takeover on the horizon, page-8

Dan and Sam

Interesting discussion. I am not sure I agree that ROC would Value Beibu that simplistically in determining what is a fair price
The things roc may consider is production performance to date , last conference call the still had not seeing water production which they had modelled at coming in very early - this could mean reserves overtime likely to increase
They would value the 2c Beibu resource which seems to be more about getting the approval to develop than any doubts of commerciality . They will also value prospectively of the block . A fee years ago BPT bought impress for what seemed to be a high price per reserve barrel to get 40% of PEL 91 and 40% of a couple of bigger oil fields - from memory they paid 50 dollars per 2 p reserve barrel . Those permits have delivered reserves that would make the original entry at sub 10 . Roc as the operator would be best placed to value Beibu.

Samscout - roc is trading a 10 dollars per barrel and that's why it's so cheap - the cheapness comes from the oil not the cash . So for example if they used 65 million to buy oil generating a 45 dollar profit per barrel for 30 dollars per barrel and got 4 million barrel in 2 c resource for free , that great . They could in future farm out for a carry further exploration drilling and again benefit .
In my view I would be working out good value this was 25 dollars per 2 p reserve barrel and per resource barrel . Lower is cheap - higher is expensive . So 160 m price tag would be a very solid but and about 180 m fair . Sub 140 million we should all start dancing as the pay back period would be quick . Also we must Remember that HZN would have contributed about 100 m to develop Beibu and more for exploration drilling

Lastly - valuing ROC on a 2 p barrel without looking at the different contribution in terms of margins the fields make is also too simplistic
As Dan has pointed out , Beibu barrels are about 60% more profitable than Zhao dong barrels

Having said all this I am quietly hoping they get a steal