. Only 25m potential???
The speed at which the JV partners can bring a finding to market will also be confirmed with the announcement. This will be through the JV partners existing/proposed infrastructure in PNG and ability to market and sell any resource. These are 2 things that are usually very costly and take a long time for exploration oilers to finalise without a partner. Only 25m potential?
Finally I see the expertise and ability of the MN to ensure the soon to be advised exploration timeline is adhered to as another big plus once the JV partner is confirmed. This may be worth 25m...
One further point is that once the deal is formalised it will significantly derisk NGE and attract a new breed of investor that is looking for a lower risk profile with a fully funded exploration program but still multibag potential due to no proven resource. This will settle the registry once the ST traders have taken their relatively small % and gone hunting elsewhere.
So in my opinion it looks like there is still some serious upside here upon confirmation. The black and white of what the JV partner will bring (as in the wells) appears to have been built in but that leaves only 25m for the asset potential and synergies the MN JV partner will bring which gives us plenty of room to run. Someone on this thread said NGE could be the stock of FY10 and based on the potential I would tend to agree it's in the running.
DYOR
BG
Add to My Watchlist
What is My Watchlist?
